Why the Planning Commission isn't being missed: The PMO needs something else

If you were to ask 10 fairly knowledgeable people the question “what does the Planning Commission do?”, the chances are the majority would reply they haven’t the foggiest.

This is why two-and-a-half months after the new government took over no one has bothered to ask why we have no Planning Commission. The tenure of the Commission is coterminus with that of the government that appoints it (ie, the deputy chairman and its members), and since Narendra Modi hasn’t stirred on the issue, it means the Planning Commission is no more. The permanent employees who work with the Commission’s secretariat remain in their jobs, but the Commission itself does not exist because Modi probably has not made up its mind on it relevance.

The biggest blow to its future came from a body called the Independent Evaluation Office (IEO), set up to review and evaluate the effectiveness of some of the flagship schemes of the central government. The IEO is nominally attached to the Planning Commission, but three days after the Modi government took over, the IEO recommended that the Planning Commission itself be scrapped. It wants the Commission replaced with a Reforms and Solutions Commission.

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While recommendations for the scrapping of the Commission have come from several quarters in the past, the IEO’s own report appears to have come from nowhere. An Economic Times report today (11 August) says that the IEO was not authorised by the Development Evaluation Advisory Committee (DEAC), which was headed by Deputy Chairman of the Planning Commission Montek Singh Ahluwalia when the UPA was in power, did not ask it to look at the Commission’s own usefulness. IEO apparently needs authorisation from DEAC to evaluate anything.

According to an RTI reply received by the newspaper, the IEO recommendation was done on the basis of an “internal” evaluation, and apparently included the views of some members of the Planning Commission itself. Ajay Chibber is the head of the IEO.

Was the IEO report calling for the scrapping of the Commission given out to impress the incoming Modi government, which was anyway not too impressed by the Commission?

Since no one is likely to confess to this, it is best to skip the question and focus on whether the Commission is relevant at all. The issue of relevance can be determined by asking whether what it does now can be done by somebody else, or not done at all.

So what does the Planning Commission do? It does roughly three things:

One, it draws up the five-year plans. Do we need five-year plans in an age where the economic environment changes from year to year? Or do we need rolling plans that are constantly updated every year? Either way, we need somebody to do the job so that we are not stumbling from one year to another without a longer-term gameplan. Do we need a Planning Commission for this? The job could conceivably It be done by a high-powered macro-economic think-tank attached to the Prime Minister’s Office, which, in turn, could employ sectoral panels to work on the smaller bits of the plan.

Two, there is the allocation of work on the plan: which ministry, which part of the government, has to do what to make the plan deliver on its overall goals. Once again, if there is no Planning Commission to do this, we need someone for it. It could conceivably be done by another group attached to the PMO. Only the PMO has the clout to make various parts of the government work together. The Planning Commission is a needless middleman in this. Without the PMO’s clout, the Planning Commission gets reduced to a talkshop.

Three, there is the work of how resources are shared between centre and states. But this is the job of the Finance Commission. A problem has arisen in recent years because of the proliferation of many centrally-sponsored schemes which effectively have to be implemented by the state governments. The Planning Commission can come in as an honest broker between centre and states, but the more effective solution is to reduce the number of centrally-sponsored schemes and let states decided what they want to do with their gross allocations. In a federal structure, financial autonomy is more important than central direction.

Arun Maira, a former Chairman of the Boston Consulting Group in India, who was till recently a member of the Planning Commission, was asked by Manmohan Singh and Montek Singh Ahluwalia in 2009 to check how the Commission could reinvent itself. They apparently gave him a list of 20 eminent persons who could be consulted on the Commission’s future.

Maira, writing about this in his book Redesigning The Aeroplane While flying, asked the eminent 20 three questions: is the Commission playing a useful role for the country; is there some other role it could play usefully; and can it transform itself to play that role?

The answer to the first question was a clear no from all 20, but the answer to the second was a clear yes: the Commission had to move away from its resource allocation role that was no longer relevant to a market economy, to one where it served more as think-tank to the nation - trying to make sense of the huge changes underway in the global economy.

So, in a sense, the IEO’s report, whether authorised or not by the DEAC, should be read more for its content than its (alleged political) intent.

The old role of the Planning Commission is clearly over. Its new role has not been defined. In government, it is tougher to reinvent bureaucratic bodies for new roles. It may be best to scrap old institutions and create new ones to focus on specific roles and new challenges.

The aeroplane need not be redesigned while flying. The Planning Commission is anyway not flying. It can be grounded and replaced with a permanent think-tank and evaluation organisations attached to the PMO.