interview
Deepak Lal on the Planning Commission and Niti Aayog
2016
Summary
Deepak Lal recounts serving at the Planning Commission at the height of Indian planning, around 1973, when Indira Gandhi turned sharply left, nationalising coal, the banking system, and attempting to nationalise wholesale trade. He describes the meetings as absurd, citing a dispute among commission members over whether the growth target should be two or three percent, and notes that a proposal to nationalise wholesale trade was fortunately blocked.
His decisive disillusionment came when he was asked to assess the impact of the first oil price shock and discovered the Perspective Planning Division's input-output table was based on roughly 1950 data, with no entries for oil or fertiliser, making it useless. He calls this his 'damascene conversion' and argues that anyone who spends a year at the Planning Commission and still believes in planning needs their head examined. On the NITI Aayog, he contends the government has merely changed the board outside while doing the same work, and suggests it should instead have set up something like a Council of Economic Advisers, given that funds now flow directly to the states.
Key points
- Lal served at the Planning Commission around 1973, which he describes as the height of Indian central planning.
- This period coincided with Indira Gandhi's leftward turn, including nationalisation of coal and the banking system.
- A plan to nationalise wholesale trade was blocked, which Lal says spared the country worse outcomes.
- Commission members argued over trivial questions such as whether the growth rate should be two or three percent.
- Asked to model the first oil price shock, Lal found the input-output table was built on roughly 1950 data with no oil or fertiliser inputs, rendering it useless.
- He calls his year there a 'damascene conversion' that convinced him planning made no sense.
- He argues the NITI Aayog has merely 'changed the board outside' while continuing the same state-planning exercises.
- He suggests a Council of Economic Advisers would have been more appropriate now that funds go directly to the states.
Transcript
Deepak Lal on the Planning Commission and Niti Aayog
Source: https://www.youtube.com/watch?v=HanUaEZDh1g Duration: 200.2s
Speaker 1 (00:00): Well, when I was at the Planning Commission, that was the height of planning, if you see what I mean. And I was asked, Eric, I can’t remember which Friday the plan it was, Dupita, he said, you know, look through this. So I sat in through all these meetings and said, people. There was a huge dispute between Bhavichmin House, who was the only sensible member of the Commission, and Sukumar Chakkarati all arguing about this, whether the growth rate should be 2% or 3% or something like this. It was completely ludicrous. But that was a big thing. And that was a period when Indira Gandhi turned left. This is 73, I think it was, 73, 73. So this was a period when she nationalized coal, she nationalized the banking system, and she was going to nationalize wholesale brain change. And Bajut when asked what Rathya said, she said, Sukumar is completely in favor of this course. And Bajut said, you need your head examined if you actually support that. So that didn’t go through, fortunately. Otherwise, the whole country would have always stopped.
Speaker 2 (01:20): Anyway, that was a period when I suddenly realized this made no sense. I’ll tell you a story.
Speaker 1 (01:25): this was I think just seven this must be simply three because that’s when the oil price rise took place first we got world price rise and you know he said please find out how much what will the effects of this I said yeah fine the perspective planning division is supposed to have this huge input out to take this I was thinking I’m not sure if you go up and the answer come back nothing so So that seems ridiculous. So I was to see the input output table and of course this was, I think, based on date of 1950 or something. So there was no oil input, there was no fertilizers factory, nothing at all. Of course there was nothing. So that convinced me this whole thing was completely off the wall, not me at all. And that’s the time when I decided this made no sense. So that was a damascene conversion, if you like, that one year I spent in the Planning Commission. And after that I said anyone who believes in all this stuff that I said, go and work in the Planning Commission for a year and you still come out, still believing all this rubbish about planning, you need your head examiner. Anyway, there we go. So that was a service only for a year, but that was a formative experience in that sense. Because that’s been when we see it in the world. Well, the trouble is, at the moment, all I can see is they’ve just changed the board outside.
Speaker 2 (02:47): But they’re doing the same thing. I mean, they’re doing state plans. They’re going to do a midterm appraisal, the final appraisal. So nothing has changed. So we have to wait and see. I mean, they’re good people. I know, but I’ve been going to be big.
Speaker 1 (03:01): So let’s see what they do. I think the mistake they made was they should only have set up something like the Council of Economic Advisers. Because now that they’ve devolved a lot of money which was distributed by the Climate Commission, there’s now this new Finance Commission that’s going to go directly to the States. So I don’t know what they’re going to do. Anyway, let’s see.
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