Planning Commission, R.I.P

Posted on: August 19, 2014

It is not usual for an Indian Prime Minister to make such announcements on an Independence Day. But Narendra Modi did the unusual. From the ramparts of the Red Fort, he announced that his government will scrap the 64-year-old government institution, The Planning Commission.

“The times have changed since the Planning Commission was created. In a short span of time we will initiate a new institution that will work in place of the Planning Commission,” Narendra Modi said on India’s 68th Independence Day.”We need creative thinking on the Planning Commission’s role,” he said.

Speculations that the Commission will soon be scrapped were doing rounds in the corridors of power, weeks after Modi took over as the Prime Minister. But Modi, who has become unpredictably reticent after assuming his office, chose the Independence Day as the occasion to make this big announcement. He, obviously, wanted the town to talk about it.

But this announcement to scrap one of the oldest institutions of India has clearly divided the house. A section of policy makers and experts who believe in market economy and Modi’s model of development say that this is an absolute redundant body which should have been dissolved much earlier. But India’s intellectuals, who believe in the socialist mindset, think that such a body is needed for policy reforms and advocacy.

An arm of the central government, the Commission, whose primary job was to allocate funds for projects and schemes, has a full-time deputy chairman and the Prime Minister as the part-time chairman. In 1950, it was the idea of a socialist state which will not just focus on the economic development but also welfare of the people that gave birth to the Planning Commission. It is still seen as the only lobby for the poor.

Some of the most “ambitious” projects of the Manmohan Singh-led UPA government, such as the Rashtriya Krishi Vikas Yojana and Mahatma Gandhi National Rural Guarantee Scheme (MNREGS) were conceived with the help of the Planning Commission. The Commission flourished more in the years when the Left lobby was strong.

A former Planning Commission secretary says that there is a need for the Commission because it gives “unbiased” views on important policy matters of varied ministries to ensure the policies are flawless and tailor-made to cater to the people.

“Reference to previous years’ discussions with states gave us an opportunity to rank them on their performance. By the same measure, states could express unhappiness with various aspects of Central plans and schemes. Solutions were proposed. Frank discussions yielded good results,” Syed Hameed, a former member of the Planning Commission wrote in Indian Express.

It is one institution which promoted public-private partnership (PPP) especially in the infrastructure sector. The Planning Commission approves the states’ annual plans. It is the only body which would help in bringing “balanced” development in the country.

But critics have pointed out that the Commission has been working on parameters of a different era. It has been highly disconnected from the ground realities. No new roles and functions have been added to the Commission for the past few years. It was only in the initial years of its formation that the Prime Ministers conducted meetings. In the recent years, such a customary meeting too stopped taking place. But the former Prime Minister Manmohan Singh, in one of his last meetings with the Commission members, had asked to adopt creative thinking and look for new directions in planning to meet contemporary challenges.

In fact, three years back, the Commission was heavily criticised because it had said that persons consuming items worth more than Rs32 per day in urban areas (Rs26 in rural areas) are not poor. An affidavit was also filed in the Supreme Court challenging it, which forced the Commission to announce that a new methodology will be worked out to determine entitlements of beneficiaries under various schemes for poor.

The larger view is that the India in 21st century needs planning process but not a planning ministry. A committee which was formed under a Planning Commission member, Arun Maira, to see the relevance of the Commission in today’s age had also pointed out that the change has to start from within the Commission. It said, “The Planning Commission should play the role of a systems reforms commission and not just get into allocations and controlling.”

Perhaps, the new body called National Development Reforms Commission that is proposed to replace the Planning Commission will do what its predecessor couldn’t do. The new Commission that intends to replicate the China model should focus on the market-led economic reform and state-led developmentalism which should be India’s road to reform. Above all, it should never lose touch with ground realities like its predecessor.


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