Economics

Multi-level Planning: Planning in India

Multi-level Planning

After discussing the Bombay Plan, the Member of Parliament Local Area Development Scheme (MPLADS), today we’d be continuing our discussion on Economic Planning in India, by discussing the Multi-Level Planning in India.

The Multi-Level Planning in India, just like the MPLAD scheme, is based on the principle of democratic decentralization, allowing for the process of planning at the lower levels of administrative strata, i.e. the state level, district level, block level, and the local level. So, multi-level planning basically establishes a link between economic development and democracy.

Multi-Level Planning
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Multi-Level Planning in India

The demand for multi-level planning was initiated by the States in the late 1950s, on the recommendations of the Mehta Committee report published in 1957. The States opposed the centralized nature of planning, as the majority of economic planning for the entire country was done by the Centre, and the States had no significant stake in determining their economic development agendas. And due to the top-down approach of planning, there were some problems such as the ignorance of local problems, needs, and aspirations; non-inclusive development; insensitivity towards local environmental issues, etc.

Multi-level Planning
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What is multi-level planning?

The entire planning process can basically be divided into two types, ‘single-level’ and ‘multi-level’ planning.

The single-level planning implies that the nature of planning is centralized, i.e. all the major plans are formulated and all the important decisions are taken by the Centre at the national level, and the only function of the lower territorial levels is the implementation of those plans and decisions. And this was exactly the process that was followed in the initial process of economic planning for the country after independence, which was clearly evident in the first two five-year plans.

On the other hand, multi-level planning is based on the principle of democratic decentralization, under which the entire country is divided into smaller territorial units, such as the national-level, state-level, district/metropolitan level, block-level, or village-level. In this type of planning, the planning is done for a variety of regions which together form a system and subordinate system. The territorial division is based on the population and size of the country. In the case of such a large, populated, and diverse country like India, the territorial divisions are quite complex.

In the case of India, the territory is divided into five stages or strata, they are:

  • First Strata: Centre-Level Planning
  • Second Strata: State-Level Planning
  • Third Strata: District-Level Planning
  • Fourth Strata: Block-Level Planning
  • Fifth Strata: Local-Level Planning

Multi-level planning ensures the participation of the local people in the planning process and takes into consideration their problems, needs, and aspirations which ultimately makes the planning process more effective and sensitive to the local needs.

In this system, the higher-level regional plans, i.e the plans at the national or state level, provide a framework for the plans at the local level, i.e. at the district or block level.

The 5 strata of Multi-Level Planning in India

Center-level Planning

At the Central Level, the planning is done for the entire country. They involve the Central Plans, which are basically those plans which are formulated and financed by the Central Government. These plans have been continuously implemented by the Centre and are detrimental to the socio-economic development of the Country. The Central Plans are basically funded by the budgetary resources and extra-budgetary resources of the Public Enterprises.

There are a total of three Central Plans, they are-

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Currently, the nodal authority for planning at the Central level is the NITI (National Institution for Transforming India) Aayog, earlier known as the Planning Commission. The NITI Aayog is chaired by the Prime Minister. The Planning Commission is a statutory body, which was granted constitutional status by the virtue of the 52nd Constitutional Amendment. NITI Aayog issue guidelines to the states regarding the perspective of planning, regional and district level planning, and coordination of plans.

State-Level Planning 

The process of planning at the state level was initiated in the 1960s. They made plans for a term of five years and their plans were in line with the concerned five-year plan of the Centre.

The planning mechanism at the state level is similar to the central level. Every State has its respective Planning Body, which works similarly to the national-level planning body, with the respective Chief Ministers being the de-facto chairman of the state-level planning body.

Multi-level Planning
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The state-level planning bodies/boards are responsible for the formulation, implementation, and monitoring of the plans at the state level. They’re also responsible for the coordination of development plans of different ministries and districts. The plans formulated by these bodies are connected to the plans formulated by the Planning Commission. However, under the federal setup, the state-level planning commission has autonomy in subjects that are mentioned in the State List, in the 7th Schedule of the Constitution.

Planning at the state level has further enhanced the principle of democratic decentralization, as the State is in a better position to plan and take development initiatives keeping in mind regional needs and aspirations.

District-Level Planning

The concept of district-level planning was initially emphasized in the Community Development Plans in the 1960s, the actions towards initiating planning at the district level were taken in the Third Five Year Plan (1961-66). Moreover, the failure of the Community Development Plans (which were based on the principles of democratic decentralization) provoked the introduction of other alternative methods of planning based on local-level participation.

Similar to state-level planning, the planning at the district level was initiated in the 1960s, through the district-level planning boards. These boards are supervised by the respective Zilla Parishad and its chairman. The formulation, implementation, and monitoring of the plans are supervised by the District Planning Officer (DPO) or the District Magistrate (DM) of the respective district. And the District Boards consist of other elected representatives, who are in the best place to plan for the development at the district level.

Multi-level Planning
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The plans at the district level are implemented via the municipalities and corporations in the urban areas and via the blocks in the rural areas.

