The issues with Planning Commission
Five Year Plans and their inherent limitations
The principal function of the
Planning Commission is to come out with five year plans for the country. Once a
five-year plan is finalised the government shall work to achieve it, even if there
is a change in the government in between. However, political pressures often
don’t allow the planning to be as effective as originally envisaged.
In 1974, the fifth five year plan
was formulated by the Planning Commission. However, towards the latter half of
the plan’s tenure, the government changed at the Centre. Morarji Desai led the
first Non-Congress Government at the Centre. One of the first things that the
Prime Minister did after joining office was to reject the five year plan formed
by the previous (Congress) government.
‘The ability of the Plan to look beyond the next poll is limited and
therefore, strategically imperative agendas often get lost in this process’,
reports Economic Times.
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Undue Importance to Planning
Over time it was felt that the
Planning Commission is being given undue importance. Instead of merely
resorting to it for developmental issues, the centre as well as states sought
the advice of Planning Commission in everything. Celebrated Indian politician K
Santhanam had said1 in 1960 that, “planning has superseded the federation and our country is working like
a unitary system in many aspects”
What this essentially means is
that the Centre and the States pass on most
of the buck to Planning Commission. Instead of taking decisions by
themselves, ministries would pass it on to the Planning Commission. This is an
issue with the traditional stance of a planned economy. Things don’t move. The
first voices against Planning Commission surfaced in 1990s, primarily because
people realised that the boost in economic growth was attributable more to the
private sector and not planning, as reported by Firstpost Biz in this article.
Finance Minister John Mathai had
resigned after presenting his Budget Speech in 1950. The only reason of his
resignation was his protest against the increasing power of Planning
Commission. The Administrative Reforms Committee (ARC) of India in 1967 also
observed that while the ministers are ultimate authority, but the Planning
Commission has earned the reputation of being a ‘parallel cabinet’ and
sometimes, a 'Super Cabinet'2
Non-representation of the States on the Commission
The Prime Minister is the Chairman of the Planning Commission. Although for most of the practical purposes, it is the Deputy Chairman who is effective head of the Commission. The Finance Minister is a member of the Commission by default. Other members include senior IAS officers. One should notice that there is no representation of the States. It functions mainly as the Central Government’s tool.
Prime Minister Modi had said in
his speech on Independence Day, 2014 that, “to strengthen our federal structure, to make our federal structure
vibrant, to take our federal structure as a heritage of development, a team of
Chief Minister and Prime Minister should be there, a joint team of the Centre
and the states should move forward, then to do this job, we will have to think
about giving the Planning Commission a look…”
The basic premise of a federal
structure is that the Centre should have no power to control how the states
spend their money. But this is not happening. An article published
by ‘Down to Earth’ talks at length about this issue. It says that Planning Commission
would often sanction the plans for states and would give them their share of
money (which otherwise also belongs to the states, the whole exercise is only a
mockery). All these issues raise a question about the relevance of the Planning
Commission.
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Importance of planning in an economy cannot be
undermined
Planning seemed to be a very good
course of action at the time of the Commission’s formation. Nehru and his
cabinet had passed a resolution for enactment of a body that could be the
guiding light for a newly freed economy with still a lot of ground to clear. In
this article, several advantages of a planning in an economy are
listed out. The eye catching line is – ‘A
plan is no dead fetish. It is a living program, and hence may be partially
changed while it is under way. So far these changes in the Soviet plans have
been only in the direction of a greater accentuation of the "general
line."’
People accept this argument even
today, albeit not completely. Planning is as important in an economy as is the
yearly budgets made in any corporation. Needless to say, the plans can be changed
given the new circumstances, since it is a ‘living program’ and not a ‘dead
fetish’.
However, there is a difference
between planning and controlling. The Planning Commission was not a
Constitutional body. Moreover, it was not any statutory body also (it was not
passed by any Act of Parliament), still it used to sanction finances even
though not under the purview of the Comptroller and Auditor General.
Therefore, the function of planning
should be separated from the function of allocation of finances.
The structure of the new Commission
This article published by Down to Earth describes the nature of a new body in place of
Planning Commission as recommended by the government. It describes the commission
as one having no financial allocation powers (for reasons we discussed above)
and focusing on developmental agenda. The office shall be a small body of five
members reporting directly to the Prime Minister, as reported by Economic Times
in this article.
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Notes
1. As mentioned in the book on 'Indian Polity', 2014 by M Laxmikant. (reference from K. Santhanam, Union-States Relations in India, Asia Publishing House, 1960 pg 70)
2. Interim Report on Machinery for Planning, 1967, Para 15 (referred via M Laxmikant)
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