Reforms in Planning Commission

PC has not evolved with changing economic, constitutional terrains

ISLAMABAD:

Before delving into and trying to answer some of the questions around the efficacy, need of existence, future reform and evolution of the Planning Commission (PC), it may be pertinent to understand the context and circumstances in which the PC came into being.

The PC was officially born in 1953 in the backdrop of the Colombo Plan established by Commonwealth countries, aided and advised by the World Bank. The premise behind creating the PC was that economies require a structured approach to development and government(s) ought to take the lead in the process.

The PC was tasked to develop mathematical models which would identify sectors where investments would yield optimum returns. The Harvard Advisory Group and the World Bank facilitated the PC to come up with various tools including five-year plans. The PC’s key role was to spearhead a consultative process across various ministries to identify profitable investments in identified sectors. The approach also led to public investments through the Public Sector Development Programme (PSDP).

The world’s social, political and economic constructs, approaches and thought processes have evolved substantially since the advent of the PC. While the initial approach adopted by the PC for development may have worked in the 1960s and 1970s, the global ecosystem in general and Pakistan’s economic structure in particular have changed significantly.

This is especially evident since the 1980s and 1990s where there has been a push globally to let the private sector take the lead in economic development. Pakistan’s economic model that the PC was initially set up to serve has changed substantially, however, the commission continues to remain mired in old ways of conducting its business. Further, introduction of the 18th Amendment has made central planning a challenge, with provinces obtaining substantial financial autonomy to carry out their development agendas independently.

Consequently, the PC has not evolved with changing economic and constitutional terrains to be able to make an impact that it used to in its heydays. The overhang of loss-making state-owned entities (SOEs), looking up to the government to dole out subsidies, are some of the extensions of the mindset of the 1960s and 1970s, which remain imbedded not only in the public sector, but the private sector as well.

Archaic mindset and operational interventions, misaligned with modern ground realities, have weakened Pakistan’s fiscal position, resulting in a tepid macroeconomic predicament, leading to loss of investor confidence and investment appetite.

While the PC has a list of functions it is supposed to perform (please refer to the Cabinet Division resolution dated October 30, 2013), it developed a perception as a project appraisal and approving entity only with little focus and conformity with the rest of its functions. The ecosystem viewed it as a conduit to obtain funds for development projects – be they federal, provincial or municipal in nature, without much heed to the core public investment mandate.

Strong political influence diluted the efficacy and implementation of its national and economic plans. Relevant economic departments and technical sections’ capabilities started to erode; political inductions and appointments did not help bring knowledgeable professionals to the forefront.

The influence of political economy can be further corroborated by the fact that before mid-late 1990s, deputy chairmen of PC were primarily either seasoned bureaucrats or eminent economists. However, after mid-late 1990s, there is growing evidence of political figures taking on the office of the deputy chairman. Changing the reporting line of the deputy chairman to the minister of planning, development and special initiatives has further enhanced the influence of political economy.

With the above in the backdrop, the first and primary question becomes whether we need a commission for planning. Given the role of the commission as a central and national coordinating body for national, federal and provincial matters, having the convening power to congregate and debate on cross-cutting topics, sectors and inter-provincial matters, a justification still exists to have a commission.

However, the commission cannot exist in its present form and will not be able to deliver its objectives, perform to its potential and expectations.

If there is a desire to commence the initial reform process and rid the commission of myriad anomalies mentioned above, a number of key changes and interventions will need to be pursued with reform-oriented and impartial mindset:

First, new entity: A new commission should be set up; it will be an arduous task to fix the existing one. The new commission should be enacted, having the full force of the law.

Second, independence: The commission must be independent of the Ministry of Planning, Development and Special Initiatives or any other ministry. The commission must have its own procedures and rules of operation. It must be positioned as a national commission rather than a federal or provincial commission.

Third, productivity-driven orientation: While the new commission may take some of the objectives mentioned in the cabinet resolution dated October 30, 2013, it ought to be oriented in a way which makes all federal and provincial ministries understand that its mandate pertains to not only PSDP but non-PSDP activities as well.

This aspect is at times not fully understood by many ministries and senior officers; the existing PC is largely seen as a project approving body as mentioned before.

Since private sector needs to take the lead in investment and growth with the government taking a facilitative role, the new PC should be reoriented to approach all sectors, cross-cutting or otherwise, with a view to augmenting productivity of the country and facilitating private sector growth.

The existing technical sector team setup is archaic, outdated, siloed and does not fully appreciate the cross-cutting linkages across various sectors. There are some extremely important areas which are not fully owned by any technical sector team such as the privatisation process and the SOEs.

Both have an exceptional role to play in providing a conducive environment for private sector to thrive.

Fourth, mandate with empowerment to execute and implement: Presently, the PC develops macroeconomic model(s), five-year plans, annual plans and related interventions through PSDP along with formulating policies in consultation with relevant ministries and other stakeholders amongst other activities.

However, once these documents are adopted by the government, associated support required to influence the implementation or steer objectives of the documents remains missing, barring PSDP allocation(s), which are also subject to change.

Merely convening ministries and other stakeholders to iron out issues while helpful, does not achieve the objective in spirit. It must also be fully appreciated that the single biggest factor in ushering investment and growth is a stable macroeconomic environment and data points which are linked with fiscal disciple, national debt management, revenue generation and expenditure, commerce and trade amongst others.

While the existing PC may formulate models and documents for intellectual consumptions, areas mentioned above are largely outside the real influence of the PC.

New commission may emulate the mandate of the existing commission, however, it must have all levers within its influence to steer and execute national macroeconomic model outcomes.

This is the first part of the article. Its second part will appear soon.

The writer is ex-member (private sector development & competitiveness), the Planning Commission of Pakistan

 

 

Published in The Express Tribune, February 26^th, 2024.

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