One of the most significant economic decisions of the present government was to replace the Planning Commission with a new institution. Accordingly NITI Aayog, which would serve as a Think Tank of the Government, was announced on Jan. 1, 2015.
During the last sixty five years after the formation of the Planning Commission in 1950, lots of economic developments have taken place. As a result, the replacement has become a necessity.
The economic discourse has been dominated by the Western ideologies for a long time. The capitalist ideology was put forth during the late eighteenth century in Europe when there was large scale discontent in the society. The industrial revolution too could not fulfill the expectations of people; it rather created more problems for the working classes. In response to this the communist ideology was placed as the alternative during the second half of the nineteenth century.
After about seven decades of experiments, communism collapsed in Soviet Russia during the late 1980s. The other bastion of the communist ideology namely China, had already abandoned it during the previous decade. As a result, the United States claimed that its market centric ideology was the most suitable one for progress. But the countries that followed the policies advanced by the US have been failing in different places. Soon the global economic crisis in 2008 proved that the US model would no longer work in its own place.
As a result, many economists including those from the US admitted that their theories have failed to capture the realities and the ‘one size fits for all approach’ would not be suitable to all the countries. Even the multilateral agencies accept that different models might be suitable for different countries. Meanwhile, the performance of different economies during the recent years show that China and India have been growing faster than the others.
Meanwhile studies undertaken by western scholars during the last three decades point out the predominant role of India and China during the earlier centuries. Angus Maddison notes that India was dominating the global economy with a share of 32.9 per cent during 0 CE, followed by China. India and China continued to dominate the world economy for the next eighteen centuries, with India remaining at the top, most of the time. India lost her position and ultimately became a poor country due to the colonial policies.
India and China could not have become the two most prosperous nations without their own native economic models. Besides, they remained the most sustainable economies for the longest period in the history. Such a performance would not have been possible without well-functioning systems in place.
Even before Independence, Gandhiji wanted to have wider discussions on the right kind of approach in free India, but the Congress leadership did not listen to him.After independence, the policy makers opted for the socialistic ideas to guide them in decision making. It was during that time that the Planning Commission was established based on the Soviet experience.
After more than three decades of socialistic experiments, the Government went in for a change in approach during the early 1990s. It chose to follow the western market ideology, again without much discussion. The consequences have been severe with the domestic markets being opened up without the required preparations and the basic sectors facing serious difficulties.
It is unfortunate that India, with a very long history of superior economic performance, has been guided by one or the other of western ideologies during all these years. Hence we have not been able to realize our full potential, based on our strengths. But in spite of confusions and contradictions at the policy making levels, the nation continues to move forward due to the strong fundamentals and the innate abilities of our people.
John Kenneth Galbraith, an economist, was the US Ambassador to India during the early 1960s. When he visited India during 2001, he noted: “I wanted to emphasize the point, which would be widely accepted, that the success of India did not depend on the government. … We have seen many years of Indian progress, and that is attributable to the energy and genius of the Indian people and Indian culture.”
Field level studies in different parts of the country indicate that India has her own unique models functioning at different levels. It is these models that are pushing the economy to continuously move forward, despite the lack of clarity at the top levels. Hence there is little use of adopting the models of other countries.
In this connection, the Cabinet resolution passed to establish NITI Aayog notes that “ …the institution must adhere to the tenet that while incorporating positive influences from world, no single model can be transplanted from outside into India.” Besides, the resolution states: “We need to find our own strategy for growth. The new institution has to zero in on what will work in and for India.”
The resolution is very clear when it mentions: “It will be a Bharatiya approach to development.” This is a historic statement for all of us, as the functioning India has been longing for nation-centric approaches. It has taken six and half decades for the Government to state boldly that we would follow our own native approaches. Only a truly nationalistic and self-confident Government can do this.
Family base, higher savings, social capital, high level of entrepreneurship, non-corporate sector, native pool of local resources and the cultural backgrounds of our age-old civilization remain the fundamental strengths of our economy. The Government has for the first time identified the core strengths of our society and initiated steps to nurture and utilize them for economic development.
Social capital is recognized as a critical asset for economic progress and is given the required importance in many countries. Studies show that we have high social capital due to our cultural ethos and that is helping our economy as a major factor. The Government acknowledges its significance and notes that it “needs to be leveraged through appropriate policy initiatives.”
The non-corporate sector remains the backbone of our economy, contributing the highest share to the GDP and providing 92 per cent of employment. There are more than 50 million small businesses, playing a very important role in the economy. Most of them are promoted by the ordinary sections of the society through their own initiatives, in distant parts of the country.
They have a huge potential and the ability to transform the lives of large sections of people, yet they are unable to perform to the full extent as they remain neglected. The cabinet resolution notes that “policy making must focus on providing necessary support to this sector in terms of skill and knowledge upgrades and access to financial capital and relevant technology.”
The modern discourse has contempt for villages and neglects them in the policy making process. The resolution notes that “villages continue to be the bedrock of our ethos, culture and sustenance”. Hence they “need to be integrated in the development process so that we draw from their vitality and energy.” So the think tank would “develop mechanisms to formulate credible plans to the village levels and aggregate these progressively at higher levels of government.”
The resolution notes that “the pool of entrepreneurial, scientific and intellectual human capital is a source of strength waiting to be unleashed to help attain unprecedented heights of success”. Besides it says that the think tank has to ensure that India’s unique middle class “remains engaged and its potential fully realized”. Moreover it is stated that steps would be taken “to broaden the participation” of the non-resident Indians living abroad.
In the centralized policy making system, there was only one way of flow of policy from the centre to the states. It is “sought to be replaced by a genuine and continuing partnership of states”. It is made clear that only strong states could make a strong India. Hence the new institution is “designed to evolve a shared vision of national development priorities, and foster cooperative federalism.”
NITI Aayog would enable the country to face challenges by leveraging India’s demographic dividend and realizing the potential of the youth. Besides, it would “provide chance to every Indian to live a life of dignity and self-respect”.
India is a unique country with diverse backgrounds and hence a uniform model will not be suitable to all the states. The new body is expected to “embrace the specific demands of states, regions and localities”. A resource centre is planned as a repository of research on good governance and best practices for dissemination to all those who require it. So far India did not have much of a role to play in the deliberations at the global level. The new body is expected to change it.
NITI Aayog aims to make India well developed economy utilizing all our potential with the involvement of different sections of the society through Bharatiya approaches. We hope that India would regain her glory and emerge as an economic powerhouse at the global level.
(Dr.P.Kanagasabapathi is a Professor and author based in Coimbatore involved in studying the functioning economic, business and social models)