[Revision] GS3: Economy-Planning, Budgeting, Resource mobilization & Farm subsidiesDevendra Vishwakarma
- [Block-1] Planning commission (PC) why replace?
- Modi’s NDRC
- Productivity commission
- SriKrishna’s FSLRC
- New Financial sector regulators
- PDMA Debt Management
- PJ Nayak Committee
- [Block-2] Budgeting reforms
- Bud1: FM 4 kharchaa-Paani
- Bud2: Feedback Loop
- Bud3: Curbing fiscal deficit
- FD1: Disinvestment Keypoints
- FD2: Fuel subsidies curbed
- FD2A: Diesel deregulation: benefits of
- FD2B: Modified DBT
- FD3: 10% cutdown in Non-plan Expenditure
- [Block-3] Banking sector
- B1: Why Monetary policy ineffective?
- B2: Urjit Patel’s reforms 4Monetary Policy
- B3: RajanBhai’s monetary policy
- Nachiket Mor: financial inclusion
- Small Banks and Payment banks
- Misc.Short term reforms
- [Block-4] Farm subsidies, buffer-stock, PDS
- MSP, FCI, procurement
- Fertilizer Subsidy reforms
- Sugar pricing (Government intervention)
- National Food security Act (NFSA)
Revision of selected topics for GS3 syllabus:
- Issues relating to planning, mobilization of resources
- Government Budgeting.
- Issues related to direct and indirect farm subsidies and minimum support prices; Public Distribution System
Planning, budgeting and resource mobilization should be seen from three stage economic reforms. (as suggested by Economic survey)
|Short term||Stroke of a pen @individual ministries||MoEF reforms in 100 days.|
[Block-1] Planning commission (PC) why replace?
Structure functions = read from M.Laxmikanth. Planning commission sucks because:
- Achieved >9% GDP growth-rate during 2005-07, thanks to American boom prior to sub-prime crisis, pretty much all nations of world experienced high growth. So 9% GDP did not come from Montek’s magic wand.
- Post sub-prime crisis, failed to evoke the “animal spirit” in Indian economy. GDP going down, inflation going up for 2008 to 2013.
- Reduced poverty by doctoring the BPL-line. Tendulkar line says 27 crore BPL, if we use Ranga line then 37 crore BPL. Planning commission brags reducing poverty line on Tendu’s parameters.
- Toothless body, can’t hold State/union/ministries/departments accountable for failing to achieve targets.
- Hopes that CAG =>Public accounts Committee will take care accountability part. But PAC too is pretty much toothless.
- Failed to implement land reforms. Faulty policies for MSME, industrialization, Factory-labour law problems we saw in GS2 MFG revision note.
- Office manned by Generalist IAS/IES with short tenure; panel members filled with academicians and jholachhap NGOs. Need subject specialists with international exposure like Rajanbhai.
- Designed CSS with One size fits all approach and a few extra crores to NE/J&K/Hill-states and LWE.
- But for long, it did not use pilot projects / sample testing / interaction with states.
- Hence, IAY, ICDS etc. programs failed to show tangible result despite pumping crores.
- Tried to bypass state Governments via NGO-funding, DRDA. Hence States unenthusiastic about implementing Central-schemes named after you know who.
- Only in 2013- reforms done like reducing # of CSS, 10% flexifund to states, direct transfer of money to state consolidated fun etc. But it’s too late.
- Shortcomings in planning commission => new bodies sprung up like PM’s economic advisory council, PM’s project monitering group and so on=> more brains=> more lack of coordination.
- Modi says planning commission (PC) is beyond fixing- just like Gotham city and Delhi city. Wants to replace it with a body similar to China’s National Development reform commission. (NDRC)
- Moily says NDRC good for China but not suitable for federal nation like India. Better restructure PC again by addressing above 13 bullets.
Modi wants to replace PC with a body like China’s NDRC. (or atlest experts say so). Let’s
|Chinese NDRC doing following||India present system|
|Makes macro-economic policy||FM+RBI|
|Approves investment & construction projects||CCI, FIPB and many other bodies @union and state level.|
|Energy & oil policy||Oil ministry, DG Hydrocarbon|
|Looks after Poorer Western Provinces||Separate ministry for NE Development|
|Parent: State council headed by President of China||Headed by PM. Disinvestment in ONGC, CIL etc .|
In short, Chinese NDRC controls pretty much everything, just like a communist unitary Government would want. Hence Moily’s criticism- NDRC unsuitable for Federal India.
- Problem in Environment laws so TSR Subramanium Committee, Problem in railway so Bibek Debroy Committee, problem in IPR so Prabah Sridevan Committee…..such piecemeal approach and firefighting must stop.
- Economic survey says create a separate Statutory body called Productivity commission”.
- To Review laws, regulations, processes continuously.
- Publish report cards of each ministry and department.
- Advanced economies have such bodies.
|NSEL scam||FMC shifted to FM|
|Saradha chitfund scam||Plan to amend Chit fund act|
- Such piecemeal / firefighting approach => scamsters shift base from one sector to another, use technicalities and loopholes to get stay orders & escape.
- Hence we need comprehensive reform in financial rector regulators.
- 2011: Government setups Financial legislative reform commission under Justice BN Srikrishna.
- Gave two type of reforms (1) non-legislative (2) legislative
- Present: dozens of acts for banking, insurance, provided fund, forward market, NBFC etc.
- Srikrishna says repeal them all, and enact a new law “Indian financial code”. (IFC)
- IFC will be a single, unified financial law with precise objectives; clear-cut jurisdictions for fin.sector regulators with adequate checks and balances.