7th Five Year Plan (Vol-2)
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21.1 The Seventh Plan proposes to emphasise the need for improvement of project formulation, sanction, implementation and monitoring in development planning of all Sectors. Weaknesses in these aspects need to be corrected in order to optimise the efforts to achieve the Plan objectives of productivity and efficiency. The first area which requires attention is the formulation and implementation of specific projects and programmes. The nature of the problems and the required solution differ for large investment projects in sectors such as industry, minerals, power, transport, communication and irrigation and for developmental programmes in the field of agriculture, rural development, village and small industries, social welfare, education, health, etc. Hence the changes required in the modalities of formulation and implementation are dicussed separately for these two broad categories of activities. The second area which deserves closer attention is the monitoring of implementation. Finally, effective implementation will require changes not merely at project or programme level but also in management structures in government and public enterprises. These three broad areas are dealt with in what follows.

Implementation of Large Investment Projects

21.2 The Plan includes a large number of investment projects in the fields of industry, railways, ports, power supply and irrigation. The factors leading to the problem of tardy implementation of these projects arise both at the stage of formulating and sanctioning of the projects as well as during the implementation stage.

21.3 There has been a trend towards acquiring capital assets in increasing quantities, without regard to the availability of funds and the economic and commercial benefits to be derived from such investments. In some sectors the volume of sanctioned projects in the pipeline is very large relative to the availabitlity of funds and the anual rate of completion. As a result, cost and time overruns are inevitable as available funds are allocated among such a large number of projects. The existence of too many unifinished projects in the pipeline also leads to a rise in capital-output ratio. The position with regard to three critical areas is given in Table 21.1.

Table 21.1 Project Pipeline and Rate of Completion

Sl.No Project


Magnitude of projects approved and under implementation at the beginning of 1984-85 Addition in 1984-85 Number of years required to comp lete approved projects at 1984-85 rate of completion
1 2 3 4 5
1. Power:  
Generation capacity in MW 34126 3080 11
2. Railways: Kilometerage of new lines 2654 201 13
3. Major and Medium Irrigation Thousand hectares of Potential 15940 820 19

This trend will be curbed by the strategy being followed in the Seventh Plan of concentrating on completion of projects as the first priority and stricter criteria for new investments.

Project Formulation

21.4 Projects have often been formulated on insufficient data and assumptions regarding input supplies and infrastructural facilities which have proved unrealistic. The underlying cause for this is the absence of long-term plans for these enterprises in regard to the strategy and direction of growth. This has also resulted in attempting comprehensive and ambitious projects for expansion of capacity without equal emphasis on replacement and upgradation of existing equipment and technology. To correct prevailaing imbalances, these sectors need to have long-term plans for the development of technology, raw material and other input resources, surplus generation and investment and management development which could be continuously implementd through smaller and manageable projects in a phased manner. This also implies the need for continuity in the corporate top management as well as continuity of persons and policies in the administrative economic ministeries concerning these sectors.

Pre-planning for implementation

21.5 Apart from the lacunae in project formulation, the trend has been to take up pre-planning activities such as preparation of feasibility reports, alternative technical choices, preparation of detailed project reports and similar activities in sequence after their approval at each stage;the obvious course of working in tandem or dovetailing sequential stages has not been followed. This has been remedied to some extent by a recent decision to clear Central Projects in two stages so that after the first-stage clearance, activisation can proceed and there is no uncertainty. It is also essential that investment approvals are only given after certain basic investigations with regard to geology, site conditions, technology, input quality and availability and markets are completed. It is therefore proposed that suitable standards for such investigations will be specified in all major services as a precondition for ministerial approval.


21.6 Delay in decision-making aggravates implementation problems that arise later. Not only are the estimates out of date before formal sanction is given and budget allocations made, but it also gives rise to a frequent tendency to enlarge or modify the scope of the project. It is necessary, therefore, to freeze the basic technical and equipment parameters at the sanctioning stage. It necessarily implies much more rigorous preparatory work on the choice of process and equipment than evidenced so far. In fact, in projects in the public sector which have been successfully implemented, this condition was met.

21.7 Delays occur in many stages, namely, (a) at the enterprise level when a proposal from a unit is to be approved by the corporate headquarters; (b) at the Government level when it goes to the administrative Ministry, the Committee of Secretaries (PIB) and sometimes even the Cabinet. The solution to this problem lies in either reducing the levels by better delegation or by stipulating a time limit so that projects are sanctioned within the validity period of the estimates.


