Decentralised Planning

Kumarappa like his master and mentor, Gandhiji, is a many sided personality, in his deep grounding in spiritual values, in putting into action the theories and beliefs he developed,. in seeing economics in which he was trained to a high level of competence as only one facet of the total life of the human personality, the ongoing community and a developing society. One of his many aided beliefs concerncd decentralization which covered all aspects of life, including the economic.

Kumarappa begins by defining an economic order, as a system which discharges from essential functions.

  1. It should create wealth as efficiently as possible.
  2. It should distribute wealth widely and evenly.
  3. It should supply the needs of the people before comforts and luxuries are catered for.
  4. It should be conducive to peace and harmony of society.

Applying these four functions to Decentralization, the he derives five corresponding principles.

"1. Where there is scarcity of capital... the only forced salesmanship. possibility is decentralization.

  1. Where there is plethora of labour, or in other , unemployment or under employment, we shall - wide scale". be increasing the malady by centralization.
  2. Diversity and variegation is the very essence of decentralization. Where this is needed no machine can compete with hand work, more specially where the hand work has to be the expression of personality.
  3. If democracy is to be attained decentralization lays the required foundation ... centralization is the grave democracy.
  4. Where raw materials and markets are in the proximity of the producing centres, decentralisation methods will serve well".

He then sets forth the five advantages that follow from decentralization

  1. Decentralization makes for a more even distribution of wealth and makes people tolerant.
  2. The process of production includes distribution of wealth also, as a large part of the cost goes to pay for labour. Better distribution of purchasing power leads to effective demand and production is directed into a supply of needs as the supply here will follow demand.
  3. As each producer becomes an entrepreneur, he gets plenty of scope to exercise his initiative. With the responsibility of the business on his shoulders, business like methods and habits will be formed. When every individual develops himself, the average intelligence of the nation will increase.
  4. The market being close to the centre of, production, there is not much difficulty in selling goods nor have we to create an artificial market for forced salesmanship.
  5. Without centralization of either wealth or power there can be no disturbance ofpeace on a large nation- wide scale”

Applying these principles and advantages to of planning (and its symbiosis with Nature), he arrives at the conclusion that "man's life as a whole has to be planned. Such planning of life can be ahimsic... We have to keep our eyes not on the material side of life but on all that makes human life worth living, the development ofhuman personality ... Proper planning of life is imperative ... Planning to this end (the development of the human personality) implies the formulation ofa norm towards which we should work ... This involves that we cooperate with nature and arrange to maintain the environment in such a forth as will guarantee its working at its best ... This norm is set by nature and man's part is to study and understand natures requirement and pay heed to it... The conditions and environment for the full growth ofthe faculties of man that have to be ensured are the primary end of planning. Every individual has to have enough whole some and balanced food, sufficient clothing to protect the body from changes in weather, adequate housing accommodation, full opportunities for training the mind and body for life, clean surrounding to safeguard health and ample facilities for human intercourse, economic production and exchange. Such then are the planner's objectives. Beyond these all other accomplishment should be left to the initiative of the people themselves. Only then will they have room to afford them chances of exercising their free will and their scale ofvalues, which would make their lives, not mere existence, but some thing worthwhile and that will produce a culture as a consequence, which will be lasting and will be a definite contribution to the progress of mankind"(1).

 To Kumarappa, these facets of decentralisation and decentralised planning were derived from his total identification with Gandhiji and his doctrine of truth and non violence'(2) , from his studies on consumption, production and trade(3)starting from the survey of Matar Taluka, Kaina district which he directed and from which he derived practical conclusions and advise on agriculture and for farmers that they "would do well to aim at being selfcontained rather than aspire to enter international markets. They should produce foodgrains and fodder and cotton for home consumption instead ofraising money crops for export trade''(4), and from the further lessons relating to land, forests, manure, management, water, irrigation and animal husbandry, the 18 village industries — all of which for him were inter—related: "When we plan with agriculture as the pivot ofhuman economic activity all the activities mentioned above fit into their own socket. Ifyou raise paddy you have to debunk it before eating. If you grow wheat, you have to grind it into flour: when you produce oil seeds you need not send them to distant mills but have them pressed into oil in local ghanies and use the oil. That is how the work done by these sanghas will help us and fit into the new economy"(5)

