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Business News/ Opinion / Online-views/  Requiem for the Planning Commission
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Requiem for the Planning Commission

From the stump speeches of Narendra Modi, it is likely that the new entity which will replace the Plan panel will be a body that will dwell on its function as a bridge between centre and states

Few can quarrel with the government about winding down the Planning Commission as it exists today. Photo: Ramesh Pathania/MintPremium
Few can quarrel with the government about winding down the Planning Commission as it exists today. Photo: Ramesh Pathania/Mint

On 15 August, Prime Minister Narendra Modi formally announced the demise of the Planning Commission. Together with the fact that it was probably the first Independence Day speech that had no references to the Nehru-Gandhi family, it also signalled a break with an otherwise defining era.

Two things seem obvious. One, the Bharatiya Janata Party (BJP) under the leadership of Modi is looking to make a clean break with the past, which has tended to be defined mostly around the Nehru-Gandhi clan—understandably, given its vice-like grip of the Indian polity for most of the first six decades. Second, the government, it seems, has no immediate alternative in mind to the institution of the Planning Commission—evident in the manner in which the government initially spoke in several voices, as also the fact that it is now inviting suggestions from the public. Quite clearly, the Modi government knew what it didn’t want, not what it wanted to create in its place.

Few can quarrel with the government about winding down the Planning Commission as it exists today. It has outlived its original objectives and its most important underwriter, Jawaharlal Nehru, is rapidly receding from the memory of a modern India.

The idea of planned development, as the original notification points out, was first articulated in the appointment of the National Planning Committee by the Congress party in 1938. Six years later, the government of India established a separate Department of Planning and Development. By the end of 1949, the Advisory Planning Board appointed by the interim government had recommended the appointment of the Planning Commission.

It recognized the country’s complex needs. Gaining independence was easier, but dealing with the debilitating colonial legacy was another matter. Firefighting was the name of the game for the new government, leaving it little or no time to evolve a long-term development strategy that would ensure optimal utilization of the country’s scarce resources and correct the inherited inequity in society and among the regions.

The Planning Commission was evolved as the entity that would be free from the burden of day-to-day administration and yet be in constant touch with the government. To cement this symbiotic relationship between the two key entities, the chairman of the Planning Commission was the prime minister and the deputy chairman was a permanent invitee to cabinet meetings.

It was a political call and a good one at that—given the context of that period of history. What it also did was emerge as a repository for some of the brightest brains of India. Their debates, sometimes acrimonious, influenced the Commission and, in turn, the ideology and the thinking of the government.

The seminal moment of the Planning Commission was the formulation of the Second Plan. It laid the basis for a planned economy that would be built on the foundation of the public sector, which was accorded the commanding heights of the economy. Drawn from the experience of the Soviet Union with a planned economy, it was to define the growth strategy for the next two decades.

The next big benchmark was the Sixth Plan that was formulated in 1980. Indira Gandhi had just been returned to power and it was clear that she had undergone an ideological transformation—she was no longer hostile to the idea of market forces.

The Sixth Plan acknowledged this ideological shift and made a compelling case for unshackling the controls on the Indian economy and allowing for greater play to private entities. It laid the foundations of a structural transformation of the Indian economy. Rajiv Gandhi, who succeeded her, accelerated this process, culminating as we know in the Big Bang reforms of 1991.

The gradual rise of the market economy progressively undermined the need for a planned economy. Not surprisingly, the Commission moved away from planning outcomes to indicative planning. However, along the way, the Commission evolved as the secretariat for the National Development Council, the apex body for cementing centre-state relations.

And this function is very much relevant today, especially with a second round of economic reforms to be led by the states even as the coordination between the Union and the states will be crucial in pushing through ideas such as the Goods and Services Tax.

From the stump speeches of Modi in the run-up to the general election and subsequently, it is likely that the new entity which will replace the Commission will be a body that will dwell on its still-relevant function as a bridge between the centre and states. Regardless, it would do well to remember that France had similarly disbanded the idea of a Planning Commission, only to bring it back after a decade.

Anil Padmanabhan is deputy managing editor of Mint and writes every week on the intersection of politics and economics. Comments are welcome at capitalcalculus@livemint.com

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Published: 25 Aug 2014, 01:17 AM IST
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