21.8 Inadequate flow of funds in fact has been a cause for delay of large projects, compounding further the problem of sharply rising cost estimates. The practice of annual allocation of Plan funds is one of the reasons for these upsets. It is suggested, therefore, that in this Plan period at least for projects which have critical importance, and affect the output of many other sectors, the flow of funds for the entire Plan period should be assured. Whilst this may be easier for projects in the Central sector, it may be difficult in the State sector (e.g., power projects) where the resources position may fluctuate widely from year to year. However, even here certain projects need to be earmarked for assured funds.

Project Organisation

21.9 Project management capability varies a great deal from enterprise to enterprise. It is necessary to have a competent project management organisation in the charge of a project manager with assigned responsibility, directing and coordinating all aspects of the project from construction to commissioning. It is also necessary that along with a project proposal there must be a plan showing how the project is proposed to be implemented in regard to the project organisation, bid packaging, contracting strategy and assessment of agencies available for executing specific aspects of the work such as civil works, utilities, structurals, erection, supply of equipment, etc.

21.10 In the work being carried out in projects by the various agencies at the project site, control of arrival of equipment and material and their storage and distribution needs a high degree of coordination which can only be done by a strong project organisation.


21.11 Award of contracts and the execution of these contracts have proved to be a major bottleneck in implementation of large projects. A contracting strategy is necessary for each project, taking into accout the manageable span of control and coordination by the enterprise project management, the type of contractors' capacity which can be mobilised, the sequencing of work front and the degree of effective competition that is consistent with the overall gain for the project in terms of time and total project cost. A range of choice is thus available between total turnkey to direct sub-contracting by the project authorities for all items of construction and supply. It is possible for example to make up suitable packages of work for which the total contract can be given to a competent firm, leaving to it the work of sub-contracting and the responsibility of coordination.

21.12 Such an approach will need also some modifications in the rigid procedures for evaluation, award of contracts, and terms of payment now prevailing in the public sector. Although some modifications have been introduced, the basic approach to select the lowest tenderer and the fear of post-audit objections continue to militate against speedy execution of good quality work and the overall economy of the project. In order to overcome this the institution of empowered committee at appropriate levels, as was followed in the case of successful projects like Kudremukh, ONGC, Space Projects, etc, is recommended for selected projects of critical importance.

Construction Capacity

21.13 In a very number of projects already on the ground and to be undertaken in the Seventh Plan, an estimate of the project construction capacity in the country in areas like civil engineering, utilities, structurals and erection, transmission, towers, cable laying, etc., needs to be made. Similarly, the upgradation of technology in some of these areas is also necessary for speedy execution. The Planning Commission propose to take some initiative in this matter.


21.14 Coordination of various agencies responsible for equipment and material supply has also proved a critical problem. Proper assessment of capacity, timely placement of contracts and payments terms are critical in this regard. The project organisation needs adequate authority for quick and flexible settlement of such issues. Coordination is also necessary at inter-sectoral level; for example, in the case of power plants with coal supply and railway transport. While some of these can be coordinated at the local level, very often coordination is necessary at the inter-ministerial level and at the State Government level. The current system of resolving such issues is through the administrative ministry as well as through the quarterly inter-ministerial reviews. The effectiveness of these mechanisms has to be improved so that they do not overlap and are seen to be effective in finding satisfactory solutions of the problems on the ground.

21.15 Special arrangements may be necessary for monitoring and coordination in the Eastern region where a large number of improtant projects, such as the rehabilitation of steel plants, coal and mining projects, power projects, etc., is likely to be sanctioned during the Seventh Plan. The problems in this region are many because the infrastructure is one of the oldest. This is compounded by large-scale unemployment and industrial sickness which are manifest in problems of industrial disputes with contract labour, requiring the State Government's intervention.

Use of Consultants

21.16 A number of consultants specialised in different fields are now available in the country, both in the public and private sectors. They are sucessfully associated with the preparation of feasibility reports, detailed project reports and project engineering. The consultants are also being used for drawing up tender specifications, tender evaluation, inspection of equipment, supervision of construction and erection, certification of bills and quantities of work and similar work which helps the project management. The role of these consultants is, therefore, of great importance in quick and economical execution of projects. Nevertheless, the client organisations must also build up the capability to use consultants to their best advantage.

