NITI Aayog – Three Year Action Plan

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Benefits of Three Year Agenda over Five Year Plans:-

  • The Three Year Action Agenda has replaced the five year plans – an economic approach adopted by PM Nehru – which became history when the 12th Plan, the last of the Five-Year Plans, came to an end on March 31.

The benefits of this move are:-

  • In a country as big and diverse as India, centralized planning could not work beyond a point due to its one-size-fits-all approach. Thus it was time to come out of the legacy of five-year plans which are reminiscent of centrally planned economies like the Soviet Union and Romania.
  • Better accountability with responsibility: The cycle of five year plan and the term of government are not synchronous. Thus if there is a new government in power then it will be implementing the priorities set by earlier government and the previous government is not held accountable for the targets set in the five year plan. With the three year cycle, government is held more accountable for its action on the plan.
  • Equal focus on present and future: By making this three-year action plan a part of a seven-year strategy paper and a 15-year vision document, government can focus on short-term goals which can be changed from time to time in a dynamic environment with eyes firmly stuck on the long-term policy objectives.
  • Combines domestic aspiration with global aims: According to NK Singh (member of erstwhile planning commission), the new format of three, seven, fifteen combines domestic aspiration with global aims as the fifteen-year vision is coterminous (to a certain extent) with the Sustainable Development Goals (SDGs).
  • With the old distinction between “Plan” and “non-Plan” expenditure gone, India is now on the road of becoming a full-fledged market economy. Thus we don’t need detailed planned targets, rather we just need to set broad priorities.
  • It will focus on shorter goals which can be reviewed after every three years to ensure that they are relevant to the demand of time.
  • They will also be aligned with the Finance Commission recommendations as the finances would be provided through the Finance Commissions.
  • Flexibility: The document is not required to be approved by the Union Cabinet which also does not make it binding for the government and its ministries and departments which was in the case of five year plans. Also the three-year strategic paper would not be as comprehensive as the five-year plan and is not expected to go into minute details of each sector.

Important Recommendations:-

  • NITI Aayog for abolishing 2% Custom Duty on mobile circuits The Budget had imposed a 2% special additional duty (Custom duty) on imports of populated printed circuit boards (PCBs) used for mobile phones, as a measure to push the Make in India campaign.
  • The duty is aimed at providing ‘adequate protection to domestic industry,’ so that local manufacturers of PCBs get an incentive of sorts. Handset prices were expected to rise by over 1% owing to the duty.
  • Calling for a ‘low or no duty regime’ for key inputs of electronic products, 2% customs duty on PCBs would provide modest protection to domestic manufacturers, but hurt the mobile phone manufacturers.

Implication of rolling back of custom duty on manufacturing:-

  • In its three year action plan 2017-2020 NITI aayaog has noted “At this stage, it is best for us to let mobile phone manufacturing flourish and not be handicapped by tariffs on its components. As this happens and we begin to export mobile phones in large volumes, the way to the manufacture of other components will be automatically paved,” thus it is required to return to zero duty on PCBs.
  • The world market in electronic products is $2 trillion compared with only $65 billion in the domestic market. Therefore, an aggressive export strategy is essential to credibly prepare ourselves for the fourth Industrial Revolution. To increase India’s electronic manufacturing volumes and create jobs in the sector, we must address the high costs of inputs, reduce the administrative burden and provide appropriate incentives to producers.
  • Though India has the potential to become a large electronics manufacturer and exporter due to its large labour force, a growing domestic market and proximity to other economies on the electronics value chain, the sector accounted for just 3% of India’s merchandise exports in 2015.

Less Teaching & More research in Universities:-

  • The goal of Make in India is to make India a hub of Manufacturing, Design and Innovation. The innovation part shall require a transformation in current system governing Universities. Universities are nursery of Innovation like Universities in USA are pioneer in research and Innovation. Success of higher education system in Innovation sector rests on less regulation, autonomous governance, transparency and outcome.
  • NITI Aayog in its recently released three Year Action Plan has highlighted the issue of ensuring that investments in research better translate to more products and bolster “innovation and development”. It has recommended that faculty at “world class” institutions prioritise research and be allowed to “reduce their teaching responsibility,” if required.
  • This will give faculty and researchers required Time and Space to dedicate towards Research and Innovation and enter into collaboration with Private sector to serve their specific needs. More Innovation means more new form of Niche Products to serve local and Global needs, and higher manufacturing activities.

Other Recommendations:-

  • Such universities also ought to be allowed to recruit research staff from abroad and be encouraged to compete for research projects from industry. The so-called ‘world class universities’ are part of a government-outlined plan to raise funding for 10 public and 10 private universities and mould them into institutions that rank among the world’s best.
  • The NITI Aayog also pitches for a new ‘National Science, Technology and Innovation Foundation’ headed by a distinguished scientist. This will coordinate with science and technology departments, ministries, governments and private sector bodies and deliberate on national issues and recommend interventions.
  • Universities ought to be ranked according to metrics such as teaching, research output and funding won from the private sector.

Conclusion:-

  • The above inputs to reduce custom duty and enhance innovation have a common thread to boost manufacturing and increasing rate of economic growth. Both measures are required within the holistic framework as envisaged in Action Plan. However, the quantum by which Manufacturing will increase due to reduction in custom duty and how well Universities become innovation oriented depends majorly on time bound implementation.
  • Thus to ensure that it doesn’t meet the same fate of the five year plans (targets which remain on paper), NK Singh committee has recommended the following measures:
  • Firstly, in the case of five year plans, Parliament gave little time in analyzing the broader issues of the five-year plans. Thus we should constitute a separate parliamentary committee on planning, which could meaningfully engage with the NITI Aayog’s policy prescriptions.
  • Secondly, for fostering cooperative federalism in true spirit, we should create state level bodies on the line of NITI Aayog to ensure that the state-level policies are in sync with the “Three Year Action Agenda”.
  • The beginning is in right spirit, but only time will tell that how many of its proposals are actually implemented and most importantly how effectively the Trimurti’s – three year action agenda, seven-year strategy paper and a fifteen-year vision document are linked together to present a holistic vision for the country.