Policy-Making for Indian Planning

Montek S Ahluwalia, Deputy Chairman, Planning Commission

Montek Singh Ahluwalia needs no introduction to economists, elected representatives and the ordinary citizen of India. He is the Deputy Chairman of the Planning Commission (longest serving) and a key figure in the country’s economic reforms. This is but the “macro” picture of Montek’s contribution and achievements in India’s policy-making. The “micro” picture is well drawn in the book under review. Few would remember that he is the author of a crucial note written for the then prime minister in 1990 which charted the path for the economic reforms that were launched in 1991. Or, as Subbarao recalls in his article in the book, that Montek negotiated the settlement of the Rupee-Rouble deal with Russia. Or that along with P Chidambaram it was he who convinced the world (East Asia, the US and Europe) that the reforms were for real and India would not look back. And even fewer would know how he was named. (In Sameer Kochhar’s Introduction it is revealed that Montek was a naughty and head strong child. One day his mother quipped, “This boy behaves like General Monty!” [the British Field Marshall] and that is how he got his name.)

This festschrift to a “world renowned economic policymaker” contains 14 essays by some of the leading luminaries of the world of economics, finance and policy. Each piece draws out an aspect of India’s growth story, linked to Montek’s contribution in policy-making, governance, inclusive growth and participatory planning.

Two articles, by Lord Meghnad Desai and Nitin Desai, bring us an up to date history of the Planning Commission. The Commission can continue to be relevant even in the liberalised economy by becoming inclusive and making the states full partners in the planning exercise. N K Singh’s paper focuses on Centre-State relations, and how the Planning Commission can become the only effective instrument to represent the voice of the states to the Central ministries. Montek is credited with bringing focus on inclusive growth in the Eleventh Plan. In fact, for the first time since its inception, the Planning Commission embarked on participatory planning when it invited suggestions and inputs through an open forum for the Twelfth plan through its portal.

The challenge of governance and corruption is the greatest long-term threat to Indian growth and development. Parthasarathi Shome in his essay provides a historical perspective to the concept, and the administrative and economic relevance of governance. Kaushik Basu has “presented” Montek with a revised version of a paper he wrote on the control of corruption.

Montek’s commitment to poverty alleviation and inclusive growth can be found from the time of his early writings. Reducing poverty is a crucial element in inclusive growth and Surjit S Bhalla’s essay deals with the “controversial” issue of poverty and its indicators. The severe criticism of the Planning Commission’s poverty line earlier in the year would have given Montek much food for thought one imagines.

“Inclusive growth cannot be achieved in one Plan period. Inclusive growth means growth of a kind [from which] benefits flow to everyone and participation in the benefits of the growth is very high,” says Montek. Several essays in the festschrift deal with aspects of promoting such a vision of inclusive growth, providing adequate livelihoods in small towns (Hari Sankaran); paradigm changes in the realm of connectivity (Sam Pitroda); empowering the marginalised, particularly women (as exemplified by SEWA, dealt with by Gursharan Dhanjal and Sameer Kochhar); and understanding of global imbalances (Roberto Zagha). Raghuram Rajan discusses how currency rates have a bearing on growth, and perspectives on banking and monetary matters are provided by RBI Governor D Subbarao and Y Venugopal Reddy.

There are many innovative changes Montek has brought to bear on Indian policy-making, many of which have been well illustrated in this book. Given the economic crisis the country is facing currently, everyone is looking to see how he will steer Indian policy to keep not only the momentum of the Indian growth story but make it more inclusive over the next decade or so. The road will not be smooth, and no one is better qualified than Montek to ride the bumps.