 On decentralisation and decentralized planning, I have quoted from Kumarappa rather extensively for several reasons: first any summary of what he says will not capture the various nuances of his thought. Second decentralisation and decentralised planning is for him associated with Ahimsa and is the only way to avoid violence on a national or international scale: third both must comprehend both the technical aspects and spiritual aspects ofliving: fourth only decentralized planning can ensure human centred - as opposed to material based planning: fifth decentralised planning for him ensures the symbiosis of man and nature, what we have come to call today as sustainable development, which we will be working on during the coming year culminating in the international forum in 4 January 1993, sixth how decentralisation and decentralised planning which we today call planning from below make possible decentralisation ofpolitical structures and provide the only firm base for non violent democracy: and finally to demonstrate rather simply but vividly how far away we are from the portrayal ofdecentralised living and planning that was a part of Kumarappa's thought and life of action.

 Decentralisation and Decentralised Planning Today

Today every aspect of life political, social, and cultural and economic - is centralised and centrally directed. This has been building up over the past two decades. We have come to accept the claim that political structures are meaningful only when operated from and by the central government - the central cabinet, the parliament and the central government officers. The division of powers between the federal centre and the states set forth in the constitution has been gradually eroded and every year more and more powers have been transferred from the states to the centre. Even the carefully and cautiously worded Sarkaria Commission Report calls attention to this centralisation and the harm it is doing to the people, the country and the government(6). This anti- decentralisation trend is also to be seen in the relations between the state government and the panchyat raj institution in the states. Today only four states have elected local level political institution functioning. In social development, also, both the initiative and funds for all social activities - whether it be women's development, or child care, or provision for the aged and handicapped and above all programmes for the backward' sectors rests with the central social welfare ministry. The most serious and in what I have quoted from Kumarappa's views on decentralisation and the flowering of culture as the anti thesis is the gradual centralisation ofthe cultural life of the country with central ministry of culture, through its various activities, culminating in the cultural utsavas, which it organises periodically at great cost to the country and little benefit in terms of cultural development. That is but natural because culture is something which belongs to emanate from the people and can never be appropriated by authority'. In the economic area, everything is centred in Delhi in terms of administration and finance by the central cabinet and the ministries, and in terms of planning by the Planning Commission which was originally set up by Pandit Nehru to coordinate and guide the development of the country. However the Planning Commission has become a monolithic organisation under which every facet of development planning belonging to the states for planning and directing their own development as envisaged by the constitution is appropriated by it. Further in all development planning at the sub states levels — the mandal, the block, the panchayat — all decisions are made by Delhi or the state government. That is when it comes to depriving these local village level bodies of the authority, power and resources to plan and decide their development in agriculture, in animal husbandry, in land management and water use, in village and small industries, in primary education, in health care and provision of assured and safe drinking water, both the centre and the states are united in setting their face against any form of decentralisation to the village organs. In plan after plan, there are eloquent chapters on decentralised planning, planning from below' which has also been the subject of innumerable circulars and communications to State Planning Commission. But the states noting that the Central Planning Commission has not allocated to them any of the powers set forth in the constitution just ignore all these communications and directives.

As a member of the Tamil Nadu State Planning Commission, and as an Adviser to the Central Planning Commission, I have repeatedly protested against this trend. The latest occasion was when I worked in the State Planning Commission in formulating the draft VIII Plan, taking particular responsibility for the sectors on Education, Science, Health and Forestry and to my horror I found that the draft was subject to detailed review by the Central Planning Commission's working parties on education, sciences, health etc by persons who know nothing about the conditions in the state. There was the start of a let up on this detailed procedures for review of the Technical sections of the State Plan by the Central Planning Commission, for which an army of state officers were taken to Delhi. This was not only procedurally anti democratic and questionable, not only productive ofno substantive result because what came out at the end of each working party review was to substantially confirm the plans made in Madras, it was also wasteful of the country's scarce resources, as on air travel fare alone several lakhs of rupees were spent every year because this exercise was repeated on both the Five Year Plan and the Annual Plans. As just noted there seem to be some let up in this tight centralized planning procedure in 1989-90, but now when the VIII Plan is being (10) reformulated inspite of the concept of indicative planning being seemingly accepted, the old review procedures has started up again and the same army of officers from the state government have gone to Delhi to explain and defend what they have drafted. Incidentally, indicative planning, which I know about at first hand because I was working for over 20 years in its place of origin, France, is not decentralised planning in relation to various levels of government, it is planning aimed at giving an elbow room to the private sector, indicating to them the targets to be aimed at — and advising on the methods to be followed to attain them. Thus over the 7 plans, all planning has gradually been centralised in the Central Planning Commission. As admitted by the 1990 Approach to the Eighth Five Year Plan this centralized planning is one of the contributory causes for the serious crisis in which the Economy is caught today.