Implementation of Development Programmes

21.17 Development programmes in the field of agriculture, rural development, village and small industries, social welfare, health and education differ substantially from the large investment projects described in the previous section. They do have some investment component mainly in the form of buildings and other construction; but the dominating components are rather different. In some cases it is staff expenses, in some others subsidies for specific purposes, while in a few cases it is promotional activity. Generally, the facilities set up are not revenue-earning and even current expenditure is financed from the budget. In many cases, the effectiveness of the programmes in terms of end result depends largely on the response of private households and enterprises. Hence the problems of formulation and implementation are quite complex and not readily amenable to managerial solutions at the programme level.

21.18 Development programmes, unlike large investment projects, are geographically diffuse and are implemented simultaneously at a large number of locations. They often require simultaneous action by more than one department at the local level. Most important, this effectiveness depends to a large extent on the response of the local community. Development programmes also require a local imput at the formulation stage. Standard schemes designed at the State or Central Secretariat level will not be able to take into account the diversity of conditions to be found in our country and rigid norms may defeat the purpose of many of the programmes. Hence a measure of local flexibility in working out the details of each scheme is necessary. The geographically diffuse nature of development programmes makes it difficut to control implementation from a central level. Hence leakages and misappropriation tend to take place. Greater local involvement can play an important role in reducing these abuses.

21.19 The Seventh Plan is based on the premise that the key to effective implementation of development programmes is local involvement. Hence it proposes to secure this by taking effective steps for decentralisation of planning and for involving local and voluntary agencies in Plan implementation. The specific steps proposed are dealt with below.

Decentralisation of Planning

21.20 The need for decentralisation of planning and development administration below the State level has been recognised for some time, particularly in the context of agricultural and rural development programmes. But the ideas relating to decentralised local-level planning have been somewhat nebulous and the progress in the various State somewhat halting. Though Zila Parishads and Panchayat Samitis have been established in several States, the actual decentralisation of political and administrative authority has been generally of a limited nature. Nor have sufficient arrangements been made in the organisation of technical administrative personnel at the State level and below to facilitate decentralisation. The lack of adequate machinery for decentralised planning and administration thus continues to be a critical weakness in the existing system.

21.21 With the introduction of a variety of new programmes for rural development requiring close coordination with other departmental programmes in the rural areas, the need for decentralisation of planning and development administration to the district and block levels has become imperative. In June 1982, the Planning Commission addressed the States, urging them to take steps towards four important aspects of a decentralised district level planning setup. These are :

(a) Effecting functional decentralisation: This involves indentification of the exculsive functions that must be planned and implemented at the district level. This procedure will help in defining the role of District Planning in the Multi-level Planning structure.

(b) Effecting financial decentralisation: This is necessary in order that the District Planner is clearly aware of the funds likely to be available for district development.

(c) The establishment of appropriate planning mechanism at the District level: This would include the setting up of District Planning Boards Councils with appropriate composition, and strengthening of the planning machinery at the district level.

(d) Establishment of appropriate budgeting and reap-propriation procedures:

21.22 The above measures have been emphasised by the Planning Commission in the context of the formulation of the Annual Plans, with the result that many States have taken steps to disaggregate, districtwise, the divisible outlay of the State Plans and to introduce corresponding administrative decentralisation measures.

21.23 The States of Maharashtra, Gujarat, Karnataka and Uttar Pradesh in particular have carried out the disaggregation of plan funds from the State level to the district level in accordance with a formula weighted in favour of backward districts. On the basis of the work done in these States, it appears that approximately 30-40 per cent of the State Plan funds go towards funding the district level schemes. For further allocating the divisible funds among the districts, the formula adopted by them gives weightages to certain relevant factors like population, level of development and special problems of the district.

21.24 However, the mere disaggregation of funds to the district level and showing 'District Allocations' in the State Plan document will not amount to true decentralisation of the planning process, if the powers to plan for these funds are concentrated at the State level with the various heads of departments. The touchstone of decentralisation would be the freedom available at the district level to plan according to its local needs and local potentials. In this context, much greater stress needs to be placed upon the delegation of powers and to local resources development and the stimulation of local initiatives within the community. Governmental and administrative structures have to be better adapted to these goals.

21.25 The Planning Commission set up a Working Group on District Planning in September 1982. It has advocated a gradual, step-by-step approach towards this goal. It has suggested that Panchayati Raj Institutions (PRIs), wherever they exist, will function as the apex body to approve as well as review the implementation of District Plans. Where the PRIs either do not exist or exist without planning functions, the District Planning Boards/Councils, which already exist or are being constituted, can perform these functions. For this purpose, they will be assisted by a suitable planning machinery at that level and the Centrally-sponsored scheme of strengthening of State-level planning machinery has been extended to district level also, with effect from 1982-83.

