Modi disbands Plan panel, says time for ‘new body with new soul’

The Commission was seen by many as a lingering vestige of the country’s attempt to replicate the Soviet-model of a planned economy. Interestingly, Modi’s predecessor, Manmohan Singh, in his last meeting as the chairman of the Plan panel on May 1, had also conceded that there was a “pressing need” to restructure the Commission and had said that the Plan panel needed to change in the wake of “an increasingly open and liberalised economy and a greater reliance on market mechanisms”. Modi’s Friday announcement on the Commission’s fate, though, had an element of surprise in it, as the minister of state for planning Rao Inderjit Singh, in a written reply in the Rajya Sabha on June 17, had categorically stated that “…there is at present no proposal under consideration of the government for abolishing the Planning Commission.”

In his Independence Day speech, the Prime Minister said that the Central government was no longer the fulcrum of economic development and states will have to be taken on the board as they are equal stakeholders. “If we have to take India forward, then states have to be taken forward. We need a new body with a new soul. Very shortly, we are about to move in a direction when this institute would be functioning in place of Planning Commission,” Modi said in his speech.

Pitching for a new institution, Modi likened dismantling of the Plan panel to the need for repairing a old house. “Sometimes it becomes necessary to repair a house. It costs a lot of money. But it does not give us satisfaction. Then we feel it is better to make a new house.”

Modi’s views on the Commission draws its strength from the BJP’s manifesto for the 2014 Lok Sabha elections. The manifesto argued for reviving “moribund forums” like the National Development Council (NDC), which is headed by the Prime Minister and comprises Union ministers and state chief ministers. The manifesto pitched for bringing “Centre-State relations on an even keel” through consultation. “The moribund forums like ‘National Development Council’ and ‘Inter-State Council’ will be revived,” it said, while emphasising on the need to evolve a model of development driven by states.

The Planning Commission, set up in 1950 by Jawaharlal Nehru based on the Soviet planning system, is tasked with fixing targets for growth of various sectors and earmarking resources to achieve them.

Mihir Shah, who served as a member of the Commission told The Indian Express, “There were many cases (in the Commission) where in-principle approvals, investment clearances, grants-in-aid and other decisions appeared to smack of bureaucratic red tape … There were also visible vestiges of the old Stalinist command and control, inspector raj mindset.”