Planning Commission has played very important role in post independence economic growth. Concerning with the current scenario of slow economic growth and abysmal performance of various sectors, do you think there is a need to revive Planning Commission in order to bring stability and fuel economic growth? (250 W/ 15 M)



Model Answer:

The Planning Commission was set up by the Government of India in March 1950. Its core objective was to promote rapid transformation of Indian economy and a speedy improvement in people’s standard of living. It was mandated to do so through five-year plans. The formulation of the plans and their execution were not supposed to be technocratic exercises, and the mandate included outlining the larger socio-political context. In 2015, government of India scrapped the PC and replaced it with NITI Aayog.

Why Was PC Scrapped:

  • The appointments in the Planning Commission had been reduced to mere as a political fulfilment.
  • The Five Year Plans by the planning Commission breached and was followed by a suitable revision in target or plan itself; reducing its resolve to trigger the momentum to achieve the economic and other social objectives.
  • The conclusions of FYP were not followed by a conciliatory account of plan achievements vs non achievements. The accountability was not defined suitably.
  • There was a lack of evolutionary approach of the Commission however the same had been restored to some extent with the constitution of Independent Evaluation Office.
  • The alienation of Planning Commission with ground realities has often been the point of criticism.
  • The takeaways of prevision Plans was not factored into forward plans suggesting the Commission only being a bureaucratic framework.

Importance of Planning Commission in Present Times:

  • The Planning Commission does not become irrelevant just because it came into being through a Cabinet decision.
  • The country has created several institutions over the decades through acts of Parliament or Cabinet resolutions, and many of them are working satisfactorily.
  • The programmes launched in India from the 1950s onwards to build indigenous capabilities in capital- and technology-intensive sectors, despite the general poverty of the country, became a model for other developing and Third World nations.
  • The debates around Indian planning provided a fertile launching pad for the evolution of development economics as an important sub-discipline.
  • The foundations for India’s diversified economic base had been laid during the planning years.
  • The successes that India enjoys today in the information technology and knowledge-intensive sectors owe much to the research and educational institutions that were built during the early decades.
  • The successes achieved by East Asian countries such as South Korea in manufacturing are, to a great extent, the result of strategic planning over several decades by their governments.
  • China is gradually shifting its economic base from low-wage industries, and is now emerging as a global leader, even ahead of the U.S., in several new technologies, including artificial intelligence and renewable energy.
  • These Chinese achievements owe much to the careful planning and investments made by its government, particularly in the area of science and technology.

Why PC Should Not Be Revived:

  • The commission adversely affected both our federal structure and Cabinet system of governance.
  • It was created soon after the inauguration of the Constitution and promptly went against both its letter and spirit.
  • It encroached upon the states’ domain enumerated in the Seventh Schedule of the Constitution, wherein most matters crying for social and economic planning are entrusted with the states.
  • This resulted in financial centralisation and the subsequent collapse of governance in states.
  • The founding fathers relegated planning to the section on non-justiciable Directive Principles in the constitution; they were also clear that the Centre had no role in determining how states governed themselves.
  • Centralised planning’s one-size-fits-all dogma has been a bane.
  • The disregard for planning and the general withdrawal of the state from economic decision-making have had important consequences on Indian industry. India is today one of the largest markets in the world for a wide range of goods, whether passenger cars, mobile phones or food products.
  • India’s commitment towards development through planning had begun to diminish from the early 1990s itself — much before the Planning Commission was formally dismantled in 2014.

Way Forward:

  • What the stakeholders in India want, is a process by which they get insights into forces shaping the economy and society.
  • They want suggestion on the paths they should guide their organisations towards, for their own success and for the progress of the whole flotilla.
  • Systems’ thinking and scenarios, rather than budgeting and financial allocations, are the principal means to guide change in an open economy.
  • Twenty-first century “think systems” and Think Long planners must anticipate the institutional reforms required for a society and economy as it changes.
  • They must lead the public discourse and work with the executive to catalyse and guide the development of institutions.
  • Numerical goals of GDP growth, reduction of poverty, improvement of health and education and creation of livelihoods, which are sprinkled across five-year plans, cannot be achieved without good institutions.
  • Rather than trying to guess what the growth in the next few years may be if the institutions are developed, a more useful role for the government would be to accelerate the development of the institutions required.
  • India needs a far more effective planning process. The sooner we overhaul our antiquated process, the faster we will reach our goals.

India is a flotilla of mostly independent organisations—elected state governments, private sector and political parties. They cannot be commanded to do what a bunch of experts at the Centre wants them to. Yet progress will be faster if they voluntarily move in the same broad direction towards the goals of the country. The finance ministry should manage the government’s funds and the Niti Aayog should give strategic guidance to the executive. What we need is strategic guidance and planning – not planning commission.


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