Will scrapping Planning Commission work?

Aug 26 2014, 01:36 IST
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SummaryThe new body replacing the Planning Commission will have to be a tool for fulfilling states’ aspirations. But the government should avoid making it too powerful, like the Chinese NDRC

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

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