 The crisis in the Economy Today

 The most obvious facet of the failure of the centralised system of planning is the stagnation, ifnot actual increase, in the number of people living in poverty in the country. We should note the sad and perplexing fact that there is no agreement among the concerned bodies on the estimate ofthe number of the poor. The government estimates that the poor number 210.8 million in 1989-9012 , the World Bank's estimate is between 322 million and 13 521 million , the Baroda based ORG's estimate is 450 million'', my studies show that our poor number 400 million'5. One common factor to all these varying estimates is the large number of our people living in poverty. What is even more disturbing is that all estimates except that of the govefnment show the number increasing over time. This is due to the fact that apart from the plan for poverty alleviation being conceived in Delhi and operated from there, the numbers who are lifted above poverty every year are slightly less than the growing number of millions born into the poor families.

A second equally disturbing result of our centralised planning, and to some extent of our centralised planning ignoring the facts, is that the numbers of unemployed and under employed are known only with regard to workers involved in the organised (factory) industrial sector. The numbers unemployed and under employed in the rest of the unorganised sector ofthe economy namely agriculture, animal husbandry, fishery, unregistered small and tiny industry, artisans, all of which amount to 85 per cent of the economy, employing 90 per cent of the workforce is worked out using the system of exterpolation and to some extent guessing. The facts of the employment scenario which characterise our system ofcentralised planning are: i)The rate of growth of the industrial sector has been around 8 per cent in the 1980s, while the employment growth has not only not kept pace with growth of labour force, but has actually declined from 2.8 per cent in the 70s to 2.2 per cent and 1.51 per cent in the 80s, with both full time unemployment and under employment growing by16 30 per cent in the 80s (from 2.77 per cent to 3.77 per cent) The Planning Commission estimates that for the next 5 years (the Eighth Plan) we will have to provide employment for 28 million who are the unemployed backlog from the past 5 years (the Seventh Plan) plus 37 million who will be entering the labour force during the 'next five years (Eighth Plan). The Planning Commission points out that the provision of employment for these 68 million people in the next five years calls for an economic growth rate of 10.5 per cent per annum (which is about double of the growth rate of the economy in the last five years) (17). This kind of centralized planning leaves us in a dilemma on this major issue of employment — which is the solution to our problems of poverty and destitution as Kumarappa saw it(18)

The other aspects of the crisis that we are involved in, which is in part, an outflow of our centralised system of planning is inflation. Inflation was running at an average of 5 per cent till 3 years ago, but has now reached to 15 per cent. This estimate of the rate of inflation is based on the index of wholesale prices which is mainly of concern to the government in relation to its large purchases, DA payments, and to large and medium industries. What concerns the 40 to 50 per cent poor of the population and the lower middle class consumers is the inflation rate shown by the consumers price index, which has always been double the rate of the wholesale price index. This means that our poor and our harassed housewife is paying an average of 30 per cent more on the vegetables, rice, wheat and other cereals, clothing that are needed for living.

One contributing cause to the sharp rise in the price of vegetables, rice, tea, cotton yarn etc is the fall out of the balance of payment problems and the trade deficit that we face. And so we are being forced to export all that we can, including the necessities that are in short supply, and are needed by our poor consumers. This export drive is one cause for the price rise: States like Tamil Nadu have appealed at the December 1991 National Development Council meeting in Delhi to stop the export of rice to the gulf countries and those of vegetables and cotton yarn as its immediate effect is to raise their prices. Here we should recall Kumarappa's clear directive that only what is surplus, which he called "the natural surplus", only the residue after what is consumed by the people, should be exported'''. We are today flying in the face of clear advise and so are playing the price in inflation.

 One more issue which is an indirect offshoot of our centralised system of planning needs brief reference. We are becoming bankrupt as a government with an internal public debt at Rs.237,692 crores in 1989-9021. We have also emptied our foreign exchange assets and are deep in external indebtedness of Rs.100,000 crores, occupying the 4th highest place of foreign indebtedness among the countries of the world'. These factors have led us to devalue the Rupee by 20 per cent, invite foreign investments, giving them 51 to 100 per cent equity rights and decontrolled our enterprises placing the small and tiny industries in jeopardy.

