“The Planning Commission will—

(i) Make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of those resources as are found to be deficient in relation to the nation’s requirements;

(ii) Formulate a plan for the most effective and balanced utilisation of the country’s resources;

(iii) On a determination of priorities, define the stages in which the plan

should be carried out and propose the allocation of resources for the due completion of each stage;

(iv) Indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the plan;

(v) Determine the nature of the machinery which will be necessary for securing the successful implementation of each stage of the plan in all its aspects;

(vi) Appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisal may show to be necessary; and

(vii) Make such interim or ancillary recommendations as appear to be appropriate either for facilitating the discharge of the duties assigned to it; or on a consideration of the prevailing economic conditions, current policies, measures and development programmes; or on an examination of such specific problems as may be referred to it for advice by Central or State governments.”

With the commencement of the Tenth Plan (2002–07), the government handed over two new functions to the Planning Commission in 2002, namely:

(i) To monitor the plan implementation with special reference to the process of ‘economic reforms’ with the help of the steering committees.

It should be noted here that once the process of economic reforms was initiated in the country (early 1990s) there was a diminishing role proposed for the state in the economy in some areas and increased role for the state in some other areas. The re-definition of the state’s role in the economy (though it was the contemporary thinking world wide) made most of the experts and the business community to conclude as if there will be no role for planning in the economy. The New Economic Policy (NEP) of 1991–92 was a prima-facie proposal for the expansion of the market economy in the country. But it was not the case altogether. Planning has not become irrelevant though it needed to search for a new orientation. And it was highly essential that the process of planning

keeps its relevance to the bigger and the broader process of economic reforms. This particular new function of the PC must be seen in this light.

(ii) To monitor the progress of various Central Ministries. It should be noted here that for the first time, the PC went to set the ‘monitorable targets’ for 10 areas indicating development. The Central Ministries have been linked to these monitorable targets. The timely performances of the Ministries are now monitored by the PC as per its new function.

With the inclusion of the above-mentioned two functions in the existing functions (which were already very broad), the PC had emerged as a real ‘supercabinet’. Since it was basically the Deputy-Chairman who officiated the general meetings of the Commission, he had a high-level say55 in articulating the direction and the nature of the economic policies. Through the first new function it articulated, the future dimensions of the economic reforms and through the second new function, it influenced the works of the various ministries—ultimately it seems as if the PC had been able to emerge as the real think-tank of development in the country.56‌

The PC had also been able to influence the economic policies of the states since 2002 in a great way. Though the PC did not make the state plans57 it was able to influence the overall economic policies of the states. It had been possible due to the setting of ‘monitorable targets’ for states for the same development indicators/areas as was been set for the Centre.58 The states were liable for being monitored by the PC concerning their performances regarding these monitorable targets. This way the Central Government had started having its say over the state governments via the new functions of the PC.‌

We may conclude that the PC had been able to unify not only the various economic policies of the Centre, but also those of the states with the help of these two new functions. Earlier, there had always been a lack of congruence among the policies of the various central ministries and the ideas articulated by the PC.

An Epitaph to the PC

On January 1, 2015, the government formally abolished the PC by replacing it with the newly created body—the NITI Aayog. With this there ended an era in the economic history of independent India. Whether it was better to revive the PC or abolish it has been a matter of much debate among the discipline experts, politicians and the media. The debate, at times, had emotional tones, too. But the government has its own wisdom behind the action (a detailed discussion on it has been included as the last sub-topic of this Chapter titled ‘NITI Aayog’).

As an ‘epitaph’ to the PC (may be an ‘ode’), it will be quite relevant to have an eye on the report of the Independent Evaluation Office (IEO) on the former which was submitted to the Prime Minister Office by late June 2014. As per it, the PC was created in response to the unique challenges faced by a nascent democracy and a fledgling economy—it conceived a ‘top-down approach’ to planning that envisaged a dynamic Central government building up the economic and social order of weak states. The report called the PC in its current form and function a hindrance and not a help to India’s development. It further added that it is not easy to reform such a large ossified body and it would be better to replace it with a new body that is needed to assist states in ideas, to provide long-term thinking and to help cross-cutting reforms. Some of the major recommendations of IEO on the PC are as follows:

(i) The PC be scrapped and replaced with the Reform and Solutions Commission (RSC), which should be staffed with experts with domain knowledge and kept free from any ministerial administrative structure. The new body should have full-time representation of major trade and industry organisations, civil society representatives, academics, etc., so as to capture their concerns and benefit from their expertise in formulating long–term strategy.

(ii) The RSC will perform three main functions:

(a) Serve as a solutions exchange and repository of ideas that have been successful in different aspects of development in various states and districts, and in other parts of the world;

(b) Provide ideas for integrated systems reform; and

(c) Identify new and emerging challenges and provide solutions to preempt them.

(iii) The current functions of the PC be taken over by other bodies, ‘which are better designed to perform those functions’.

(iv) Since the state governments have better information about local requirements and resources than the central government and central institutions, they should be allowed to identify priorities and implement reforms at the state level, independent of mandatory diktats from the central institutions.

(v) The task of long-term economic thinking and coordination can be performed by a new body established to act solely as a ‘think tank’ within the government.

(vi) The Finance Commission be made a permanent body responsible for the allocation of centrally collected revenue to the states and the finance ministry be tasked with the division of funds among the various central ministries.

The recommendations of the IEO (a brainchild of the PC itself) on the PC were quite surprising, even shocking to few. Whether the new body replacing the PC will be a betterment over the latter and will be able to carve out its desired aims is a matter to be evaluated and analysed in future. Meanwhile, we can visibly find some of the recommendations of the IEO resonating in the newly created body, the NITI Aayog, the replacement for the PC.

[Note: While a detailed literature has been included on the ‘NITI Aayog’ in this edition (as the last sub-topic), the literature on the PC has been left unchanged for ease of understanding and comparative purpose.]