Time to axe the Planning Commission?

Should the Planning Commission be abolished? There are many in the Union infrastructure ministries such as highways, power, civil aviation and shipping who salivate at the prospect. By some convoluted reasoning in the UPA Government, the Commission became the focal point for infrastructure; it was the body that serviced the Cabinet Committee on Infrastructure, chaired by the Prime Minister.

Many mandarins in these ministries feel the country has paid a heavy price for that decision. Over the past few years, the development of physical infrastructure — roads, ports, power, airports — was hamstrung by a number of factors. This included the constant bickering, nagging and one-upmanship by the Commission, which conducted itself as a super body without any accountability.

The letters written to the Government by the chairman of the National Highways Authority of India in the last couple of years adequately highlight what happens in a scenario of authority, divorced from responsibility and accountability. The alacrity with which the copyright of a document prepared by inputs from many officers and various government departments was claimed by the Commission did not endear it to those who had contributed to the document.

The environment was so soul-destroying that some secretaries to the Government had sought to move out of their ministries as they felt that the blame for lack of performance would be tagged on to them even though the actual problem lay elsewhere.

But this was not always so. Set up in March 1950 by an executive order, the Commission has had a galaxy of deputy chairmen heading it, not excluding the last incumbent. Names such as DR Gadgil, DT Lakdawala, PN Haksar and C Subramaniam (who was also minister for planning) come to mind. The objectives of the Commission were 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”.

Over the last six decades, it has produced a number of useful documents which have helped in policy formulation. However, it is widely believed that the quality of its output has declined. But to judge its usefulness by aberrations in its functioning may not be fair. To take a considered view, it is worthwhile to examine its raison d’etre and determine if those activities are best performed by other agencies.

Some of the more important functions of the Commission are: (i) allocation of resources between the Centre and States, within the Central ministries, between States and between various development programmes in the States; (ii) mediation in inter-ministerial disputes; (iii) appraisal of projects; (iv) evaluation of programmes; and (v) the preparation of a Five-Year Plan.

Is the Commission really supposed to allocate resources? With the Finance Commission, Finance Ministry and the modified Gadgil formula (and, if necessary, fresh guidelines) doing the same job, the Commission need not be burdened with this responsibility.

The annual unseemly wrangle between the Commission and the Finance Ministry about the size of the Plan — which subsumes incorrect notions of developmental and non- developmental expenditure, based on a distinction between Plan and non-Plan — will also be put to rest. Along with this, the ritual of chief ministers of States calling on the deputy chairman to fix the size of their annual plans can be jettisoned. The Commission was never meant to be a mediator in inter-ministerial disputes. The structures for resolving such disputes exist. The Committee of Secretaries at the official level chaired by the Cabinet Secretary is mandated to do this job. If disagreements still persist, the Cabinet steps in.

The appraisal function of the Commission is a significant one as it provides inputs which facilitate investment decisions of the Centre. This activity could be spun off to the Finance Ministry. The programme evaluation set up in the Commission was meant to assess the delivery and impact of programmes objectively and independently. However, for many reasons, it has lost its credibility and utility. This work could be outsourced to bodies that are at arms’ length from the Government.

But perhaps the most important function of the Commission is the preparation of a Five-Year Plan. It is argued that many countries do not have such plans, and therefore we too can do without it. That said, given the state of development of the economy, the need for optimum utilisation of resources, linkages between different sectors and their impact, as well as an articulation of the developmental philosophy of the Government, a Plan document which intricately weaves the above factors is required. Without it, the danger of a drift becomes more pronounced.

However, the requirement that state Plans are to be approved by the Commission has been found to be irksome, if not repugnant. There is considerable merit in the view that States cannot be straitjacketed in their resource allocation by a body that may not fully comprehend their needs.

So, should the Planning Commission be abolished or reformed? The Independent Evaluation Office has suggested in a recent paper that the Commission be abolished and in its place a Reform and Solutions Commission, which would function as a think tank of the Government, should be established. This Commission would be staffed by experts with domain knowledge.

Given the fact that planning to optimise use of resources is necessary and that correcting the tardy implementation of programmes is critical, perhaps the best way forward would be to convert the Commission into a body that will prepare medium- and long-term plans — five, 10 and 20 years — and will actively monitor implementation. The Commission can be rechristened as the Planning and Implementation Commission and can have two wings. One will be in charge of perspective planning and the other of implementation.

The ministry of statistics and programme implementation can be downsized to become the ministry of statistics. In any case, the basic role of this ministry was to monitor certain programmes and projects. It essentially provides information on projects which have been sanctioned, completed and delayed. It does not have the mandate to look at issues of implementation.

Projects worth more than ₹6 lakh crore are stuck due to issues of land acquisition, environment and forest clearance, financing and so on. As a consequence, the economy has slowed down and banks are stressed. Over time, new projects will get added.

In order for the reformed Commission to be effective in resolving hurdles in implementation, it will need to be adequately empowered. This should not be difficult considering the Prime Minister would be the chairman of the body. Instead of meeting once in six months or annually, the reformed body would meet every month where issues of implementation can be discussed, debated and sorted out under the cairmanship of the Prime Minister.

The writer is a former Finance Secretary to the Government of India

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