21.26 In order to ensure effective horizontal coordination at the district level, the Working Group on District Planning has made a number of recommendations which include:

  1. Strengthening of the position of the District Collector;
  2. Placing departmental functionaries under the direct administrative control of the Collector by deeming their services to be on deputation from their departments; and
  3. Making district officials accountable to the District Planning Body.

21.27 The Working Group has also made several recommendations towards improving administrative decentralization. They bear on the procedures for administrative and technical sanctions, reappropriation measures, etc. The Working Group has recommended a participatory approach to the district planning process, such participation extending through the stages of pre-planning, Plan formulation, post-planning and implementation stages. The Planning methodology for district planning has been outlined, and a massive training programme has been envisaged for the purpose. In the 'stages approach' advocated by the Working Group, Stage I will be a phases of 'initiation', Stage-11 will be one of 'limited decentralisation', and Stage-111 will be the culmination. An illustrative list of the various measures that could be taken during each stage is given in Annexure 21.1. The Working Group on District Planning has envisaged that all States in the country should reach the final phase by the year 2000 AD but as far as possible even earlier by, say, compressing Stages, I and II by the end of the Seventh Plan period itself.

21.28 During the Seventh Plan period, the decentralisation of the planning process and full public participation in development will be pursued on the lines suggested by the Working Group. These steps will seek to ensure the achievement of the twin objectives of effective implementation of the anti-poverty programmes and ensuring a balanced regional development at least in respect of the minimum needs. District Planning, as advocated in the report of the Working Group, should be vigorously pursued. Eventually the decentralisation of planning should be extended further to the block level, particularly for the more effective implementation of anti-poverty programmes.

21.29 The initiatives taken by several States on the Sixth Plan suggest that the initial resistance to decentralisation seems to have been overcome. But since for a majority of the States the decentralisation of the planning process is a new experiment, the Planning Commission propose to play a promotional and guiding role in order to impart momentum to the district planning process. This is proposed to be attempted in the following directions:

  1. Data and information system for district planning: It is proposed to update the natural resources inventory data at the district level through use of remote sensing techniques. About 100 districts in the country are proposed to be selected during the Seventh Plan period to provide a scientific basis for district planning. The institutions to undertake this work will be identified and their efforts will be coordinated.
  2. Machinery for district planning: The existing scheme of strengthening the district planning machinery will be continued during the Seventh Plan period.
  3. Training in district planning: The task of training district-level personnel is a stupendous one. This is proposed to be achieved through massive training programmes organised by the Centre and the State Governments in selected institutions.
  4. Technical guidance through Pilot Projects: It is also proposed to initiate a few pilot projects, including action-based research, in different States in the country to improve methodologies and procedures for decentralised district planning. This may be particularly necessary in States which are beginning the district planning exercise for the first time.


21.30 The essence of a good monitoring system is the speed of communication of dependable information on key result areas, the competence of the monitor to interpret the signals and the ability to lead to intervention in a constructive manner. Monitoring is not an end in itself, and, therefore, it has to be suited to the objectives. For instance, in large projects where time is of essence, monitoring has to be intensive at all levels whereas for other projects it may be intensive at the field level but selective at the higher levels. In some other activities monitoring of trends may be of more importance than that of actual details.

21.31 Monitoring has several aspects and it is necessary to identify the scope for monitoring for effective plan implementation. Broadly speaking, monitoring would cover following areas:

  1. Physical progress of implementation of projects involving civil construction, equipment erection and commissioning within time and cost schedules, e.g., irrigation canals and drains, industrial plants, power projects, etc.
  2. Quantitative and qualitative progress of implementation of programmes where physical targets are set, e.g., MNP, IRDP, NREP, Hill area programme, etc.
  3. Production, productivity and profitability performance for established public sector units in the core sector, for which key indicators specific to the units concerned may be identified.
  4. Maintenance of capital assets created to be monitored selectively so that the expenditure earmarked for this purpose in the State and Central budgets (though on the non-Plan side) is in fact utilised for the purpose.
  5. Plan expenditure—to ensure that sectoral outlays are not disturbed and outlays earmarked for specific projects are not diverted for other purposes without compelling reasons.

In all these areas, it will be necessary to spell out the responsibilities of the concerned enterprises, Ministries and the Planning Commission.

