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Most CMs back PM Modi’s plan to replace existing Planning Commission

PM Modi described the meeting as 'fruitful' saying that all Chief Ministers had offered significant suggestions.

By: Press Trust of India Written by Surabhi | New Delhi | Updated: December 8, 2014 1:00:25 pm
Prime Minister Narendra Modi gives his speech during an election rally in Hazaribagh on Saturday. (Source: PTI) Prime Minister Narendra Modi gives his speech during an election rally in Hazaribagh on Saturday. (Source: PTI)

A majority of chief ministers on Sunday favoured Prime Minister Narendra Modi’s proposal to replace the existing Planning Commission with another institution that would reflect a truly federal polity and a changed economic scenario, and which recognises states’ need for flexibility in spending.

Congress-ruled states, however, did not favour dismantling the 64-year old Commission, and instead suggested a revamp of the existing structure.


The issue was discussed during a four-hour meeting moderated by Finance Minister Arun Jaitley, where the PM “invoked the spirit of cooperate federalism cooperative federalism” and stressed on the need for a suitable body to replace the Planning Commission.

“The process of policy planning also has to change from ‘top to bottom’ to ‘bottom to top’,” Modi is learnt to have told the chief ministers.

The PM also referred to remarks that his predecessor Manmohan Singh had made on April 30, to the effect that the Plan panel lacked a futuristic vision in the post-reform era. Singh had noted that the panel would have to reinvent itself in order to stay effective and relevant, according to an official release.

Government sources said an alternative to the Plan panel was likely to be announced within a month. It would be chaired by the Prime Minister and include some Cabinet ministers, chief ministers, as well as private sector experts. Chief ministers may be inducted by rotation, and have greater say in the allocation and use of central funds.


The new institution will, as recommended by the Planning Commission, also serve as a hub for innovation and research. In accordance with the recommendation of most state governments, it is likely to do away with the concept of planning and annual plans. An option on the table is to subsume the functions of the Planning Commission in the Inter-State Council, provided for by the Constitution.

Jaitley, who briefed the media after the meeting, said no timeline had been fixed for setting up the new body. “The central government will take a considered view after the consultation is over,” he said, and indicated that the Budget would be prepared as in the past.

“There is no disagreement on the need for change. But the transition should be managed well,” said a Congress chief minister.

In his Independence Day speech, Modi had proposed restructuring the Planning Commission to suit the current needs of the economy, and to empower the states which, at the moment, have little say in decisions on state plans.

BJP-ruled states including Rajasthan, Maharashtra and Gujarat were in favour of the move, as were Tamil Nadu, Telangana, Punjab and most Northeastern states. Bihar, Assam, Kerala, Uttar Pradesh, Himachal Pradesh and Uttarakhand, however, questioned the need to replace the Planning Commission.

West Bengal Chief Minister Mamata Banerjee did not attend the meeting, but has supported an alternative to the Plan panel in a letter to the Prime Minister. The chief ministers of Jharkhand and Jammu & Kashmir, which are in the midst of assembly elections, did not attend.


Sources said chief ministers were given five to seven minutes to present their views, with Jaitley in charge of managing the time. Prime Minister Modi interjected only once during the meeting (apart from the introductory and concluding remarks) to clarify his position on the Plan panel. He said he appreciated the work of the Planning Commission, and emphasised that he had never called for its abolition. He pointed out to states opposing the move that former PM Manmohan Singh too had called for restructuring the Soviet-era agency.

Some states are understood to have questioned the need for dismantling the Commission in the middle of a Plan period; those in favour of the proposal, however, asked for it to be disbanded immediately.

Maharashtra Chief Minister Devendra Fadnavis suggested that the Planning Commission be replaced by a National Development and Reforms Commission, as well as a grouping of similar states. Punjab Chief Minister Parkash Singh Badal is understood to have pointed out that states must have more say in the new body on decisions affecting them such as minimum support price for grains. CMs of Northeastern states said they often got a raw deal because of their small populations and the inability to raise resources.

Planning Commission secretary Sindhushree Khullar made a presentation on the need and role of the proposed agency — and sought comments from states on whether the five-year Plan should be continued, the scope and method of interaction in the new forum, restructuring of fund flows for the central Plan to states, and the role of the knowledge and innovation hub for states.

Lieutenant Governors of Delhi, Andaman and Nicobar Islands and Puducherry were also present at the meeting. West Bengal and Mizoram were represented by their finance ministers.

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