Decentralised planning

Against this sombre background that our economy and people face, there is need for 5 types of action which decentralised planning involves:

First we should immediately transfer the responsibility for planning and operating the development programmes, as indicated earlier, namely a)the beneficiary oriented poverty alleviation programmes (what we have come to call by the acronyms - JRY (combining NREP and RLEGP),I IRDP, TRYSEM, DPAP, DWARCA etc,and b)the general development programme of soil and moisture conservation, local flood proofing works, minor irrigation, small and tiny industries, primary education, health and nutrition, drinking water, to local village, level institutions. It has been estimated that the alleviation of poverty is to the extent 40 per cent be through the first group of beneficiary oriented programmes and the balance of 60 per cent through the normal development programme.

 Second the transfer should be to villages or block panchayat and Mandal level elected representative institutions. This is already the case in four states: To make this operational in all states, the necessa constitutional provision which is under consideration by Parliament should be speedily completed and should include the Finance Commission under Article 280 (3)(a)—(c) of the Constitution allocating resources to the panchayat raj institutions as it does to the central ministries and state governments. There is one prior condition to this proposal to transfer the two groups of functions listed above to the elected local level bodies. And that prior condition is indicated by the RBI decennial surveys in 1960, 1970, 1980' –Of the distribution of rural assets which show that 39 per cent of rural households own 5 per cent of a rural assets, while the top 5 per cent own 49 per cent of this. In order to avoid the decentralised (transferred) programmes falling into the hands of the well to do, asset owning minority, the rural clique, the land reform programme should be implemented fully and speedily, as West Bengal has done, as a result of which 70 per cent of the elected representatives of the local bodies are small and marginal farmers and landless labourers. Each village or block panchayat or mandal level body will then use the resources allocated to it by the Finance Commission to identify the poor and devise a programme to meet each poor family's needs and condition. There will be real poverty reduction because it is a plan devised and executed by the poor.

Third in place of the overall inappropriate national plan and state plans with their standardised schematic projects, each local body will device its own local area plan which will first aim to create and increase employment, production and income: only it will know how this can be done in the village, how the skills of each villager, man and woman, can be used for socially gainful, productive work, in place ofthe relief programmes which build roads which are washed away in the next rains, or are given cattle or loom which is sold at the first opportunity. Instead local skills will be strengthened and conserved and the decentralised local plan's resource base will provide life support - in food, water, fodder, fuel, fibre, and raw materials for artisans and builders. This is where development and the life support system are joined harmoniously, involving no conflict, as today's large scale farming or industrialisation involve.

Fourth, decentralised local area planning must address itself to both the negative and positive aspects of decentralisation. In agriculture and rural assets generally, there has been taking place and continuing onto today, an extreme form of decentralisation under which the family farm and other property has been and is being divided and sub divided in tinier and tinier fragments. The local level plan must help in consolidating these divided pieces of land which because of their smallness and distance from one another are becoming uneconomic for cultivation. Consolidation of land holdings should be a prime aspect of local level village plans as Punjab, Haryana, and West UP have demonstrated. Second on the positive side, the local level plan must be based on the Gandhian finding carried forward by Kumarappa that the only way of generating and increasing employment in this capital scarce country is through small industries which now are grouped under three heads: a)small industries including ancillaries aimed at efficiency and cost effectiveness and the promotion of output, employment and exports: b)village industries whose basic list is still the 18 set forth by Kumarappa" aimed at promoting rural industrialisation and employment especially of the weaker and backward sections of the population: and c) tiny units which now cover both manufactures and the much larger field of services (services contribute 39 per cent of our total income today). The Khadi and village industry commission units comprise all three groups, characterised by small average assets per unit and very small value added, with low capital output ratio and low capital - labour ratio to meet the condition of our capital scarce villages.

