Column: Chinese planning lessons for Modi

Aug 21 2014, 01:44 IST
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SummaryGoing the way of China’s NDRC would create a body second to only the PMO, senior to most ministries

The National Development Reforms Commission (NDRC) in China seems to have influenced Indian Prime Minister Narendra Modi’s decision to replace the Planning Commission with a similar body. Before such an entity is up and running, it is useful to take a closer look at the influencing agency itself.

The NDRC in China replaced the State Planning Commission from 2003. It has since functioned as a macroeconomic management agency, reporting directly to the Chinese State Council. The Commission performs a huge array of functions across twenty-six departments. In this respect, it is almost as large and diverse as India’s Planning Commission that has thirty-one departments.

The NDRC is organised into departments reflecting strategic priorities of the Chinese government such as regional economy, rural economy, climate change, fiscal and financial affairs, laws and regulations, policy studies and economic reforms. While some of these reflect the sectoral priorities of the Indian Planning Commission too, the NDRC has much greater thrust on industry and investment, which is evident from its divisions on industry, basic industry, hi-tech industry, fixed asset investment and foreign capital and overseas investment. Along with industry and investment, the NDRC is equally focused on regional development through the departments of regional economy, western region and northeastern region. Resource conservation and climate change are its other major priority. Unlike India’s Planning Commission, it has a specific division on prices.

Interestingly, the NDRC does not focus on health and education, at least not through separate divisions. Nor does it, in any way, act as an interface between the Centre and the provinces, as the Planning Commission does. But it has extensive review and approval powers, particularly for industrial investment proposals.

Apart from the obviously larger focus on industry, investment, macroeconomic policies (including reforms) and emerging issues (climate change, regional disparities), the NDRC China has three major functions. All these three functions set it apart from the Planning Commission.

First, the NDRC is the key agency in deciding the country’s strategic policies on natural resources. The National Energy Administration (NEA) is located in the NDRC. The NEA not only formulates energy development plans and policies, it also contributes substantively to R&D activities in the energy sector as well as taking the lead in fixing energy pricing and finance. The NDRC also manages China’s strategic petroleum reserves. In addition to energy, the State Grain Administration in the NDRC prepares policies for long-term macro-management of grains in the

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