For more than six decades, the Planning Commission has mapped India’s path to development. Now, it must be reformed to remain relevant in the new economic age, but there is little reason to shut it down
The corridors of power are abuzz with speculation on what should happen to the Planning Commission. There is no unanimity over whether to make it a titular body and give the ministries and departments a free hand.
Despite being a remnant of the Soviet Union model of governance, the Planning Commission, which has received a lot of criticism from politicians and bureaucrats alike in recent times, has not outlived its mission. Reforming the commission is one thing but let us not throw the baby out with the bath water.
Trimming the commission, giving it a sharper focus and weaning it off the air-conditioned comfort of New Delhi, requires serious thought. The commission is a bête noire for the officials of the Union Ministry of Finance who want the issue of allocations to be merged with the expenditure department. This will allow the Ministry to become everyone’s boss.
The commission, despite many of its problems, has been an arbiter for the State Governments — a role not liked much by the Union Finance Ministry. The Union Government’s desire to clip the Planning Commission’s wings, therefore, must be viewed with circumspection.
The Planning Commission has to be made a more rational organisation so that it can function as an effective arbiter. The Finance Ministry views everything from the prism of revenue; the plan panel takes a broader view. This role of the panel has to be strengthened.
If the Government doesn’t like the ‘Planning Commission’ label, it is free to change the name. But the issue is not in the name but how to make the panel more broad-based. The Planning Commission should become a conglomeration of several regional planning bodies, but they all should function in tandem with the centralised body to create a unified-diversified vision.
Presently, the commission has a top-down approach of functioning and States are supposed to accept its vision without demure. That has to change. The panel has to become a body that functions from the bottom-up. State planning commissions should be merged with regional commissions.
The old order is changing but to give place to the new order, a vision is required. That is what the centralised plan panel needs to do. It has to collate the vision of regional panels and ensure diversified regional growth in a unified plan. It should also be remembered that the since the beginning the plan panel has been preparing a Five-Year Plan but with a 20-year vision. In the new dispensation, that cannot be given up.
Prime Minister Jawaharlal Nehru, partly inspired by the Congress vision of economy given to it by Netaji Subhas Chandra Bose, decided to have a centralised body to take the country’s development forward. That’s how the Planning Commission was born. And the panel served well at least till 1980s, and according to some others, till the advent of the new economic regime in 1991. The first plan launched in 1951, a little before the first general election, marked the beginning of an era of development.
China and India both continue to use Five-Year Plans. Even China has been re-thinking its approach to development: It named the Eleventh plan from 2006 to 2010, a guideline (guihua), rather than a plan (jihua), to signify the Central Government’s hands-off approach to development. The basic Chinese approach has not changed except that planning has become more decentralised.
The First Five-Year Plan in India was one of the most important because it launched the Indian development project after Independence. It supported agriculture production and paved the way for industrialisation (but less than the Second Plan, which focussed on heavy industries). It built a mixed economy, on the concept of a welfare state, with an important role for the public sector.
The First Plan also encouraged the private-sector, a concept given by the so-called ‘Bombay Plan’ formulated by eight industrialists in 1944-1945. Though Nehru officially did not accept the plan, he imbibed many of its concepts into the planning process. A key principle of the Bombay Plan was that the economy could not grow without Government regulation.
Other salient points of the Bombay Plan were an active role of the Government in deficit financing and planning equitable growth, transition from an agrarian to an industrialised society, and — in the event that the private sector could not immediately do so — the establishment of critical industries as public sector enterprises, while simultaneously ensuring a market for the output through planned purchases.
In the changing economic scenario, the plan panel has an important role to play in sorting out issues between Government departments, States, farmers, industries and industrial houses. It should be recast with this vision; not trashed completely. The child may have gone a bit off the track but it must be allowed to reform and become an asset for the family.