Replacing Plan Commission

Prime Minister Narendra Modi has junked the Planning Commission. His announcement on the Independence Day scrapping was not a bombshell as speculations to that effect were doing rounds in the corridors of power. What was not expected was his invitation to the public to come up with suggestions for an alternate body. One would have expected the government to give a thought about the alternate body before announcing its liquidation. Now until the new reformed commission is formed, there will be a vacuum.

The imposing Planning Commission building in Parliament Street is a landmark in the capital for decades. Greatly impressed by the Soviet model, Jawaharlal Nehru set up the Commission for a planned economy. It enjoyed tremendous clout earlier with the full backing of the prime ministers. Its basic responsibility was to assess and allocate the resources as also to determine the priorities. The Commission provides guidance for the formulation of India’s Five-Year Plans, Annual Plans and state plans. It works under the overall guidance of the National Development Council, India’s top policy-making body, in which the chief ministers are members.

The first five -year plan was launched in 1951. We are in the midst of the 12th five- year plan. For the first eight plans, the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced.

There is certainly a case for scrapping the Commission, which has outlived its utility. Prime Minister Modi has reasoned why the Commission has become redundant pointing out that it is only duplicating the work of the central ministries. Things have changed in the past five decades and the priorities of planning also have changed.

Secondly, the Commission has become irrelevant in today’s changed world environment where India is linked to the global economy. From the ninth plan onwards the planning is undergoing a change because of the liberalised economy.

Thirdly, the composition of the Commission also has changed and in the past two decades it has almost become a dumping ground for the government and the ruling party. It is also overstaffed and has become a while elephant.

Fourthly Modi is talking about a new body taking into account the concerns of the state governments often ruled by different political parties from the single party domination of the fifties, sixties and seventies. The chief ministers who resented being called by Deputy Chairman every year for plan allocation often criticised the Commission’s working in recent years. Modi himself has resented the role of Commission as chief minister of Gujarat.

Fifthly, often there have been clashes between the Commission and the Finance Ministry. While the Commission wanted the government to invest more money in social welfare schemes, the finance minister was constrained by the lack of resources.

Sixthly, India now has what is called the mixed economy where the government decides the rules of the game. The private sector is having a greater role to play while the public sector has taken a back seat.

Seventhly the Commission also oversees the planning process in the states and in the process often becomes an unwanted intruder as the state governments resent their interference.

The demand for scrapping the Commission is nothing new. Former Prime Minister Rajiv Gandhi called the Commission as a bunch of jokers. Former Finance Minister P. Chidambaram described it as too big, flabby and unwieldy. Manmohan Singh, himself a former Deputy Chairman had stressed the need for reflecting what should be the role of the Commission. The present Deputy Chairman of the Planning Commission Montek Singh Ahluwalia had even come up with a 15-page note for restructuring the Commission.

So under the circumstances, one cannot fault the prime minister for taking a decision to disband it. Had the government started the debate earlier and invited suggestions from the public for an alternative body, it might have worked better. There are some experts who feel the government could have made attempts to reform the Commission but this would not have worked.

 The question is what happens to the ongoing 12 five-year plan? Will it be completed or abandoned? Apart, what would be the functions and role of the new body? How much teeth will it have?  Further, what about the involvement of the think tanks in the new body?

 Whatever body is put in place it should be compact, homogenous, and harmonious and have vision for short term and long-term policies. Talent from all parts of the country should be pooled to give a holistic view for the new body. The Prime Minister and chief ministers should be totally involved in the new body, which will give teeth for the new body. The decision making process should be quick and implementation should be speedier, or else it will turn into another Planning Commission in the long run.