Home Articles Scrapping of Planning Commission, Is It a Sound Idea?

Scrapping of Planning Commission, Is It a Sound Idea?

By Syed Ali Mujtaba,

Planning commission has been scheduled to be dissolved and shutdown to be replaced by new institution. In his first Independence Day speech in 2014, Prime Minister Narendra Modi announced scrapping of Planning Commission.

The Planning Commission is an institution in the Government of India, which formulates India’s Five-Year Plans, among other functions. It was formally established on 15 March 1950, with then Prime Minister Jawaharlal Nehru as the chairman.

Planning Commission was established in accordance with article 39 of the constitution which is a part of directive principles of state policy. Planning Commission does not derive its creation from either the Constitution or statute, but is an arm of the Central/Union Government. It reports directly to the Prime Minister of India.

The first Five-year Plan was launched in 1951 which mainly focused in development of agricultural sector and two subsequent five-year plans were formulated till 1965, when there was a break because of the Indo-Pakistan Conflict. Two successive years of drought, devaluation of the currency, a general rise in prices and erosion of resources disrupted the planning process and after three Annual Plans between 1966 and 1969, the fourth Five-year plan was started in 1969.

The Eighth Plan could not take off in 1990 due to the fast changing political situation at the Centre and the years 1990–91 and 1991–92 were treated as Annual Plans. The Eighth Plan was finally launched in 1992 after the initiation of structural adjustment policies.

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. The current thinking on planning is that it should increasingly be of an indicative nature.

The composition of the Commission has undergone a lot of change since its inception. With the Prime Minister as the ex officio Chairman, the committee has a nominated Deputy Chairman, who is given the rank of a full Cabinet Minister.

Cabinet Ministers with certain important portfolios act as ex officio members of the Commission, while the full-time members are experts of various fields like Economics, Industry, Science and General Administration.

The Commission works through its various divisions, of which there are two kind: General Planning Division and Programme Administration Division.

The majority of experts in the Commission are economists, making the Commission the biggest employer of the Indian Economic Services.

The Planning Commission’s functions as outlined by the Government’s 1950 resolution are following:

To make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting those are related resources which are found to be deficient in relation to the nation’s requirement.

To formulate a plan for the most effective and balanced utilization of country’s resources.

To define the stages on the basis of priority, in which the plan should be carried out and propose the allocation of resources for the due completion of each stage.

To indicate the factors that tends to retard economic development.

To determine the conditions which need to be established for the successful execution of the plan within the incumbent socio-political situation of the country.

To determine the nature of the machinery required for securing the successful implementation of each stage of the plan in all its aspects.

To appraise from time to time the progress achieved in the execution of each stage of the plan and also recommend the adjustments of policy and measures which are deemed important vis-a-vis a successful implementation of the plan.

To make necessary recommendations from time to time regarding those things which are deemed necessary for facilitating the execution of these functions.

Such recommendations can be related to the prevailing economic conditions, current policies, measures or development programmes. They can even be given out in response to some specific problems referred to the commission by the central or the state governments.

From a highly centralised planning system, the Indian economy is gradually moving towards indicative planning where the Planning Commission concerns itself with the building of a long-term strategic vision of the future and decide on priorities of nation.

Panning Commission works out sectoral targets and provides promotional stimulus to the economy to grow in the desired direction. It also plays an integrative role in the development of a holistic approach to the policy formulation in critical areas of human and economic development.

In the social sector, schemes that require co-ordination and synthesis like rural health, drinking water, rural energy needs, literacy and environment protection have yet to be subjected to coordinated policy formulation. It has led to multiplicity of agencies.

The commission has now been trying to formulate an integrated approach to deal with this issue. The Planning Commission has asked the States to hike the power tariff to save the ailing power sector. It also called upon the States to utilise the power subsidy for improvement to essential services like drinking water supply, education and health for promoting inclusive growth.

The Planning commission has been answerable to the NDC, which comprises chief ministers of all states and administrators of the union territories, besides the members and deputy chairman of the Planning Commission. However, the institution has drawn flak from the states as well as central ministries in recent years for its overarching role.

Prime Minister Naradra Modi who had announced in his Independence Day address the scrapping of Planning Commission, has sought suggestions on the role and shape of the commission from the public.

It is likely that he will outline identity as well as structure and function of the new institution soon. His government will define the role of the new institution vis-a-vis the states and its thinking on the National Development Council (NDC), the highest federal decision-making body in the country.

It is likely that the Planning Commission’s function of allocation of plan funds among different states and sectors is likely to shift to the finance ministry. The distinction between plan and non-plan spending could also be done away with. It is assumed that the new body could function purely as a think tank, advising the government on development spanning social and economic sectors.

There is little doubt that the Planning Commission has become a mammoth organization, scrapping it altogether and replacing it with a new institution has to be viewed with care and caution.

(Syed Ali Mujtaba is a journalist based in Chennai. He can be contacted at [email protected])