A course correction
In his first speech from the ramparts of the Red Fort, on 15th August, 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 stalwarts including Bimal Jalan, Vijay Kelkar, Yashwant Sinha and many others; it 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 the policy making bodies also need to be revamped.
The Prime Minister hinted that an altogether new institution would be created, instead of bringing changes within the Planning Commission, when he said that renovation of a house is costlier than making a new house itself.
It is notable that the Planning Commission has so far made 12 five-year plans and has been guiding resource allocation for plans and schemes for development. Critics of the 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.
The 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. It is therefore is not subject to scrutiny by parliament. India has a federal system of government; however Planning Commission is solely under the Central Government and many a times it is felt that existence of Planning Commission erodes our federal spirit.
It is notable that the 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 bias against them.
We also understand that in a federal system, it is imperative to have a clear-cut division of financial resources between the Centre and states, to carry out their respective functions. However we find that there is always a dearth of resources with the states. Interestingly, it is the Finance Commission, which is a constitutional body designated to recommend transfer of resources from the Union to states. But we find that a major portion of transfer from the Union to states is done through Planning Commission. Therefore Planning Commission comes in the way of smooth functioning of the federalism.
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 much at variance with the thinking of the bureaucrats sitting in the Planning Commission.
Development of the economy by planed industrialisation 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