Irrelevance of Planning Commission & Relevance of States

One of the most widely spoken about moves of the BJP led NDA Government as it took power on May 26, 2014 and also the one that was on every one’s mind was – “What was the Government going to do with the Planning Commission?”. Innumerable stories and editorials made its way, some citing probable suggestions to reinvent the Commission and some even naming probable candidates who are expected to take on the mantle of the Commission.

While many media houses both mainstream and social, ran campaigns on what should Prime Minister Narendra Modi speak during his Independence Day speech, none predicted that the decision on Planning Commission could feature or at least a decision in this regard could be possible in his speech.

Inference, yet again Prime Minister Narendra Modi has proved he is faster than the media and is known for setting the agenda for their reportage.

On the ramparts of the Red Fort during his maiden speech, Prime Minister Modi elucidated that the Planning Commission had outlived its use and quite rightly, lost its relevance in today’s social political scene in India, and that there is a need to disband it. The import of the decision comes from Prime Minister’s own words ‘Co-operative Federalism’. In his maiden speeches in both the houses of the Parliament, PM Modi made it clear that states must develop for India to develop.

One of the hurdles in the way to attain the aforesaid objective was the very existence of Planning Commission and its powers. The Commission as such was set up by Nehru in the 1950s and was primarily tasked to develop five year plans. Over time, the commission evolved to allocate funds and most notably grew as a centre of political power. As on date, the main role of the Planning Commission is to allocate funds for projects and schemes, whose underlying aim is to help in the developmental process and to promote a rapid rise in the standard of living of Indians. This is done by exploitation of the resources of the country to promote inclusive development via the delivery of public goods and services. From planning of roads to figuring out how much to fund for programmes like NREGA, decisions need to be taken in order to allocate public funds to States, along with blueprints for implementation and monitoring.

The major flaw with the conception of the Commission was that it was not visionary and far-sighted. The scene in India today is such that coalition governments and regional parties have decentralised the political structure and therefore there is further need now for more devolution of planning to state and local levels. One of the biggest casualties of the Planning Commission was that states and local bodies were excluded. They were never given the opportunity to have a say in formulating an economic or project oriented blue print, leave alone implementation.

Another major criticism which the Commission faced from the likes of many experts is that it gets into allocation of both planned and non-planned expenditure as well as controlling them. Several governments came and went, but none could effectively enumerate steps for the Commission to reinvent.

The Commission drew up economic plans on its own and in turn expected the state governments to be inspired by them. With the economy opening up, large number of private players entering the scene and with zero involvement of the state governments and local bodies, the Commission was cut off from the grass roots.

All said and done, till date there have been no concrete solutions from the Commission to actually end poverty. Since its inception, there have been many attempts to reinvent and redefine the Planning Commission but none have fructified.

With so much criticism coming its way, the next logical step was to reinvent the Commission to be a body which can provide expertise on developmental reforms. This is exactly what Prime Minister Narendra Modi and the BJP led NDA government have embarked upon. As per reports, the Planning Commission is set to be disbanded and replaced with the National Development and Reforms Commission. The new Commission is set to be headed by the Prime Minister, the deputy head will be the Finance Minister and most importantly the body will also include three state finance ministers and three industrialists.

In sync with Co-operative federalism, the inclusion of state finance ministers signifies the intent of the Central government to take states along at the policy formulation and at the implementation levels. In addition, as soon as he took charge Prime Minister Modi directed the Finance Minister to deal with the states directly in terms of allocation and regulation of funds and the Prime Minister’s Office to attend to grievances from the states on a priority basis. The inclusion of industrialists signals that the Government is aware of the role that private sector plays in the nation’s economic growth.

Having governed a state for 13 years, Prime Minister Narendra Modi is acutely aware of the federal structure and the changing times in which states have to be given maximum impetus. What is most certainly happening under Narendra Modi is that States are becoming more relevant having been included in the process of nation building.

The article is written by Sudarshan Ramabadran who is a Research Scholar at India Foundation. The views expressed are his own. 

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