No New Organization to Replace Planning Commission, Please!

Distribution of resources is no longer a relevant issue and there are plenty of specialized institutions all over India who can do the thinking and planning for the government. Let us allow the Planning Commission to achieve moksha


The Economic Times proclaimed on the morning of 15th August that the vice chairman of planning commission is to be named soon; it even mentioned Suresh Prabhu former power minster of Shiva Sena as a front runner.

On the same day from the ramparts of the Red Fort, Prime minister (PM) Narendra Modi conducted the single largest 'massacre' of 'Development Economists' in modern history by abolishing the Soviet-era relic called Planning Commission. It is rumored that more than hundreds of this species were occupying seats in Yojana Bhavan. It was also mentioned in passing by the PM that the said institution is to be replaced by one that is more effective.

This was a major big blow to Nehruvian Marxists who thrived on Mahalonobis’s idea borrowed from the Soviets that planning by the Government is critical for development and Government is best suited to organize our lives.

Then started the hunt for new residence for the same old Government thinkers. The Economic times [ET], a paper which thrives on 'sources' and 'deep throats' in Government rather than any serious economic reporting and analysis- decided to take matters in its own hands and declared there would be a 'New Planning Commission'. On 18th August  it reported about the new planning commission’s tasks and members as well.


ET also decided to christen the body the  “National development and Reforms Commission”  like in China.

Incidentally, Cuts International public Policy Centre had, as early as July, come up with some recommendations one of which is this very name; so our leading economic paper has not even come up with an original suggestion.

Now the real issue is about replacing the old Planning Commission with a new one that is “vibrant and independent” –these are standard words used by usual suspects.

Then came the announcement from Prime Minister's Office (PMO) asking all Indians to send their suggestions about this new body and a suitable name for it to be sent to MyGov site.  

First of all we should start by asking a basic question  -- does the said body need to be replaced at all?

As far as Center-State allocations are concerned –as already  pointed out by economist Surjit Bhalla—there is a major reveral in trend of funds flowing to the States. Writing about expenditure figures presented by the 2014-15 Budget he says, “for the large plan expenditure component (approximately 5% of GDP), there has been a complete reversal of trend. In 2013-14, state plans constituted 25% of this total; in 2014-15, states will handle nearly 60% of the total!”
It is anachronistic for an un-elected bureaucrat called vice chairman of the Planning Commission- as in the Soviet Model-- to advise/ berate State Chief Ministers once in five years about the amount they can spend from Central kitty. The entire model of a Central Sultanate allocating finances to states is not an appropriate one in these changed times.


The Finance Commission takes care of the statutory division of resources and the Interstate Council can be, and should be, activated to iron out any differences between the Centre and States and between States. The Prime Minster can meet Chief Minister/s every month or every quarter under the aegis of Inter State Council to foster better communication. Further, a substantial portion of centrally managed schemes can and should be shifted to States.

Now lets come to the 'think' portion of what the Planning Commission does. It is presumed that thinking can be done only by an organization located at Delhi with large number of experts employed 'to think'. This is a specious argument used by Delhi Durbar wherein it is assumed that all expertise is available only in Delhi and all those who are in Delhi are experts!!

In the days of Internet, mobile phones and social media it is waste of money to create an organization at Delhi to 'think'. There are plenty of existing organizations all over India working in different disciplines such as science, technology, public policy and defence.


The government can also fund large institutions such as the Indian Institutes of Technology (IIT), the Indian Institute of Science (IISc), Central Statistical Organisation (CSO), National Sample Survey Organisation (NSSO), the Indian Institutes of Management (IIM), Indian Council for Social Sciences Research (ICSSR), Bhabha Automic Research Centre (BARC), National Institute of Advance Studies (NIAS), National Institute of Public Finance and Policy (NIPFP) and others or commission specific outputs from them in both strategic and operational. Hence, we feel that there is no need to create a new institution. If the PM wants advice on specific issues he can always rely on a multiplicity of institutions that already exist all over the country. He can always have a small advisory group to identify where to get each repors from. We feel for instance that the voluminous reports of the CSO and NSSO on various aspects of  the Indian economy and society has not been adequately leveraged by the Government.

Our primordial instinct of not allowing any institution to die needs to end. Institutions like individuals have life span and must have Karmic endings. The Planning Commission died on the 15thAugust and on 27th August, in the ancient tradition, it will have Vaikunta Samaradhane.  But many experts, thinkers and intellectuals want it to be revived before that based on our belief in re-birth. Let us for a minute assume that the  Planning Commission has achieved Moksha –no re-birth since the organization has done so much punya in its life span serving the masses of this vast land (like it did when it juggled with the poverty line and made people better off overnight). And let us leave it there and close the chapter.

(Views expressed in this article are personal)

(Prof R Vaidyanathan , Professor of Finance and Control, has taught at IIM Bangalore for over three decades and is consistently rated as one of its most popular teachers. Prof Vaidyanathan has coined the term 'India UnInc' for the largest component of the Indian economy comprising small entrepreneurs, households. Prof Vaidyanathan sits on the advisory boards of SEBI and the RBI.)

9 years ago
Rightly said. I too feel the same. renaming an organization doesn't help. What are the ministries and hordes of bureaucrats doing. and has some study been done on its activities all these years.
Mahesh S Bhatt
9 years ago
Looks bit strange to lead a country of billion people without Planning Commission.

Let's get more State /Center orientations of various Ministerial allocations reduce overlaps/gaps.

Audit overexpenditures in sectors for reallocations for basic Healthcare/Infrastructure.

Seems easy but when Modi when to Amma with Aadhar implementation requests she shot it down.So moral is that we like chaos because corruption thrives & we like the same.Mahesh
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