Abolition of the Planning Commission

The decision to abolish the Soviet-style Planning Commission was the most prominent highlight of Prime Minister Narendra Modi’s speech from the Red Fort on the Independence Day. It is a commendable and bold move by the Centre. Commendable because the Commission had clearly outlived its relevance. In the age of rapid globalization, long term five-year plans (FYP) do not make any sense. In 5 years, global economic scenario changes to a great extent, recessions come and go in a period of 5 years in today’s information age. There must be at-most annually allocated targets for the economy if not half-yearly. Another reason of the Commission’s declining relevance in India is because with the maturing of Indian democracy, the state governments have become stronger and they do not like meddling in their finances and allocations by extra-constitutional bodies. The Planning Commission interferes with the states’ plans but has no power whatsoever to enforce its policies, strategies, allocations. The Planning Commission was not created by the Parliament nor does it derive its existence form The Constitution of India. It was created by an executive order of the Union Government after India’s independence. That is why, for the inclusion of states in the planning process, National Development Council (NDC) was created. The members of NDC include Chief Ministers of states, Prime Minister, members of the Planning Commission, Union Cabinet ministers and administrators of Union Territories.

The move to abolish the Commission is bold because the previous government did not have the guts to abolish it even after admitting its decreased usefulness. The reason may be that it was formed by Jawaharlal Nehru, the great Congress leader and axing it by the same party would have questioned its own confidence in institutions created by it. There is no doubt that the Commission played a great role in placing the country on the path of economic development from the 1950s to the 1990s, when socialist policies of the government were the norm in India.

The Planning Commission has faced criticism for spending ₹3.5 million (US$58,000) to renovate two blocks of toilets, while declaring a very low, and arguably unrealistic, threshold of poverty of a monthly consumption of ₹859.6 (US$14) in urban and ₹672.8 (US$11) in rural areas.

Media websites are abuzz with news that a five-member body of eminent persons appointed by PM Modi could take the place of the Planning Commission.

Some info on the Planning Commission

  • The National Planning Committee of India founded by Subash Chandra Bose was the precursor of the Planning Commission of independent India.
  • The formation of National Planning Committee of India in 1938 by Subash Chandra Bose was a modernistic, progressive and intellectual move at that time.
  • The Planning Commission is inspired by the Soviet style of planning for economic development.
  • This model was followed mostly by communist countries in  the period 1920s-1990s.
  • There have been 12 FYPs (Five Year Plans) formulated by the Planning Commission uptil now.

-Ribhu V.

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