21.32 Monitoring will continue to be undertaken through reports, review meetings and field visits. However, the information content, channels of communication, frequency, presentational formats (including presentation through charts and graphs and other means), etc., will have to be reframed according to the nature, type, size and importance of projects, programmes and levels of monitoring, and after taking into consideration the following experience in the past:

  1. The primary responsibility of monitoring lies with the agency entrusted with the execution of the project/  programme.
  2. The farther away the monitoring level from the field, the greater is the need for selectivity in the span and items of monitoring.
  3. Monitoring should lead to intervention, corrective as well as supportive, for resolving problems arising at site.
  4. Over-reporting and overlapping at different monitoring levels can cause confusion and tend to become counter-productive.
  5. Timeliness of reporting is more important than absolute accuracy, especially at higher levels of monitoring.
  6. Data reporting has to be supplemented by direct discussions and field visits.

21.33 There are many hierarchically linked monitoring agencies and if reporting is channelled through these agencies, not only will it be delayed but the information is also likely to be distorted. There is, therefore, a need for direct communication of key information from the field level direct to each monitoring level, giving the information relevant to it. Such level jumping in monitoring can considerably reduce the time lag in reporting to higher levels.

21.34 As regard the specific steps for strengthening the monitoring and information systems, the following suggestions are made:

(a) Central Level

  • Each Ministry/Department should review their existing monitoring system in order to remove the deficiencies and problem areas. For this purpose, small working groups headed by a 'nodal' officer of the Ministary should be set up to review the existing system. The main emphasis should be on simplification and usefulness of the system.
  • Establishment of a computerised Data Bank within each Department/Agency should be undertaken on priority basis and the monitoring system should be linked to the Data Bank. Necessary hardware and software should be provided for these Data Banks and monitoring systems.
  • It should be ensured that Monitoring Units are established and properly staffed in each Department/Organisation/Project depending on its requirement.
  • Monitoring should be recognised as a specialised function requiring necessary professional skills. Intensive training efforts will be needed for this purpose.
  • For selected large-scale projects, interministerial groups can be set up in the form of empowered committees with representatives from inter-linked implementation agencies, which could closely monitor the project and also take decisions for corrective action.
  • For other major projects, field visits from Ministries and other concerned agencies should be regularly made for monitoring and providing assistance to project authorities.
  • Maintenance of records should be improved. Where possible micro-filming should be used.
  • Resource-based network systems for implementation planning and monitoring should be extended to all sectors.

(b) State Level

  • For the programmes/projects executed by the State Governments (both Centrally-sponsored and State Plan) the monitoring at the Central level cannot be effective unless the basic monitoring facilities are effectively developed at the State, sub-state level on a uniform pattern with modern facilities for communication, processing, storage and retrieval of data.
  • While the basic monitoring of the State Plan programmes/schemes has to be undertaken at State and/or sub-State/District level, the Centre may confine itself to monitoring the earmarked projects/programmes which are of vital importance for the country as a whole. These projects will be primarily in the Agriculture and Allied Services, Cooperation, Irrigation and Power and Minimum Needs Programme. In addition, the Central monitoring will cover the Centrally sponsored schemes.
  • It may be helpful if a system of mid-year review of the progress under the approved Plan is introduced, where physical progress and performance under various programmes and projects could be reviewed.
  • Monitoring units should be set up in important technical departments, State Public Sector Organisations and important projects. Use of computers and data processing facilities for the monitoring system should be made as widely as possible and computerised data bank and information systems should be developed. The Central scheme of providing 2/3rd assistance should cover all these aspects.
  • A list of inventory of all schemes in the State Plan should be developed, sub-divided by sectors and districts. The physical aspects to be monitored in each scheme should be identified.
  • Considering the large number of schemes at the State level, there is need for selectivity and differentiation in the intensity of monitoring in terms of frequency and degree of detail. The Plan schemes could be divided into, say three categories depending on investment, importance and critical linkages. For the most important category of selected schemes, the monitoring should be more frequent and intensive, while for the less important schemes, which may be large in number, monitoring may be less frequent and in lesser detail.
  • The concept of implementation planning with the help of resource-based networks should also be introduced for State projects/programmes in the same manner as it is being used for the major Central Sector projects and some State power projects.
  • Monitoring should be linked with the review and problem-solving mechanism so that the results of monitoring are considered by the concerned decision-making levels and used in initiating corrective action. The monitoring system should use modern techniques such as PERT/CPM and the periodical monitoring should be linked to the PERT/CPM analysis at the time of Annual Plan formulation.
  • There may be an advantage in developing arrangements which ensure public participation and scrutiny in monitoring of beneficiary-oriented programmes.
  • The basic records at the field level should be streamlined and simplified. The example of the Health Information System introduced in 1982 could be considered for other sectors.

