Thursday, March 6, 2014

Why Planning Fails (and ‘failed’) in Nepal?

I stumbled upon a 1972 paper written by Aaron Wildavsky— then dean of the Graduate School of Public Policy, UC Berkeley— and published in Administrative Science Quarterly (Vol.17, No.4, pp.508-528). The title and abstract of the paper caught my attention. Some of the observations and points made then have a striking resemblance to the present scenario, especially the development planning process, and its implementation and ownership. 

Yes, times have changed and a lot of institutional, administrative and regulatory frameworks are in place (they have evolved gradually), suggesting that there indeed has been some progress. But, the speed of the progress, given the amount of resources spent on planning and meeting expenditures, seems to have disappointed the people. Among other issues, what stroke me the most was that the issue about the gap between planned expenditure and actual expenditure is pretty much the same since the very first medium term plan was sketched out on October 31, 1949 (Mohan Shamshere was the Prime Minister then). Most of the plans were short-lived and so were the various forms of planning ministries and councils. It was around 1963 that the present National Planning Commission was created by dissolving the National Planning Council. After almost six decades of planning and despite so many 'reforms' to increase the quantum and quality of public expenditure, the issue of the low absorptive capacity of the government is still persistent (shows the gap between planned and actual expenditures). Not only this, there has also been a consistent gap between development targets and achievement by the end of each plan. [For interested readers, here is my take on why is Nepal poor?]

Here is an abstract of the paper:

Planning in Nepal has little to do with anything that happens in that country. Planned targets are not met. Planned expenditures are not made. This paper explores the reasons- insufficient information, few and poor project proposals, inability to program foreign aid, opposition of the finance ministry, and severely limited capacity to administer development -given for the failure of planning. Special attention is paid to the tortuous release of funds and the effort to overcome basic political and administrative factors through surface changes in the form of organization for planning. The author argues that planning cannot create the preconditions for its own success.

Excerpts from the paper (remember it was published in 1972 and think about its resemblance in the present context):

[…]the Review Room of the Planning Commission has gradually become a ritual with little influence on decision or implementation.
[…]In earlier plans the absorptive capacity of the administrative machinery used to receive a great deal of attention from our planners. In this plan there seems to be little consideration of the absorptive capacity of the instrument for development in determining targets and outlays.
[…]project preparation is very weak and project implementation is worse.
[…]Relatively few operating officials have a clear understanding of the techniques involved in this radical departure from their traditional methods.
[…]Recurrent costs will go up sharply in the future as the need for repair and maintenance grows. Should aid decline in the future, Nepal would be faced with a rising bill for past commitments that would give it little room to maneuver, whether dealing with next year’s budget or some future five-year plan.
[…]the Commission could not work in a vacuum. It was completely out of the government. It had no relationship to implementation.[…]no one who counted heed its advice, such as increasing tax rates and plugging leaks in customs. […]Juggling their demands with the requirements of some twenty foreign aid donors, all with something special in mind, proved no easy task. When it came to implementation of plans and projects, the Ministry of Finance, whose Secretary, Y.P. Pant, was also forceful and capable, seemed to the planners “willful, obstructive, overly cautious, and not at all in sympathy with modern ideas of development”.
[…]Underspending was chronic, release of funds intolerably slow, procedures cumbersome and obstructive.
[…]The Planning Commission is ineffective because it cannot issue directives. No one listens to it. […]a tug-of-war between planning and finance.[…]Planning can be made strong by delegating both executive power and money to the planner.[…]a single fertilizer project or other large scheme could take up the entire foreign exchange surplus. Finance is, therefore, inclined to be cautious.
[…]The main complaint of the planners is clear: they make the plan and somebody else holds the purse.
[…]A top planner is convinced that if you do not have control over those who control implementation, advice becomes merely theoretical.
[…]as expenditures increased, the administrative capacity of the country to spend become overtaxed. Underspending became a serious problem.
[…]some departments spent extravagantly. What is worse, they undertook unauthorized expenditures in desperate efforts to improve their spending performance.
[…]Of the many causes of undespending, delay in releasing funds after the have been authorized occupies a prominent place.
[…]There is tremendous delay in making new appointments, often lasting up to and beyond a year. 
[…]When the appointees do arrive they are often not qualified. People rarely end up with specialties for which they were trained, especially if they have been educated at foreign universities.
[…]Salaries are low, resulting in departures abroad or to private concerns. […]the more talented now have the option of joining international organizations…
[…]It is not that they are unwilling to work. On the contrary, they are eager. But once the slightest initiative is required, once there is any question of responsibility, they wait for orders. If the orders do not come, everything stops. […]There can be no spending unless someone wants to take responsibility for it.
[…]The technical education of department heads is a barrier to growth of risk taking and economizing behavior because it enables the defenders of the status quo to join defense of the administrative establishment with claims to higher levels of competence.
[…]The ministers themselves are concerned with bargaining at the national level and with making sure that projects are geared to providing political benefits. They do not deal with the administrative apparatus.
[…]The nation lacks information, expertise and management skills. It is subject to the usual fluctuations in the terms of trade and the availability of foreign aid. Maintaining its political life on an even keel occupies the concerted attention of its highest political leaders. Economic development is only a sometime thing for them. In the light of these circumstances the effort to plan the nation’s economic life for years to come cannot be done well. If implemented the results are likely to be poor. As things stand, we shall never have to find out.