Krishna Koundaniya

Much has been written, discussed, debated and suggested on this subject already, so what is new here? Most of the opinions that have come up by various thinkers, columnists have focused on the shortcomings of the Planning Commission and the further course of action for NITI Aayog. However a perspective which is based on a subtle contradiction in the formation of NITI Aayog did not get its due share of limelight.  When our honourable Prime Minister drove the last nail in the Planning Commission’s coffin on Independence Day, he took care to highlight the USP of the successor body. The prime objective was to foster “Cooperative Federalism” in our nation and this is the bone of contention here. There is a clear cognitive dissonance at the Centre, dichotomous contradiction between thoughts and actions.

Cooperative Federalism seeks to devolve more power to the states. The economy has evolved from an anti-imperial crusade to a neo-liberal stripling making headways into the arena of global politico-economic bigwigs. This demands a more level playing field for the market forces, more customized models of developments based on local needs which Planning Commission could not adopt and NITI Aayog seems to promise, or does it? A perspective is that it’s all hogwash. Two key pieces of evidences can be provided for this.

nitiFirstly, the abolition of the National Development Council. Back in the day, even though the pan-Indian body called Planning Commission did not provide for representation from the states, Chief Ministers of various states had a channel of expression in the form of National Development Council whose working was based on consensus and it is now replaced with regional councils thereby depriving the states of a proper channel for expression of their anguish. All the Chief Ministers together could form a formidable opposition and were a check to the arbitrary caprices of the Centre which is crucial for federal polity. Though NITI Aayog does have Chief Ministers in its Governing Council, they have only a recommending role and it is rightly termed as “Cosmetic Federalism” by Dr. Bharat Jhunjhunwala. A bitter way is to retain its powers of distribution or else the notorious regime of “conditionalites” on funds & grants to states would intrude into the working of NITI Aayog and the whole point of its creation would be lost.

Secondly, arm twisting the states to follow a defined economic strategy. During the days of the Planning Commission it was expected that the Centre will decide what the states will do and how they will do without questioning the underlying rationale. It was accepted that centralization of economic policy was the way to go and externalities demanded such policies. In the present day, after abolishing the Planning Commission, it’s the Finance Commission and the Ministry of Finance who will decide each state’s share. The states are now forced to follow a neo-liberal path of development, enter into Public Private Partnerships (PPPs), tie ups with domestic & foreign capitalists etc. What if a state wishes to purse a more socialist path of development like West Bengal? This has not been taken into account or even acknowledged. This is precisely the argument here that the Centre is arm twisting the states to follow a predetermined path or else face consequences. This is in no way different from having a highly centralized planning during 1950s where states had little to no latitude in their choice of path to development.

The whole argument of this perspective boils down to this – in the garb of neo-liberalization and adjustment to the international market realities, the PMO is fostering centralization of economic policy and not devolving it.

If our PM means to pursue the spirit of cooperative federalism, NITI Aayog should create a conducive environment and not a coercive one.

Krishna Koundinya Mothukuru is an entrepreneur and writes on Foreign Policy, Economics and Law.

Posted by The Indian Economist