June 29, 2022
Indian Economy|Development Strategy
Towards a Coherent Development Strategy
By Nitin Desai
Towards a coherent
Last month’s contribution by this columnist on the need to reform the Niti Aayog has raised some questions about what was meant by the proposal that it should become the High Command of Development Strategy. This is clearly an analogy to a defence institution and by implication to military planning. Pursuing this analogy further one can spell out how development should be planned and implemented in terms of the military concepts of grand strategy, strategy, grand tactics and tactics.
- At the level of a grand strategy for development, national and international challenges and options are identified and a vision for development is presented. As in the case of military grand strategy, this is where political and professional dimensions interact.
- At the level of a working strategy, the long-term vision is spelt out in more precise and possibly disaggregated medium-term goals and policy priorities, particularly to indicate the role of public and private sector and indicative changes in resource allocations.
- At the level of grand tactics, perhaps more appropriately styled Action Plan, a framework for action is prepared on the basis of judgements about policy changes and resource allocations best oriented to pursue the goals.
- At the level of tactics, or implementation, the units responsible for implementation push forward with actions to realise the medium-term goals, allowin for variability that reflects specific circumstances of the sector or region and could be modified as the prevailing conditions change, say, because of a pandemic.
The evolution of the goods and services tax (GST) can provide an approximate but useful example of these four steps. The grand strategy was the articulation of a unified indirect tax system to bring us closer to a single national market, articulated by Atal Bihari Vajpayee in 1999. A strategy for implementation was worked out by the Asim Dasgupta Committee and the Vijay Kelkar Committee and pursued by finance ministers P Chidambaran and later by Arun Jaitley in negotiations between the Union and state governments which, after some political judders, finally found expression in a Constitution amendment and GST laws by 2017. The actions to set rates and data systems could be thought of as the equivalent of grand tactics and the actual implementation by tax authorities at the ground level as tactics.
When it comes to development, the greatest gap at the moment is the absence of a grand strategy for development that reflects both political concerns, development challenges and opportunities. This has to be the responsibility of the highest in the political hierarchy. However, unlike military grand strategy, a grand strategy for development must involve the top levels of both the Union and the state governments. It must also go beyond very general goals like growth with equity and sustainability.
One can list some of the political choices that need to be made for designing a grand strategy for development:
- Growth at present is quite concentrated in the Northwest, West and South of the country. Should one shift the balance of public support for development (through policies and spending) to the North and the East even if it means some reduction in overall growth?
- Given India’s demographic prospects, employment generation, particularly in the North is a major political concern? Should this be the dominant goal of public policy measures for promoting development?
- Should India, given the size of its markets, aim for vertically integrated self-reliance or should it aim at playing a larger role in global supply chains? Should this answer vary by industry and service category? Is it relevant for agriculture?
- What are the politically acceptable options for aggressive pursuit of trade and investment linkages— with China or with the US, Europe and Japan?
- Given growth compulsions, how vigorous should be the emphasis on promoting resilience, adaptation and mitigation activities to address climate change risks and other emerging environmental hazards, like, for instance, the growing scarcity of freshwater?
One can add to this list of questions. What we need is a process of deliberation by the Union and state governments that will make choices which translate into a coherent grand strategy for development. The job of the NITI Aayog is to provide the analytical support for these deliberations.
A coherent grand strategy provides a starting point for the NITI Aayog’s main job of formulating a medium-term strategy that is designed to implement the choices proposed. This working strategy has to go much beyond projections of economic parameters and must focus on the policy changes and shifts in the direction of public spending that are required. Three areas in particular must receive special attention in this strategy formulation — foreign trade and investment policy, research and development priorities, and environmental management, because their impact cuts across sectors. The departments dealing with these policy areas should be an integral part of the strategy formulation process.
Political choices are part of the process for the formulation of a grand strategy. The choices that are more relevant for the next stage of formulating a working strategy are between policy alternatives and this means a movement of dialogue from the political to the professional level both within and outside the government. The NITI Aayog is well-suited for this.
The strategy prepared by the NITI Aayog would of course have to be approved by the Union and state governments. How should the strategy be presented — as a medium- term plan or as a set of directions for policy and public spending orientation? Perhaps at the present stage, the latter option may be more useful, particularly to correct the “targeting without planning” tendencies that are being pursued for political mileage.
The most useful product of the NITI Aayog formulated medium-term strategy will be qualitative and quantitative goals. An Action Plan will translate these into more specific projects, programmes and policy reforms. These will be primarily the responsibility of sectoral ministries at the Union and state level. The NITI Aayog must exercise some oversight to ensure coherence in the formulation of these grand tactics for development.
The responsibility for translating all this into action at the ground level, or implementation will be the responsibility primarily of the bureaucracy. But it may also require some proselytisation amongst other sources of power and influence like corporations and local authorities. This four- step system does not mean that everything will work out as planned any more than it does with military strategy.
The simple point about this four-step approach is that it helps everyone from the prime minister downwards involved in development to know what we are aiming at and why. This in essence is the real job of the NITI Aayog.