Development Planning: Synergy between the State and Citizens

PLANNING for the State's citizens began with full vigour by the erstwhile USSR in 1921 through GOS PLAN, based on a model developed by the Soviet economist Grigory Feldman. The model focuses on allocating investment between the capital goods sector and the consumer goods sector to achieve rapid economic growth.

- SATYA NARAYAN MISRA

Fredrick von Hayek in his widely read book "The Road to Serfdom (1944) warned about the dangers of government control over economic decision-making through central planning, arguing that it inevitably leads to state tyranny and loss of individual economic freedom. It was a clash of ideology, one plumping for State control and distribution of resources, the other a free market economy, where the individual was at the centre of economic decision-making. Nehru, the Fabian socialist, opted for the Soviet experiment and set up the Planning Commission in 1950 as a Cabinet decision. The Second Plan in 1956 witnessed the unfolding of the Feldman & Mahanobis model, by prioritizing investment in heavy industry. The Planning Commission was supplanted by a Think Tank, NITI AYOG, in 2015, to foster cooperative federalism, provide strategic and technical advice.

The Changing Contours

From top-down planning of the Planning Commission, the thrust of NITI AYOG is bottom-up. The Planning Commission used to allocate 30% of the government budget among state governments for various centrally sponsored schemes, which were part of a five-year Plan. Niti Aayog does not have such fiscal devolution powers. It facilitates the sharing of best practices, provides support for capacity development at the state level, serves as a think tank, promotes inclusive growth, and monitors SDG goals in India. Most importantly, it strongly believes in decentralized planning, a model followed by countries like the USA, Canada & Germany. In Latin America, the thrust is on greater urban self-government.

State, Constitution & Citizens