Block Level Planning

The block-level planning was initiated as a part of the district-level planning, which had the district planning boards as the nodal authority. However, these development blocks were initially established to supervise the implementation of plans under the Community Development Programmed during the First Five Year Plan.

Initially, each district was divided into numerous blocks according to its geography and demographics and each block consisted of 100 villages, with a population of roughly 60000. And these blocks are a vital part of the micro-level planning in the country.

There are 7 stages of planning at the block-level, they are:

  1. identification stage
  2. resource inventory stage
  3. formulation of plans stage
  4. employment plan stage
  5. areal and layout of plans stage
  6. credit plan stage
  7. integration and implementation stage

The block-level planning further emphasizes the principle of participatory democracy and the participation of the local population in the process of planning, mobilizing local resources, and the implementation of the development schemes. Moreover, block-level planning also absorbs local surplus labor. Block-Level planning also ensures the optimum utilization of resources, further emphasis on local problems, needs, and aspirations, and better identification of the target groups.

Multi-level Planning
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The major areas of planning at the block level are:

  • agriculture
  • irrigation
  • animal husbandry
  • processing units of agriculture products
  • soil conservation
  • small and cottage industries
  • local-level infrastructure
  • water supply
  • health
  • education
  • sanitation
  • welfare programs
  • transportation
  • formal credit growth
  • removal of socio-economic disparities

Local/Panchayat Level Planning

By the early 1980s, plans were formulated, implemented, and monitored at the local level via the Blocks and the District Planning Boards as the nodal agency. But however, this system wasn’t very efficient as there was visible socio-economic differentiation among the population at these two levels. Hence, the process of planning in India was further decentralized and now involved planning at the:

  • Village-Level Planning
  • Hill Area  Planning
  • Tribal Area Planning

The Panchayati Raj has been given constitutional status through the 73rd Constitutional Amendment Act, 1992. Through the 73rd amendment act, the Panchayat/Gram Sabha has been authorized to formulate plans for socio-economic development at the local level and look after the implementation of these plans. The 11th Schedule of the Indian Constitution exclusively mentions the subjects over which the Panchayati Raj has powers of planning and implementation. However, the actual transfer of subjects from the State-List to 11th Schedule depends upon the discretion of the State.

The members of Village Panchayat are elected every five years by the Gram Sabha, which is responsible for the planning and implementation of the local plans at the village level.

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And in order to ensure the systematic and adequate flow of funds, the 73rd Amendment has provided for the setting up of the State Finance Commission (SFC). The State Finance Commission reviews the financial position of the Panchayats every 5 years. Moreover, the commission also makes recommendations about the principle governing the distribution of revenues between the State and the Panchayats, and the determination of the grants-in-aid to the Panchayats from the Consolidated Fund of India.

Moreover, the Village Panchayats also have a special responsibility of:

  • promotion of rural industries
  • promotion of agriculture
  • maintenance of common grazing grounds
  • maternity care for women
  • women and child welfare

The Village Development Officer (VDO) and the secretary are responsible for the implementation of plans at the Panchayat level, and they are supervised by the Gram Sabha, headed by the Gram Pradhan. The Gram Sabhas also have the responsibility of identification of the eligible people to be benefitted under the various anti-poverty schemes by the Centre and the States.

Image by- The Indian Express
The Shortcomings

The idea of Multi-Level Planning was based on one principle, democratic decentralization. The main motive of the multi-level planning system was to guarantee participation to the local population in formulating and implementing plans for local development. There were great expectations from this initiative, however, the results surely did not meet the expectations. This was mainly because there were many loopholes and flaws in the system, which have somehow overshadowed the noble principle on which the idea of multi-level planning is based upon. The flaws in the system are:

  • It could not promote people’s participation in the formulation of the various plans. The basic idea of the model was that once the local level plans would be handed to the blocks, the blocks will make their plans, and once the blocks hand over their plans to the districts, the district-level plans would be formulated. And the same would apply to the state plans and finally the five-year if the Centre would formulate one. And by doing so, every idea of planning will have the representation of everybody in the country at the same time as plan formulation – a special kind of plan empathy would have developed out of this process. But however, expectations were not met and the reality was different. As every stratum made its own plans – lacking the empathy factor.
  • The only plans which were implemented seriously were the Central Plans because the States did not have the adequate financial support to facilitate the implementation of their plans.
  • Before the 73rd Constitutional Amendment of 1992, the local-level bodies in India did not have constitutional status and their existence and functioning were based on the discretion of the respective States. And moreover, as they did not have any financial independence, their funds were always scarce, due to which the plans formulated by them remained only in paper and weren’t implemented.

And it was mainly on account of these very shortcomings of the Multi-Level Planning, that the Government in 1992 was compelled to enact the 73rd and 74th Constitutional Amendment Acts. These acts ultimately provided Constitutional status and protection to the local level bodies and made their existence and financial provisions independent of the discretion of the Centre and States.

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