Planning Commission Shut Down. Good. Now Don't Invent a Mutant

The irony is that the Planning Commission outlived licence raj and thrived two decades after P V Narasimha Rao had liberated the economy.

Published: 17th August 2014 06:00 AM  |   Last Updated: 17th August 2014 09:51 AM   |  A+A-


India’s institutions and politicians have often, for inexplicable reasons, outlived logic, legitimacy and obituaries. The Planning Commission is an eloquent illustration. High priests of the commission in the 1960s and 1970s opposed every transformative initiative, including the Green Revolution and Milk Revolution. Between 1960 and 1980, Malawi grew faster than India. The political economy has witnessed multiple seizures and failures. The concerns of the First Five-Year Plan continue to be voiced in the 12th Plan.

Yet the commission survived. Rajiv Gandhi called those at Yojana Bhavan “a bunch of jokers”, but he couldn’t dismantle the commission or the “command economy”. The irony is that the Planning Commission outlived licence raj and thrived two decades after P V Narasimha Rao had liberated the economy.

On Independence Day, Prime Minister Narendra Modi read a 383-word obituary and summarily shut down the Planning Commission from the ramparts of the Red Fort.

It was Milton Friedman who authored the first of obituaries on the idea of a planned economy. Friedman, who visited India to study the mixed economy at the invitation of Jawaharlal Nehru, wrote, “A standard cliché is that India must compress into decades what took other countries centuries. There is, of course, much merit to this position.” His conclusion: “India will stretch into centuries what took other countries decades.” And that is what transpired.

It would be tempting to blame Nehru, his idealism, the romance of fabian socialism. It was not just that. Nehru was also swayed by fact—the defeat of industrialised Germany in World War II by a young USSR which owed its success to central planning. The commission owed its genesis to a blinding illusion of the times. Among the most globalised economies till the 1800s, India’s rulers chose to place faith in the religiosity of “government knows best” nurtured by high priests led by P C Mahalanobis. Under Lal Bahadur Shastri, the Planning Commission was cut to size but his successors restored authority. Thereafter, the commission—despite failures—continued to define and decide the process of development.

It was a flawed construct. The Centre allocated resources, the Planning Commission monitored/regulated/directed the deployment, and the states were tasked with implementation. The Centre had no responsibility to deliver, the commission no power to enforce and the states who had little say or incentive felt dumped upon. The Planning Commission represented a multi-polar disorder in the structure of governance.

The good news is that it has been declared dead. The worry is that news of its death may be greatly exaggerated. One hears the government is replacing the commission with a new alphabet soup called NDRF, the National Development and Reforms Commission. Would it be a clone of the Chinese NDRC? The Chinese avatar has a 15-point charter of 1,180 words ( and is charged with the responsibility of everything from “strategies of national economic and social development, annual plans, medium and long-term development plans” to “administration of the State Grain Administration and the National Energy Administration”. Hopefully, the Modi Sarkar is not inventing a mutant.

India though does need to engage stakeholders and innovators in governance in policy, on one platform. It is abundantly clear that top-down models militate with the idea of federalism. The critical point here is that the think tank must assimilate, fund, explore ideas—both bottom up and top down. The needs are many… mentorship of large infrastructure projects, evaluation groups that can objectively assess policy, auditors to produce outcome reports on government spending, methods for real-time updating of social and economic indicators. India also needs a body to rank states for unemployment, for inflation management, delivery of services and investment so there is competition.

There is also great case for sharing best practices and new ideas. The Gujarat government set up a pilot project that deployed satellite imagery and an SMS service to tell its fisherfolk where schools of fish could be found. The induction of technology enabled better incomes. Can this idea be replicated in all coastal states? Tamil Nadu has successfully implemented policies that enable and encourage a higher ratio of women in the workforce. Can other states follow? What are states in the Northeast doing right to curb malnutrition? How is Himachal Pradesh ramping up literacy? Can Uttar Pradesh learn horticulture from Maharashtra? There are global practices too—in skills training—which need to be absorbed. One in four mariners in the world is from the Philippines. Can India with a 7,500 km coastline learn?

The dismantling of the Planning Commission offers an opportunity to create a platform for ideas, for evolving solutions to seemingly intractable issues, for designing systems to enable implementation.

India should not fall for another romantic notion. India needs solutions, not another grand delusion.

Shankkar Aiyar is the author of  Accidental India: A History of the Nation’s Passage through Crisis and Change

India Matters


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