(c) District Level

  • The monitoring at District level is particularly important for the beneficiary-oriented schemes and those schemes requiring greater efforts at the Block and Field levels. The current scheme for strengthening and Planning machinery at the District level for which 50 per cent Central assistance is provided, covers the monitoring function but does not specify a separate functionary for this purpose. In order to ensure effective monitoring at the District level, it will be necessary to have a small monitoring machinery either in the District Planning Cell or by combining with the District Statistical Organisation. Some monitoring arrangements will also be needed at the Block level.
  • There is a need for coordinated monitoring of several similar activities in the same geographical area but falling under different programmes/ schemes.

(d) Project Level

  • For each major project/programmes, monitoring mechanism should be inbuilt as a part of the project implementation and specific provision should be made for monitoring unit/staff in the project estimates.

(e) General

  • The Integrated Classification for planning, budgeting and accounting which has been developed by an Inter-Departmental Group set up by the Ministry of Finance and is to be introduced during the Seventh Plan, will provide a common list of major, sub-major and minor heads to be used for planning as well as accounting purposes. It will then be easier to monitor the expenditure under each Plan scheme which would be shown at one place in this classification.
  • For improving data handling, including processing, storage, retrieval and communication, greater use of computers is envisaged during the Seventh Plan. It is expected that each major organisation such as Ministry/Department/Agency at the Central and State levels would develop and streamline its management information system, including a computerised data bank, located at one place or at various places, but inter-linked in such a manner that data flow is possible from one data bank to another. Later, this should help in replacing the flow of reports from one agency to another by transfer of data on computer lines, provided either by the P and T system or through satellite communication system. This requires considerable efforts in each Department/Agency in streamlining the existing data system and developing a Computerised Data Bank. The National, Regional and State Centres of the National Informatics Centre could be utilised for these data banks. It should be ensured that these data banks are compatible with each other so that the data could be easily transferred.
  • As a part of improved project planning and monitoring system, extensive use of value engineering techniques is suggested not merely at the design stage but also during implementation. The concepts of target-cost-contracts with incentives for cost savings should be encouraged wherever possible. In contracts, payments should be linked to physical progress and not simply to passage of time. Penalty and bonus provisions should help in greater adherence to imiementation schedules.
  • In effective implementation and monitoring, management consultants can play a useful role in developing necessary systems and attitudes. There are many sectors such as public utilities, social services, small-scale enterprise, etc., for which managment consultancy services need to be developed and introduced effectively.
  • The Performance Budget, presently being prepared by various Ministries and organisations would need to be improved so as to indicate physical targets and indices more specifically as related to financial allocation and made an effective instrument of monitoring.
  • Large scale and intensive training effort would be needed for developing necessary skills for implementation planning, monitoring and information systems.


21.35 The limited purpose of monitoring is to ensure timely completion of stipulated tasks for which resources have been allocated in the Plan. However, completion of tasks may not always amount to the achievement of long-term objectives in terms of actual benefit accruing to the economy or segments of economy and the population which are assumed at the time projects/programmes are approved and funded. It is necessary, therefore, to evaluate projects and programmes periodically. A significant period of time must elapse before such an evaluation can be made meaningfully.

21.36 The expert evaluation studies are being undertaken by the Programme Evaluation Organisation of the Planning Commission and State evaluation bodies, with the object of assessing the impact of selected Plan programmes and determining the successes or failures in their formulation and implementation. These evaluation studies relate mainly to rural development programmes. During the Seventh Plan, the scope of these studies may be enlarged and some studies may also be assigned to independent expert bodies/groups.

21.37 The evaluation effort so far has largely been concentrated on programmes, mostly in rural areas. There has been little effort at ex-post evaluation of large investment project. During the Seventh Plan it is proposed to undertake ex-post evaluation of a few selected major projects in different sectors. To start with, it would have to be ensured that completion reports are prepared in respect of all major projects. Later, field evaluation studies may be undertaken for some of them to evaluate the effectiveness of formulation and implementation and achievement of the benefits estimated at the time of approval of the projects.

Management Systems in Government and Public Enterprises

21.38 In the preceding paragraphs some proposed improvements in project implementation and monitoring have been outlined. But in the ultimate analysis, successful implementation of the Plan depends on the speed and efficiency of (a) the administrative system, (b) delivery system at the field level and (c) public enterprise management.

