Reforming the reformers

Those tasked with bringing about reform for Pakistan through planning and development have no easy job, but their commitment could make all the difference. In contrast to its glory days of the 1960s and early 1970s, the Planning Commission today confronts a number of issues. The traditional ways of thinking cannot keep pace with the current rate of globalization, there is a lack of coordination between federal and provincial governments, and important planning objectives have been allocated to other ministries, e.g., the Ministry of Finance, thus undermining the role of the Planning Commission and reducing it to a mere custodian of the Public Sector Development Programme (PSDP), when it was designed to serve as much more; as the real brain power behind all government policies, as custodian of equitable growth as economic allocator of resources of the state.

A key ingredient which remains missing among our crop of seasoned planners and policymakers is actual investment in the outcomes of decisions and policies. Let us consider a bit of history: back in 1754 BC, the code of Hammurabi had a law by which if a house collapsed, resulting in the death of the owner, the architect who designed it also had to die. This may sound extreme, but the logic behind it is that it made the architect careful in constructing the house, using the best possible material and building techniques to make it sturdy and reliable. One could say the architect had his own skin in the success and longevity of the building. Thus, when decision makers have their skin in the game, they share in the costs and benefits of their decisions that might affect others, and are more likely to make prudent decisions than in cases where decision-makers can impose costs on others and escape any retribution. Contemporary writer Nassim Nicholas Taleeb sees skin in the game as not just a useful policy concept but also a moral imperative.

Pakistan’s government has repeatedly sought short-term economic management, sacrificing long-term growth prospects. Projects have been preferred to policy, and the projects in question have often been chosen for populist reasons rather than the needs of sustained economic progress. Furthermore, bureaucrats have frequently been transferred between different departments and ministries without regard for their professional experience or areas of expertise, leading to no accountability of their decision-making and no risk of their career growth or promotions being at stake. The Board of Directors of all important institutions are selected on the basis of kinship and PR. They are given lofty amounts for their meetings and they share no burden in the outcome of their decisions; the companies work on a rate of return formula with no stakes. Public sector entities, ministries, PSDP have been frequently used as political tools rather than for their intended purpose. This explains the exorbitant expenditures and the relentless need for donor aid, further corroding policymaking and minimizing the stakes for all involved.

China presents us with a successful example of a planning commission that gets its job done. The National Development and Reform Commission of China has served as the brains behind the country’s strategic economic growth, serving as an active institution with strategic planning capacities. The success of China with the NDRC shows that fiscal decentralization, accountability mechanisms, experimentation, learning, and openness to expertise form the core of any institution that seeks to provide vision and strategic economic planning. Meanwhile, in 2015, India’s Prime Minister Narendra Modi abolished the Planning Commission and established a new body, NITI Aayog. NITI Aayog was disparaged as an ineffective body that is too dependent on the Prime Minister – signaling that the planning body needs to have a degree of independence to function well. These countries’ examples provide us with some direction on how to proceed with reforming the PC, and how not to.

As was pointed out 10 years ago by Khalid Ikram in the IGC Working Paper Revitalizing the Planning Commission, the main problem with the Planning Commission in dealing with the issues it has been facing is not its structure, but the capacity of its incumbents. “As a result of abandoning the training programs of the past and losing the regular connection with external experts, the quality of the Planning Commission staff has noticeably weakened.” Meanwhile, the brain drain Pakistan has been experiencing for decades, combined with declining educational standards, has reduced ‘institutional bandwidth’ and competency levels across government, and this can be seen within the Planning Commission as well. The parliament is almost completely missing in action in terms of debating or giving direction on economic issues. The transactional approach to policymaking has been detrimental to Pakistan’s development, and must be replaced with well-structured and intentional strategy, which should be holistic in nature and not focused on singular project approvals.

In the immediate term, a key reform the Planning Commission must undergo is that of reclaiming its role as the central agent for Pakistan’s economic transformation, for which it must take measures such as

• Revisiting its recommendations for the upcoming budget and bringing them in line with the transformation agenda;

• Working towards modifying existing and forthcoming policies, including tax and tariff structures, so these can aid transformation rather than prevent it;

• Engaging with stakeholders to gain better understanding of how a holistic policy framework can be designed with the aim to use policy instruments to help the country climb the complexity ladder, with special focus on allowing the incentive structure to evolve; and

• Prioritize and facilitate exports to lead Pakistan out of the “debt trap” and towards sustainable export led growth.

Over the long-term, the Planning Commission must strategize to regain its role as the key strategic thinker for the government and the main repository of its economic expertise. This will require the Planning Commission to be far more selective in its planning targets, rigorously prioritizing what goals must be met and which must be provided all necessary resources, and those that are of less importance. Capacity development is another long-term reform, so that policy development can be undertaken by the best trained staff; and outside resources can be liaised with more frequently, such as consultants, think tanks, and universities. Furthermore, working in collaboration with other institutions such as the State Bank of Pakistan, the Ministry of Finance, the Federal Bureau of Statistics to address areas of common concern, such as developing a macroeconomic model and generating a unified set of macroeconomic projections, can greatly improve the quality of decision-making, as stakeholders can have a say in the matters most relevant to them.

For reforming the reformers, there is no shortcut, but rather a need for Pakistan’s best talent to come forward with a genuine mindset towards bringing about change. Cooperation between the public and private sectors needs to be enhanced by bringing together important elements of the government and the private sector, and interaction with the provincial planning departments needs to be substantially increased. Furthermore, we must learn from the experience of countries that have successfully confronted problems similar to those facing Pakistan. Finally, the Planning Commission must continuously upgrade its stock of skills by reintroducing the system of scholarships for study abroad on the lines of the successful programmes of the 1960s and 1970s.

(The writer is a former Member Planning Commission)

Copyright Business Recorder, 2021