New PC substitute may gradually end five year planning

Government’s decision to wind up the operations of the Planning Commission indicate that planning process including its design and implementation will come to an end in near future.

Though the end of the PC may nostalgic for the socialistic ideologists, it should be remembered that in a reform oriented economy, its role is not significant.  In 1991, with the launch of economic reforms, planning has lost its relevance and the then government has introduced a much diluted indicative planning without dismantling the Planning Commission.

The new body will be powerful as it can guide a huge amount of the central transfer to the states. The centre’s financial transfer to the states is channelized into two routes – the Finance Commission (Constitutional) and the planning commission (extra constitutional). Finance Commission allocates nearly 4 % of GDP to states while the Planning Commission gives approximately 3% of GDP.

From the state’s angle what is attractive about the new body is that it will give freedom or flexibilities (according to the PM) to them to design programmes with their profile and development priorities. This was the very important thing that missed in the nearly 65 years of planning commission activities in the country. The one size fits all approach of the Commission has made many of its programmes ineffective.

At the same time, the proposed structure of the new entity shows more centrality. Unlike in the case of the NDC, where all CMs are members, the new body has the PM, Cabinet Ministers and few CMs who are selected rotationally. This means a central bias as the body never sits all the CMs at the same time.

The Planning Commission has served as an expert body doing analyses, policy statements and vision statements and these are the services we may miss with the demise of the Nehruvian entity.

Approach of the new body and the PC are different as well. The new body will be a believer of reform oriented competitive economy and will guide states to adopt such practices. 

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