In this post, Sunil Jain – Managing Editor, Financial Express – provides his perspective on some of the issues involved in replacing the Planning Commission. In his view, the new body should focus on providing advice on policy issues, and undertaking neutral assessment of government policies in the long run. It should not be involved in allocation of funds across levels of government.
In his address to the nation, from the ramparts of the Red Fort on India´s 68th Independence Day, Prime Minister Modi announced his government´s decision to abolish the Planning Commission:
“I believe that when Planning Commission was constituted, it was done on the basis of the circumstances and the needs of those times…but the prevalent situation in the country is different, global scenario has also changed, governments are no longer the centre of economic activities, the scope of such activities has broadened... therefore within a short period, we will replace the planning commission with a new institution having a new design and structure, a new body, a new soul, a new thinking, a new direction, a new faith towards forging a new direction to lead the country based on creative thinking, public-private partnership, optimum utilization of resources, utilization of youth power of the nation, to promote the aspirations of state governments seeking development, to empower the state governments and to empower the federal structure.”
The Planning Commission performed the following functions;
- Preparation of the Plan Document
- Allocation of funds between: (a) states and centre; and (b) central ministries
- Appraisal of all expenditures of the central ministries
- Mediating between states and central government
- Providing independent opinion on all project/ programme proposals of central ministries
- Monitoring progress of central government schemes
- Mediating between central ministries on issues of a crosscutting nature
In view of the above;
Q. Which of these functions are obsolete and could be dispensed with, and why?
In my view, functions a, b, d and g are dispensable as I think the Planning Commission´s job is to visualise the future and come up with alternatives such as on what happens if India does not develop more gas-grids or if it remains on the current carbon-creation path. Once you stick with the what-is-plan and what-is-non-plan kind of stuff, we remain stuck in the kind of situation we are in. In my world, more money gets devolved to states and they decide where the money should be spent. The Planning Commission´s role is one of a body that indicates where money needs to be spent 10-15 years from now and then leaves it to government to actually allocate it. The Finance Commission needs to be a permanent body in this scheme of things.
Q. Of the functions which need to continue to be performed which should be retained in the new institution and which can be located in other existing bodies? Reasons may please be provided.
I think functions c, e and f could be part of an Independent Evaluation Office (IEO) that reports to Parliament and various sub-committees of it. This way, standing committees can ask why money is being wasted. Whether the IEO is housed in the Planning Commission is a matter of detail. Q. Are there other (new) functions that should be performed by the new institution? Please specify with reasons.
The new body should take over a part of the role of the Prime Minister’s Economic Advisory Council (PMEAC), to give independent advice on various issues such as the gas price hike. The body should morph into a Congressional Budget Office kind of body which gives a neutral assessment of various government policies in the long run. For instance, Pronab Sen, Former Principal Adviser to the Planning Commission, had done a paper on government pensions a decade or two ago - this should be one of the series of policy papers the new-look Planning Commission should come out with routinely.
Q. In order to perform the functions envisaged for the new institution, what should be its legal position, character and structure?
Clearly, the new body needs to have a statutory status that prevents the government from dissolving it at will or to browbeat it into silence.
This is the third part of the series "In lieu of the Planning Commission", as part of which we are presenting views of experts from various stakeholder groups - academia, private sector, media, government and civil society - on some of the issues involved in replacing the Planning Commission of India.