Cabinet Over-Rules The Planning Commission-At Mahalanobis Instance 1

The Central Cabinet, having considered the Draft of the Third Five Year plan, is reported to have sent it back to the planning Commission for re–drafting with the decision that the plan outlay be raised from Rs. 9,500 crores to Rs. 10,200 crores. This must set a nought the controversy that had been long going on between the planning Commission and the Finance Ministry on the one side; and the Cabinet, or, to be exact, the spending Ministries, on the other. While the former felt that keeping in view the resources position during the third plan period it would not be possible or desirable to raise the target already fixed by the National Development Council, the ministries which had prepared draft of a number of ambitions projects were not prepared to leave them out of the draft of the plan. The Central Cabinet could not have listened to the lone voice of the Finance Minister as against the combined and loud protestations of other ministers. It would have also been politically unwise to tell the electorate that some of the projects promised to them couldn’t be included in the Third plan. The Finance Minister can be tactlessly frank in denying to the people what might have been wrongly and politically promised, but others cannot afford to emulate his example without serious consequences to their political future. And so the Central Cabinet has overruled the decision of the National Development Council and of the planning Commission. Sri. M.R. Masani, who, of later, has been crusading against the planning Commission, should be happy that at last the Central Cabinet has re–asserted itself and that the planning Commission has not been allowed to assume the role of a super cabinet.

But the whole thing is not as innocent as it looks. The Cabinet has in fact succumbed to the machinations of one man who did not like to relegate into the back ground in the preparation of the Third plan. The Second plan was virtually outlined by Sri P.C. Mahalanobis. He took decisions not only with regard to the priorities and objectives of the plan but also in respect of the targets of financial out lays and the technique. But for various reasons in the preparation of the Third plan he did not play that key role. The planning Commission in consultation with the State Governments is reported to have taken its own decisions, and the draft was prepared accordingly. But Shri Mahalanobis was not satisfied. He assailed the planning Commission for alleged conservatism and underestimation. The perspective planning Division, which he lead published a paper criticising the assessment of resources by the Resources working Group. He claimed that the Group had not taken into account Rs. 1,200 crores on the revenue side and Rs. 500 crores on the expenditure side. In this connection the paper relied on the difference between the budget estimates of 1959-60 and actual. The resources for the Third Five Year plan have been assessed on the basis of the estimates for the year 1959-60. The following chart gives the estimates of the Resources Working Group and the perspective planning Division–


& Corporation  Excise  Taxes
Tax

Revised Estimates 160 240 351 128 879
Actual Estimates  158 244 361 128 891
Under Estimates 25 19 36  13 93

Estimates by
The Resources
Working Group 125 235 343 121 824
Budget Estimates 160 240 359 136 895
Estimates by the
Perspective
Planning Division 160 256 387 136 939

In addition to the above resource the paper assesses Rs. 400 crores as profit from public enterprises and Rs. 300 crores as repayment of loans by the ‘third parties’. After adding Rs. 500 crores to the expenditure side for payment of interest etc. the paper comes to the conclusion that the Resources Working Group had underestimated resources to the tune or Rs. 700 crores net. Being thus re–armed, the spending ministries insisted that their demands be conceded. The perspective planning Division, in fixing a larger out–lay, is motivated not so much by the possibility of availability of resources as by ideological considerations. While the planning Commission had insisted the investment during the Third plan period be of the order of Rest. 7,000 cores. Sri P.C. Mahalanobis feels that no such limit may be prescribed. The paper of the perspective planning Division says, “Insistence on a ceiling of Rs. 7,000 crores may mean excluding from the plan a number of essential projects, some vital for the continuing growth of the economy and others for the progressive realisation of the social goal of expanding basic amenities and opportunities for the under–privileged so as to reduce the present hideous inequalities in the society. It would be a case of wasted opportunity to the detriment of the public sector and progress towards socialistic objectives.”

Obviously it is the desire of establishing a socialist society as quickly as possible that has led Sri Mahalanobis to make the plan still more ambitious. As for his assessment of his resources he may stand on better ground then the Working Group so far as estimates of the basic year are concerned. But it would be unwise to plan in that optimistic manner. The optimism that prevailed during the period of the preparation of the Second plan was along responsible for a number of miscalculations and misjudgements. The difficulties of the Second Plan period were mainly due to the fact that the planners then could not take a realistic view of things. Similarly, it would not be desirable to assess our sources on the optimistic returns of a single year. But Shri Mahalanobis seems to be an incurable optimist, or his doctrinaire approach makes him ignore facts. His expectation of repayment of loans by third parties and profits of public enterprises might also not be fulfilled. Past experience does not justify his inference. But what we are concerned with is not his inferences, or the correctness or otherwise of his estimates, but the fact that one man should dominate whole planning attitude of the government and that the Central Cabinet, against the judgement of experts in the planning Commission, and of the National Development Council, should pay more heed to the advice of a man, whose judgements had already been prove to be wrong by the happening of the last few years. It is not known what part the Prime Minister has played in revising the financial outlays in accordance with the Mahalanobis thesis. But the whole thing is disquieting. It is necessary that the planning Commission reassert itself rather than follow the debate of a single man, or fall victim to his manoeuvres.

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