 Finally decentralised planning and local area plans call for active involvement of Sarvodaya workers who are grass root activists and other such voluntary groups which go by other names. This fifth and final aspect of decentralised planning is decisive because the village plans and their execution should not be left only to governments alone, not even to elected local bodies. There are three specific and irreplaceable contributions that only such voluntary groups can make to the effective operation of flexible local area planning, to what Kumarappa called "villagism'. First they can bring professional skills as social scientists, engineers, agronomists, hydrologists etc to the operation ofthe local area plan. This will fill out with technical content what the local village committees has decided as to what it wants. Second this group through its living first hand contact with the marginalised and deprived sections in the village will bring their needs and aspirations to the attention of the elected representatives and not allow them to be overlooked. This the CPM cadres in West Bengal are doing. Third they will have to act as watch dogs to safeguard the essence of village level planning, so that higher level (state and central government) agencies stay within the limits that decentralised planning imposes on them. These government agencies will take time to adjust themselves to non direct involvement in formulating and implementing their own schemes which they have been doing now for over 40 years under the central system of planning. Will the Sarvodaya workers cast aside their preoccupation with their "Gandhian purity" and be prepared to soil their hands in the programme and execution of local level plans, as Kumarappa did all his life, which also made him keep out of all government involvement. Can we follow his footsteps as our small contribution to decentralised planning?


  1. The Economics of Peace: The cal Ise and the Man pp79,81,82,98 and iii, Gram Udyog Village: Maganwadi - Wardha 1952.
  2. J.C. Kumarappa: Victorious living: Kumarappa Publication, Madras 1989.
  3. J.C. Kumarappa: Gandhian Economy and Other Essays: AIVIA, Maganwadi, Wardha, 1949. 4. A survey of Matar Taluk: Director J.C.Kumarappa, Gujarat Vidyapith, Ahmedabad, 1931.
  4. J.C. Kumarappa: An overall Plan for Rural Development, Akhil Bharat Sarva Seva Sangh, Kashi 1948.
  5. Report on Commission on Centre-STate Relations: (Sarkaria Commission), Government of India Press, Nasik 1987 and 1988.
  6. Annual Report 1990-91 Department of Welfare, Ministry of Welfare, New Delhi 1991.
  7. Annual Report 1990-91, Department of Culture, Ministry of Human Resources Development, Government of India, New Delhi 1991.
  8. Fourth Five Year Plan 1969-74, Chapter I paras 6.
  9. Planning Commission; Government of India, New Delhi,1970. Draft Fifth Five Year Plan 1974-79, Chapter IX paras 9.22 and 9.24 and 9.27, Planning Commission, New Delhi 1981.
  10. Sixth Five Year Plan, Chaps . D-acer Yil I paras 28, 8.25, Planning Commisscr_ of India, New Delhi, July 1991. Seventh Five Year Plan 1985-199:. Chapter XXI paras 21.20 -21.29, Planning Commission, Government of India, New Delhi 1965. 10. Statement Deputy Chairman Planning Commission: Delhi, July 1991, and Madras, September 1991.
  11. Approach to the Eighth Five Year Plan, 1991-95, Planning Commission, Government of India, New Delhi, 1990.
  12. Answer to Question 242 , April 28, 1990 from the Minister of State for Planning, Lok Sabha, New Delhi. Annual Report, 1989-90, Ministry of Programme supplementation, Government of India, New Delhi 1990.
  13. World Bank: India, Poverty, Employment and Social Services, Washington 1989.
  14. State of the Economy: ORG Baroda, December 1991. World Bank: World Development Report 1990 Washington 1990
  15. Malcolm S. Adiseshiah: Mid Year Review of the Economy 1990-91, Konark Publishers, New Delhi 1991.
  16. NSS 27, 32, 38, 43rd rounds CSO New Delhi.
  17. Employment: Past Trends and Prospects for 1990s. Report of working group, Planning Commission, New Delhi, May 1990.
  18. J.C.Kumarappa: Swadeshi: Shri Gandhi Seva Ashram OEC Himachal Pradesh 1965. J.C. Kumarappa: Economy of Permanance: Sarva Seva Sangh, Prakashan, Rajkot. Varanasi 1945
  19. Vide J C Kumarappa: Gandhi-an Economics and Other Essays. J.C. Kumarappa: Planning for the People by the people, Vora and Co, Bombay 1954.
  20. Economic survey 1989-90, Ministry of Finance, Government of India, 1990.
  21. Annual Report: Reserve Bank of India, 1988-89, Bombay 1991.
  22. Reserve Bank of India: All India Debt and Investment Survey, Bombay 1962, 1972, 1982, Bombay.
  23. Ibid: J.C. Kumarappa: An overall Plan for Rural Development Section II, Part II.