Modi shutting the Planning Commission: All you need to know about the central body

The 64-year-old Planning Commission, a vestige of the socialist era, will soon become history as Prime Minister Narendra Modi announced its abolition this past Independence Day. The body will be replace by a more relevant institution.<br />

FP Staff August 19, 2014 11:45:43 IST
Modi shutting the Planning Commission: All you need to know about the central body

The 64-year-old Planning Commission, a vestige of the socialist era, will soon become history as Prime Minister Narendra Modi announced its abolition on the Independence Day. The plan is to replace it with a more relevant institution.

Here are a few details about the central body to get you up to speed:

When was it set up and what was its objective?
Greatly impressed by the Soviet planning system, the country's first Prime Minister Jawaharlal Nehru had set up the Planning Commission in 1950 to steer the country's economic destiny.
Set up by a Cabinet resolution, the commission enjoyed immense power and prestige as it had always been headed by the Prime Minister. Its primary objective was to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering opportunities to all for employment in the service of the community. It did this through its Five-Year-Plans.

It was charged with the responsibility of assessing all resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of resources and determining priorities.

Modi shutting the Planning Commission All you need to know about the central body

Planning Commission

What were the Five-Year-Plans like?
For the first eight plans, the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced and the current thinking on planning in the country, in general, is that it should increasingly be of an indicative nature.

Who were some of the high profile deputy chairmen?
The Deputy Chairman of the Commission has often been a political stalwart holding the rank of a Cabinet Minister. The chairperson of the commission is always the prime minister.

The stalwarts who had been the deputy chief of the panel included Gulzarilal Nanda, V T Krishnamachari, C Subramaniam, PN Haksar, Manmohan Singh, Pranab Mukherjee, K C Pant, Jaswant Singh, Madhu Dandavate, Mohan Dharia and R K Hegde. The last deputy chairman was Montek Singh Ahluwalia.

What were the Plan Outlays like?
Plan outlay is the amount for expenditure on projects, schemes and programmes announced in the Plan. The money for the Plan Outlay is raised through budgetary support and internal and extra-budgetary resources. The budgetary support is also shown as plan expenditure in government accounts.

What about growth performances under each plan?
Out of the 11 earlier five year plan period, the government failed to achieve desired economic growth on six occasions.

Why is the commission redundant now?
The planning body lost its relevance after the opening of the economy in the 1990s. With the dismantling of the licence raj, it functioned only as an advisory body without any effective power.
The Commission's working in recent years was often criticised by the Chief Ministers who resented being called by Deputy Chairman every year for approval of their state plans.

"We have come to Delhi just to be told by the Commission how we should spend our own money," Tamil Nadu Chief Minister J Jayalalithaa had said in 2012 after a meeting with the then Planning Commission deputy chairman Montek Singh Ahluwalia.

In 2012, it was pilloried for spending $50,000 to renovate two office toilets, and then it was lampooned for suggesting that citizens who consumed goods worth Rs 27 or more a day were not poor - in a country where millions struggle to survive on much less daily.

What is everyone saying about Modi's decision?
Welcoming Modi's decision to do away with the plan panel, former Planning Commission member Bimal Jalan said: "It is very good idea. Planning has become outdated concept now. There is a need to modernise it. We have to see the blueprint of the new concept. But change was very much required."

Another former Commission member Abhijit Sen said Modi has cleared the air about the future of the Commission. "It is not still clear what would be the structure of new body. But the Planning Commission will not be the Planning Commission it was."

Industry chamber CII too welcomed the decision and said: "We would be happy to work closely with Government to offer ideas on the outline of a new development and implementation institution."

Arun Shourie, an influential member of Modi's ruling Bharatiya Janata Party, had derided the Planning Commission - set in a hulking New Delhi building with 500-600 employees - as a "parking lot" for political cronies and unwanted bureaucrats.

Data compiled by Kishor Kadam

With inputs from PTI and Reuters

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