21.39 Many expert, bodies were set up from time to time for suggesting improvement in the managment of these systems, but there is still considerable scope for improvement. During the Seventh Plan, the emphasis will be on the implementation of the needed reforms. These comprise changes in organisational systems and procedures as well as personnel policy. Even if wide-ranging changes many not be feasible in the short term, some of the basic weaknesses must be removed. These include the following:

Central and State Headquarters

(i) There are too many levels of decision-making adding to delay but not necessarily to the quality of decision-making. Excessive consultation and involvement of too many levels also dilutes accountability and responsibility. These levels must be reduced by conscious delegation and elimination as multiplicity makes little contribution to decision-making.

(ii) Creation of new departments before the activity level justifies it, means increase in overheads and proliferation of new programmes and activities of doubtful viability. This trend must be curbed.

(iii) Quicker methods of communication and information flow have to be encouraged and a better method of retrieval of data availiable in the departments, must be instituted.

(iv) Over-centralisation in decision-making is manifested by a large number of meetings continuously taking place at the headquarters. It is not only wasteful in expenditure, but, more importantly, it entails frequent absence of officers from the field where they should concentrate.

(v) Coordination is one of the major weaknesses in our systems. The institution of Committee of Secretaries at the Centre is a useful instrument, but appears to be overloaded mainly because too many items are referred to the headquarters too frequently. Priorities are lost in the long queue of proposals. The trend over the years has been towards shifting the responsibility of decision-making up-wards to the highest level, instead of delegating it down to the lower echelons.

(vi) In areas of concurrent responsibility, e.g., education, health, rural development, agriculture and power, where the bulk of physical work lies with the States, the role and responsibility of the Central ministries have to be redefined. The proliferation of Centrally-sponsored schemes and attendant problems such as parallel staffing for each scheme, must be corrected.

(vii) With the growing dimension and diversity of planned development programmes, the need for specialisation has grown. Therefore, a change in the policy of posting and tenure of key officials in the economic ministries is needed, as that continuity is maintained and the experience gained by officers in trie areas ot their specialisation, is maintained for at least a period of three to five years.

(viii) The knowledge and experience of officers, particularly on the technical aspects, who retire at the age of 58 is mostly lost to the Government. They could be selectively utilised through a retainer scheme.

(ix) The existing district and block level administration of Plan programmes in agriculture and allied services, irrigation, education, health and family care, etc., is largely a modification of the traditional administrative system of the pre-independence days. It is proving increasingly inadequate for the intensive and extensive developmental efforts that are being mounted in successive plans. The overall control and coordination of development work is still vested in the District Collector in addition to his traditional task of revenue collection and maintaining law and order. Some States have a separate officer of Collector rank to look after development work, but all have not adopted this pattern. Such work not only needs special skills for coordinating multidisciplinary organisation, but also the expertise to administer local institutions. Right selection, training and continuity of such executives is essential. A specialised pool or cadre of such officers could be considered.

21.40 The emphasis which has been placed in every Plan document on work at the grassroots level is not reflected in the value system obtaining in the adminstra-tive structure. There is no reason why officials at the district and block level should not get equal or more remuneration than officers at the headquarters level enjoying urban facilities. This needs to be corrected by suitable incentives not only in financial terms, but also in other ways such as hostel facilities for their childrens' education in the capital cities. Training of block-level extension officers is of utmost importance. The concerted emphasis on decentralised planning is the cornerstone of development strategy in the Seventh Plan.


Central Sector

21.41 The emphasis during the Seventh Plan period in respect of commerical ventures in the public sector, namely, departmental undertaking, like railways, posts and telegraphs and communications and others as well as public enterprises, should be on consolidation, improvement and modernisation rather than on large expansion of capacity except where it is imperative.

21.42 The capital base of many of these enterprises has expanded without commensurate additional output and rise in produciivny. Maintenance ana nmely renewal of assets which should have been almost mandatory, has been neglected. This is because of under-provision of depreciation year after year in many of the enterprises, in addition to servicing of loans from Government. The under-provision is the result of inadequate income generation, the latter being a function of capacity utilisation as well as price. While enterprises as a policy should be assured of an economic price, administered prices cannot be a device to neutralise losses arising out of inefficiency.

