Do we need a planning body? - Wind up the panel, it's an anachronism


Do we need a planning body?

Wind up the panel, it's an anachronism

Parth J. Shah
Liberal Times , Volume X / No.4 2002


The licence-permit-quota raj and the high walls of tariff were the ubiquitous instruments of Indian central economic planning. We have buried them for good. But we still keep brooding over what to do with the master who wielded these instruments. It's a typical Indian existentialist angst in dealing with change.

Creative destruction is becoming the life of Indian companies, but for Indian government old is still gold, or even family heirloom. Just like the Indian firms, the government needs to understand and adapt to change, look at the future and not at the past. The Planning Commission symbolises the old approach to economic management.

It represents an antiquated economic philosophy and an antediluvian mindset. We need a clean break from that approach, philosophy, mindset. Let's be unambiguously clear about India's future path. The civil service, judiciary, and even the ministers from UP and Bihar should have no doubts about the broad path that will lead India into the 21st century with peace and prosperity.

With the burial of the instruments of central planning, the primary task left for the Planning Commission - of plan allocations - would become largely redundant if Mani Shankar Aiyar is successful in transferring finances along with functions and functionaries to local governments. The approach of top-down allocation of funds now belongs to history books.

Bury the Planning Commission along with the idea it represents - that government planners know better than people (markets) about most productive employment of society's resources. If the government wants a think-tank, then let it create one. Do not struggle to shuffle around pieces of the old skeleton and strive to breath a new life into it. Create a council of economic advisors with a new mandate, a fresh vision and a modern structure. Give the chairperson of the council a Cabinet status, if you may.

I hope that the re-assembled 'reform dream team' will seize this opportunity to make a bold political statement by abolishing the Planning Commission. It will complement and reinforce their courageous economic programme.

Do we need a planning body?

It has helped nurture fiscal federalism

N J Kurian, Principal Consultant, NIPFP
Planning Commission was set up through a government of India Resolution on 15 March 1950 for overseeing the socio-economic development of the country. The commission, though it was not part of the constitutional scheme, acquired a pre-eminent position from the very beginning.

This was partly due to the fact that the prime minister was its chairperson. Indeed, the commission's importance and clout has invariably been in proportion to the interest shown by the prime ministers over the past 50 years.

Critique of planning and Planning Commission has been a regular part of the Indian public debate from the '50s. Prof P C Mahalanobis as member of the commission for well over 12 years since 1955, influenced, more than anybody else, the shaping of the planning process in the country.

As a result, most of the ills of planning in India are attributed to him by the critics from the right. The fact is the commission got intellectual backing and technical support not only from socialist planners but also from several economists from the UK and the US. Some of the best and brightest young Indians with informed idealism joined the Planning Commission.

While nobody can justify the role of the commission in sustaining the licence-permit raj and its contributions to stifling the market signals, its overarching contributions to development thinking in the country cannot be belittled. The commission has been playing a central role in nurturing fiscal federalism in the country. There have been few complaints against the commission in its dealings with state governments of different political hues.

The critics who want the Planning Commission to be wound up forget the Indian society is too complex to be left to market forces to ensure balanced and equitable development. Even the most ardent economic reformers of the country now recognise that gains of development over the past decade have been shared very inequitably.

A reformed Planning Commission with adequate technical competence and understanding of ground realities of the country could provide the needed policy advice to the Centre and the states.