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Out of commission

Centralised planning is an idea whose time may have gone

Written by Nikhil Menon |
Updated: July 15, 2014 8:05:10 am
The BJP election manifesto of 1998 declared that it “opposed senseless central planning”. But it was only under UPA 2 that the commission came under serious reformatory scrutiny. The BJP election manifesto of 1998 declared that it “opposed senseless central planning”. But it was only under UPA 2 that the commission came under serious reformatory scrutiny.

It might be the end of the road for the Planning Commission. Despite having been in power for more than a month, the BJP government has chosen not to appoint new members to the commission, a decision viewed as portentous. The political consensus appears to be that the Planning Commission is now a zombie — well past its natural life and surviving only as a nuisance.

The Planning Commission began its career in March 1950. Its mandate was to study the economy, allocate resources between sectors and states, and chart the course for long-term economic development. It was the culmination of efforts by Indian nationalists to institute a planning body at the heart of government. In 1938, the Indian National Congress had established the national planning committee. By 1944, the British Indian government had its own planning and development department. There was also a profusion of “paper plans” —  S. N. Agarwal’s Gandhian Plan, M.N. Roy’s People’s Plan and even one drawn up by India’s leading industrialists, dubbed the Bombay Plan. Planning was seen as deliverance, and India was primed for planning.

The Planning Commission grew into a power centre within independent India’s government. Its prestige owed much to the significance Nehru attached to its work. During these years, it became the institutional face of the Indian development story, at home and abroad. Not satisfied with authoring the economic agenda, the commission believed that the idea of planning had to win popular support. Along with other arms of government, it embarked on nationwide “plan-publicity” campaigns to stoke enthusiasm for planning. The aim, in celebrating “Plan Day” and “Plan Week”, was to make all Indians “plan-conscious” participants in the project of national advancement.

During the commission’s halcyon years, Yojana Bhawan, its headquarters in central Delhi, attracted economists from near and far. India’s situation as a poor, newly sovereign country that had fused democracy and planning made it a laboratory for testing the theories and techniques of development economics, a field then in its infancy. India’s policy of non-alignment found expression in the commission’s openness to conversing with economists from both sides of the Iron Curtain. India wasn’t just a recipient of expertise from abroad. Its successes in the 1950s, especially in industrial production, drew the attention of developing nations such as Ghana, Egypt, Yugoslavia and Indonesia. In addition to soliciting experts from India, these countries sent teams to examine the work of the Planning Commission in the fields of science and technology, industry and community development.

The questions raised today about the Planning Commission’s remit echo an infamous episode in its history. In the summer of 1950, the government was forced to accept the resignation of its finance minister. The minister in question, John Matthai, had only recently formally introduced the Planning Commission to the nation in a speech in Parliament. In a series of angry interviews, Matthai revealed that his resignation was precipitated by the disquieting escalation of the commission’s powers. It had begun encroaching on ministerial prerogatives, he said, by participating in cabinet meetings and involving itself in day-to-day administration. Further, the hierarchy within the commission designated the finance minister as simply an ordinary member —  on par with the civil servants who formed the majority and outranked by the deputy chairman. In effect, he warned, it was becoming a “parallel cabinet”. Not only would this “weaken” the finance ministry, it could also, he feared, gradually erode the cabinet’s powers.

Today, in contrast to 1950, the commission is on the wane. A jostle between ministries and the commission is likely to yield in favour of the former. Since Nehru’s time, the commission’s stock has dwindled, as it progressively receded from public view. It was embarrassed when, in the mid-1980s, the then prime minister, Rajiv Gandhi, referred to its members (including former Prime Minister Manmohan Singh) as a “bunch of jokers”. The BJP election manifesto of 1998 declared that it “opposed senseless central planning”. But it was only under UPA 2 that the commission came under serious reformatory scrutiny. Noting its changed role in the Indian economy over the past few decades, the commission’s website concedes that it has moved from “highly centralised planning” to “indicative planning”.

Downsizing the Planning Commission would be consistent with Prime Minister Narendra Modi’s recent moves to fulfil his campaign chant of “maximum governance, minimum government”. It should come as no surprise, then, if in doing so, he invoked Sardar Patel’s reservations about the commission. It would underscore his allegiance to Patel’s muscular style of leadership, put a distance between him and the policies of the Nehru-Gandhi dynasty and perhaps even offer a wistful vision of what might have been had India trodden a different path.

The scepticism about the utility of a Planning Commission reflects how far opinion has shifted over the last six decades. In an altered polity and economy, centralised planning —  an idea that had once gripped the minds of many Indian freedom fighters and nation-builders — has lost traction. Once capable of dethroning ministers, it finds itself today in unfamiliar abeyance, nervously waiting on news of its own survival.

The writer is a research scholar in history at Princeton University, US

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