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Once upon a plan

Looking back at the early years of the Planning Commission.

Written by Inder Malhotra |
September 26, 2014 12:46:42 am
The great excitement, even high drama, began with the formulation of the Second Five-Year Plan. The great excitement, even high drama, began with the formulation of the Second Five-Year Plan.

Doubtless the Planning Commission of yore, which did the country service in days gone by, had to be wound up and replaced by an organisation more in tune with the free market. There is already a deluge of suggestions about what should take its place but I have no intention to add to these. My purpose is to recall some memories of an institution that once occupied centrestage, and with which my professional association began at its inception.

On March 23, 1950, as a rookie reporter of a news agency called the United Press of India (on whose ashes was built the United News of India, which is also now defunct), I was asked to cover an event at the Federation of Indian Chambers of Commerce and Industry (Ficci), which then operated from a rented place. Since Prime Minister Jawaharlal Nehru was to be the main speaker, the audience was large and refreshments lavish. All this was overshadowed, however, by the consternation following Nehru’s announcement that the government had just constituted the Planning Commission, with him as its chairman, to prepare five-year plans to promote rapid economic growth and economic and social justice.

Hardly a couple of days had passed when Finance Minister John Mathai’s resignation became big news. He was protesting against the transfer of some of his powers to the Planning Commission. His place in both the finance ministry and the Planning Commission was taken by C.D. Deshmukh. In the initial years, the commission’s vice chairman was G.L. Nanda, who also served as minister for planning. But later, Nehru entrusted the vice-chairmanship to V.T. Krishnamachari, who had better economic credentials. On the floor of Parliament, communist leader Hiren Mukherjee welcomed this change, declaring that Nanda’s “portfolio of planning reminded him of the grin without cat that Alice saw in wonderland”. Nanda’s return to his old job in the Commission later was typical of how government functions.

Even in those less-crowded days, any new outfit had an acute problem of accommodation. The high and mighty of the Commission got a place in a wing of Rashtrapati Bhavan. All others, including the best and brightest young economists, were scattered around in “wartime abominations” dotting Lutyens’ Delhi (some of them still exist.) Eventually, however, the Yojana Bhavan was built.

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From an early stage, I discovered that at the bureaucratic level the moving spirit in the Planning Commission was Tarlok Singh, a firm believer in planned development and social change and a man with impeccable manners. To call him a workaholic would be a gross understatement. No wonder then that after the first general election, when the Lower House was renamed the Lok Sabha, by common consent, the Planning Commission began to be called “Tarlok Sabha”. Singh spent the rest of his career in service of the Planning Commission. By the time he had risen to the rank of additional secretary, he was elevated to the Commission’s membership. Another distinguished functionary so honoured was Pitambar Pant, one of the many brilliant economists serving the Commission who headed its Perspective Planning Division. He could be a hard taskmaster, simply by working harder than any of his colleagues.

The First Five-Year Plan began in 1951, although the final plan document wasn’t ready until two years later. In the words of I.G. Patel, who held every high economic office and was economic advisor to the Planning Commission almost permanently, the first plan was “like the Mahabharata: there is nothing in the Indian economy which does not find a reflection in the plan, and there in nothing in the plan which is also not found in Indian reality. It was natural that the first exercise in planned development should be a sort of reconnaissance trip…”

The great excitement, even high drama, began with the formulation of the Second Five-Year Plan, because the task was basically assigned to P.C. Mahalanobis, a man of formidable intelligence with charm to match. He was the founder-director of the Indian Statistical Institute in Calcutta, respected across the world. At home, however, he had several critics. Before finalising the framework of the second plan, he had travelled abroad and invited many of the world’s top economists, such as Jan Tinbergen, Ragnar Frisch, Joan Robinson, Gunnar Myrdal, J.K. Galbraith and Oscar Lange, to name only a few. At a later date, the US’s ruling establishment, in response to an Indian request, sent Milton Friedman to advise us. It is impossible to improve upon what Galbraith had to say about this: “It is like asking the Holy Father to advise India on contraception.”


The Mahalanobis model, placing great emphasis on the capital goods industry in the public sector, is ridiculed these days. But at that time, a panel of 24 eminent Indian economists endorsed it, with the solitary exception of B.R. Shenoy. The second plan did run into difficulty because of a massive foreign exchange crisis. It had to be pruned and foreign aid sought assiduously. This task was performed admirably by B.K. Nehru.

The Third Five-Year Plan was interrupted by the 1965 India-Pakistan War and by the deep struggle for power within the Congress party, even after Indira Gandhi’s succession to Lal Bahadur Shastri. In 1967, when Morarji Desai became deputy prime minister in Gandhi’s cabinet, he persuaded her to appoint one of the most respected professors of economics, D.R. Gadgil, vice chairman of the Planning Commission. Shortly after sacking Desai in 1969, she forced Gadgil to quit too. He left Delhi for Bombay by train the day after resigning. He was not well and even fainted at the railway station, but insisted on leaving. Sadly, he never reached Bombay but died during the journey, with only his wife by his side. This was also the beginning of the Planning Commission’s decline and fall.

The writer is a Delhi-based political commentator

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First published on: 26-09-2014 at 12:46:42 am
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