Is Planning Commission relevant today?

Dr Ashwani Mahajan
In his first speech from the ramparts of the Red Fort, on August15, Prime Minister Narendra Modi announced that the Planning Commission will become history very soon. He also said that the circumstances under which Planning Commission came into existence, no longer exist and therefore in the changed circumstances we need some different institution in its place. later an expert group was formed, which included many experts including Yashwant Sinha, Bimal Jalan, Vijay Kelkar and many others; which has started its work to suggest the nature and the functions of the proposed new institution.
We understand that since national as well as international environment has undergone major changes; there is a need to relook and redefine the role of state governments in the development of the country; and for the same policy making bodies also need to be revamped. Prime Minister hinted that an altogether new institution would be created, instead of bringing changes within planning commission, when he said that renovation of a house is costlier than making a new house itself.
It is notable that after the formation of the new government, people in the official circles have been questioning the relevance of the Planning Commission, which has so far made 12 five year plans and has been guiding resource allocation for plans and schemes for development. Critics of Planning Commission maintain that this institution has lost its relevance and there is a need for an alternative structure for guiding the course policy of direction for the country.
Many economists who have become accustomed to the environment of running of the economic affairs in the country according to the guidelines of the Planning Commission, are feeling really astounded by this proposal. However, this is equally true that in the present context, this debate after the Prime Minister’s announcement, which was so far limited to closed rooms, of course, has come in open.
Arguments of Critics of Planning Commission
Development model adopted by the government after the independence, was the one influenced by USSR, in which public sector was given a major role and therefore the Planning Commission was assigned a leading role for making and implementing five year plans by allocating resources mobilised in order to achieve objectives set forth in the plans.
It is important to note that Planning Commission is the only important institution in India with such a major role, mention of which is not found is the constitution. Planning Commission therefore is not subject to scrutiny by the Parliament. India has federal system of government(s); however Planning Commission is solely under central government and many a times it is felt that existence of Planning Commission erodes our federal spirit.
Federalism Issues
It is notable that Prime Minister is the chairman of Planning Commission and its Deputy Chairman and other members are nominated by the central government. Therefore it is possible that thinking at Planning Commission is influenced by the ruling party and/or its alliance partners. Under these circumstances, it is possible that states ruled by opposition parties are subject to negative bias against them.  We also understand that in a federal system, it is imperative to have a clear cut division of financial resources between centre and states, to carry out their respective functions. However we find that there is always a dearth of resources with the states, as the central government has more resources at its disposal, and states are always dependent on transfer of resources from centre. Finance Commission, which is a constitutional body designated to recommend transfer of resources from union to states. We find that a major portion of transfer from union to states is done through Planning Commission. Therefore Planning Commission comes in way of a smooth functioning of the federalism. It is learnt from news reports that the expert panel constituted for making suggestions about new planning body, has opined that the new institution will not have right to make financial transfer to states.
Synchronising with Market
Those who question the relevance of Planning Commission also say that due to the new economic policy pursued in the last more than two decades, the importance of central plans has come down and the importance of private sector has increased manifold. It is undoubted that the projects run by private sectors and/or with the cooperation of the private sector, the role of market forces is much greater. Decision to undertake private investment and its implementation is guided by thinking, which is at much variance with the thinking of the bureaucrats sitting in Planning Commission.
Development of the economy by planed industralisation was the need of the hour after independence. However, today we rarely find any sector where private sector is not a partner. Moreover government is withdrawing its investments from public sector by way of disinvestment. Even the social services like education and health are also being privatised. Under these circumstances, it is difficult to synchronise Planning Commission and the privatisation, which is the rule of the game today.
While addressing the last meeting of the Planning Commission, the then Prime Minister and Chairman of Planning Commission Dr. Manmohan Singh had also raised questions regarding Planning Commission, stating that whether it has changed its role and way of functioning in the changed circumstances. He said that today there is a need to change the outlook of Planning Commission from ‘control and planning’ to that of ‘governance and regulation’. The slogan of the new government under Narendra Modi, that there should be ‘minimum government with maximum governance’; which means that there should be minimum number of ministries and their officers, however they should work with maximum efficiency.
It is notable that in the last 10 years Planning Commission has been subject to criticism at various occasions. Sometime back when Planning Commission was adamant on its definition of poverty line of 32 rupees daily income for urban areas and 28 rupees daily income for rural areas despite objections from the Supreme Court, it was subject to huge public resentment and when the same Planning Commission got its toilet made with the cost of Rs. 35 lakhs, the public anger had gone manifold. It is an open fact that in the present day globalisation and privatisation , there is hardly any relevance of Planning Commission, however bureaucratic functioning of Planning Commission continues unabated.
Today’s Planning Commission is exhibiting its extreme insensitivity not only in context of the definition of poverty, but also in terms of providing minimum education and health facilities for the masses. Twelfth Five Year Plan is full of big talks about privatisation of education and health services. In today’s circumstances it is imperative to have a new system in place, which does not burden the government by big agencies. Instead the new system should be able be give solution to the problems of unemployment, poverty and lack of health and education for our masses.

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