It is time that the Planning Commission?set up in 1950?is restructured, as its role and functions have undergone drastic changes over the last few decades. When it was set up, its prime objective was to ensure that under-developed states progressed economically at a faster pace so that they can catch up with the developed ones. For this, the Commission was required to understand the issues affecting under-developed states and help them in the development planning process.
Another critical role of the Commission was the devolution of financial resources in the most effective and balanced way while keeping in mind the needs of the states. The Planning Commission has not been able to fulfil this in all these years. It was also supposed to highlight the factors that retard economic development.
Its structure underwent a major change after the ?special-category state? distinction was introduced in 1969, when the Fifth Finance Commission sought to provide preferential treatment in the form of central assistance and tax breaks to certain disadvantaged states. Initially three states?Assam, Nagaland and Jammu & Kashmir?were granted special status, but since then eight more have been included (Arunachal Pradesh, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Sikkim, Tripura and Uttarakhand). But the implementation side of planning and programmes was not as effective as was conceived.
The financial resources distribution policy that was implemented in the Third Five-Year Plan (1961-66) benefited developed states at the cost of mineral-bearing states such as Odisha. This policy was countered in the mid-1990s after the free market economy came into operation and investment started to come in the mineral-bearing states.
From a highly centralised planning system, the Indian economy has gradually moved towards indicative planning, where the Planning Commission concerns itself with the building of a long-term strategic vision of the future and decides on the priorities of the nation.
There is an urgent need to restructure the Commission so that state governments can plan their development programmes as per their requirement, instead of these being framed at the Centre or at the Yojana Bhawan.
The Planning Commission?s function as a think tank was to be carried out keeping the whole country in focus. Its members were drawn from various fields, thus bringing in diverse expertise. The purpose was to develop a national plan as a template for developmental activity.
However, by the late 1960s, the Commission had assumed executive functions which were not part of its original mandate. Somewhere, the Union government gave up its role and the Commission took over itself to clear respective state plans. Chief ministers had to rush to the Commission to clear their annual plans. The finance ministry delegated the role for clearing states? plan to the body. This was against the spirit of federalism as the Commission does not derive any authority from the Constitution.
Even the former finance minister, P Chidambaram, recently stated that it should be a much more limited body, tasked with drawing up prospective plans as, at the moment, it is ?too big, flabby and unwieldy.?
As per the Constitution, it is the finance ministry?s job to take into account revenue generation figures and prepare state-specific plans. Though the NDA government has expressed its intention to restructure the Commission, nothing should be done that would hamper economic growth of under-developed states. We expect the government to adopt a pragmatic approach while restructuring the decades-old institution. It has outlived its life, thus the need for a new institution for national planning.
(As told to Sandip Das)
The author is a Lok Sabha member, Biju Janata Dal.
Creating a new institution to replace the Planning Commission will take time, maybe a couple of years; in the interim, the functions of the Planning Commission will have to be carried out by some other agency. However, there is no clarity right now as to how those functions will be carried out and who will do that. And as far as the Budget-making process is concerned, while the Planning Commission may cease to exist, the Secretariat to the Planning Commission is there?it has not been disbanded as yet?and this Secretariat will continue with its job. However, keep in mind that the bureaucracy doesn?t have the technical domain knowledge that the Planning Commission has.
The Commission was hitherto responsible for the allocation process. Members of the Commission, each of whom was overseeing a set of ministries, would sit together and determine the allocation. That joint procedure would no longer exist if the Commission is scrapped. Each ministry will work in isolation, each ministry will have its own demand.
Resolving the huge discrepancy between what is demanded by a particular ministry and what is available is not an easy task either. For the Commission, deciding this could take 2-3 months of constant dialogue with the ministries. Now you can shorten that process by simply saying that you have X amount of money for a particular ministry, but then that X amount may not be a fair allocation for that ministry. In the absence of the Commission, some other agency will have to look at the process of fair allocation.
Every time a new government took over, the Planning Commission used to change with new members coming in. However, while its composition used to change, the continuity in the system was provided by the Secretariat. But when policies have to be altered, then that job doesn?t fall under the ambit of the Secretariat.
The fact that it was the Planning Commission which used to reduce the space for schemes is not correct. It is, in fact, the ministries. The reason is that every ministry wants to have ownership over its schemes. The Commission doesn?t own any scheme, its job is to simply make sure that the schemes which are going to be implemented are consistent with the priorities of the plan. So long as you have the Cabinet, it will want to retain that control. So, don?t think that the new institution would be able to break that.
One of the functions of the Planning Commission was to make sense of the way the schemes were used to run. The Commission ran by a formula for allocation of funds to particular schemes. The Finance Commission, as of now, cannot do this, unless the Constitution allows it. Also, you cannot turn the Finance Commission into a permanent body, because the Constitution specifically provides for it to be a temporary body. It comes into existence, for two years it does its job, and then it is reconstituted.
Scrapping the Planning Commission and bringing in a body like China?s NDRC is not a good idea either. The NDRC is a much more powerful body than the Planning Commission ever was. It determines the policies of the entire system. The NDRC is nothing but an extension of the Communist Party of China. In a democracy, debates happen, people put across their views, and then a decision is taken. A non-transparent way of taking decisions is not a good idea in a democracy such as India.
Also, nobody is going to join a Planning Commission if it is only a think tank. People like me, we join the government because we are contributing to the policy. You take away that policy bit and I wouldn?t have joined. I would like to go to a pure think tank where I am not subjected to political pressures and where I am paid a whole lot more. Finally, given the situation, nobody is clear what the new body would be like.
The author is the chairman of the National Statistical Commission