21.43 Deficiencies in operational management are by and large within the control of enterprise managements and can be improved with continuous training, better systems and procedures and upgrading of managerial capabilities. Public enterprises and departmental undertakings cannot but concentrate on improvement of productivity of all factors of production as a pre-condition for survival and growth.

21.44 There are, however, some other generic problems with public enterprises because of their governmental ownership. These relate to the interface between the government and the public enterprises management. At present there is, on the one hand, a feeling that enterprise autonomy in decision-making in vital areas of corporate policy such as product-mix, distribution policy, modes of finance and personnel policy, has hampered the growth of initiative and business acumen in the managements of these enterprises. On the other hand, the close links with governmental processes have diluted the accountability for performance.

21.45 Many expert committees have, from time to time, examined these issues and recommended reforms with a view to give the enterprise management greater freedom to innovate and initiate and to hold them accountable for results. Unless these reforms are implemented with urgency during this Plan period, the expectation that the public enterprises should generate internal resources for their own growth and be independent of budgetary support, will not be fulfilled. The adoption of systems and procedures akin to governmental administration is contrary to an industrial and commerical culture. The enterprises tend to be looked upon by others and by themselves as attached offices of the administrative ministries. This needs a radical change. One of the weaknesses in project formulation was identified earlier as the lack of long-term corporate strategy and plan for development in the core sector, the underlying cause being the frequent changes in top management and the economic ministry personnel. Encadrement of managerial, and administrative personnel into a specialised Service may need to be seriously considered.

State Sector Public Enterprises

21.47 Public enterprises in the State Sector have grown appreciably during the past decade. Data show that the number of these enterprises almost doubled within six years, i.e. during 1976-77 to 1982-83. During the Sixth Plan the rate of growth of investment in the State enterprises, excluding the State Electricity Boards and State Road Transport Corporations was almost twice that of the Central public enterprises. In fact, if we include the investment in the State Electricity Boards and the State Road Transport Corporations, then at the end of the Sixth Plan, the total investment in the State enterprises would be comparable in magnitude to the investment in the Central public enterprises. However, a review of the performance of these enterprises reveals that a large number of them have been running in losses and are totally dependent on budgetary support. Revitalising the State public enterprises system assumes critical importance in the Seventh Plan.

21.48 During the Seventh Plan the efforts of the State Governments in this direction need to be consolidated and a detailed strategy for managerial development, upgradation of skills at the shop-floor, introduction of financial discipline and improvement in productivity will have to be pursued. Over the decades a large number of technical administartive and management training institutions have grown in most of the States. At this juncture the attempt has to be towards integration and utilisation of such local institutions for upgrading technologies and techniques and refining the managerial culture in the State Public enterprise system for a rapid professionalisation of their management.

21.49 It is expected that during the Seventh Plan the growth of the State Public enterprises will be moderated so that attention can be devoted to their consolidation and improvement of performance to enable them to contribute to State finances rather than be a drain on the State exchequer.

ANNEXURE—21.1 Scenario towards Decentralised District Planning by year 2000: The Basic Conceptual Framework.
Stage—I (Initiation) Establishing Prerequisites:

(i) Define scope of district planning : district and State sector schemes.

(ii) Disaggregate Plan funds to the district level.

(iii) Formulate criteria for inter-district allocation of Plan funds.

(iv) Strengthen planning capability (establishing district planning machinery and organising training for district planning personnel).

(v) Establish horizontal monitoring machinery at district level and link it vertically with other monitoring mechanisms at higher levels.

(vi) Establish district planning boards/councils/ committees with representation from the public.

(vii) Establish planning procedures for Five Year Plan and Annual Plans.

(viii) Introduce the concept of free-united funds and initiate planning for the free funds.

Stage—II (Limited Decentralisation)

Bring limited sectors of activity, e.g., Minimum Needs Programme, agriculture and allied activities and all targetgroup planning within the purview of planning at district level, limited localism in district planning, improve multilevel resource allocation for development budgeting, grant extensive powers to district level including powers of re-appropriation, streamlining of procedures for dovetailing district plan into the State Plan and for deriving Annual Plans and Five Year Plans.


Enlarge localism to cover decision-making in all district sector activities. Effect administrative reforms to delegate all decision-making powers to the district level. Ensure high level of popular participation. Adopt budgetary practices that would encourage local initiative. Render functionaries of development departments accountable to the district planning body. Establishment of Integrated Resource Information system. Prepare forward integrated perspective plans to guide Five Year Plan and Annual Plans. Improve personnel planning capability. Improve and strengthen local governments. Evolve healthy relationships between political executives and State officials.

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