By Disha Sachdeva

Edited by Nandini Bhatia

The Planning Commission of India or the Plan Panel, as it was commonly known, was set up by India’s first Prime Minister Pandit Jawahar Lal Nehru by a simple government resolution on March 15, 1950 as a major platform for successive governments to formulate and push forward economic policies and other development plans.

However, twelve five-year plans and six annual plans involving fund outlays of over Rs 200 lakh crore later or 65 year later (which coincidently happens to be our country’s average life expectancy rate), India’s fifteenth Prime Minister Shri Narendra Modi announced its demise in his Independence Day 2014 speech. And now, it will be replaced by a new body called the NITI Aayog or the National Institution for Transforming India.

Why was the Planning Commission scrapped?

The Planning Commission was charged with the responsibility of making assessment of all resources of the country, augmenting deficient resources, formulating plans for their effective utilization, determining priorities, indicating factors retarding economic development, determining nature of machinery for securing successful implementation of plans, and appraising the progress in execution of plans. Many of these reasons were unique to a fledging economy and hence the government resolution conceived a top down approach to planning that envisaged a stronger Central Government, and hence, a stronger public sector. But 1997 onwards, the emphasis on the public sector became less pronounced thereby raising questions on the utility of government planning.

It also had discretionary powers over providing a part of the funds to the States. This power would put chief ministers of states on the back foot and to swallow their self–esteem. Politically, this attempt to weaken state governments was a Congress response to the rise of regional parties after Independence.

 Furthermore, the Commission suffered from the problem of accountability as it was not answerable to the Parliament except through the Minister of State for Programme Implementation and Statistics.

Also, the Members of the Commission were appointed by the Prime Minister on the strength of his personal knowledge and comfort, and without any selection criteria. This often remained subject to the whims and fancies of the government.

One well known instance where the Commission was criticized was its suggestion that citizens who consumed goods worth Rs 27 or more per day were not poor.

Will the NITI Aayog transform India?

The NITI Aayog will act more like a think tank or forum. It will include leaders of India’s 29 states and seven union territories. But its full-time staff – a deputy chairman, Chief Executive Officer and experts – will answer directly to the Prime Minister, who will be chairman. Its way of functioning will be different too.The body is unlikely to allocate funds or devise Five Year Plans and is more likely to focus on the policy aspect of governance. For instance, it will discuss the use of Aadhaar. It further aims to promote Corporate Federalism to make states stronger by adopting a bottom- up approach, and hence, rendering the nation stronger.

With this new mechanism, it is being said that in the coming years, better distribution and utilization of financial resources will be ensured and hence quality of life of the people will improve for the years to come. Hopefully, it will be more effective than its predecessor.

Disha Sachdeva is a 2nd year student pursuing Bachelor of Commerce from Shri Ram College of Commerce. Her biggest fear is that her ‘To Be Read’ list might be longer than her life expectancy. She is a feminist who prefers to hear both sides of a story before forming her opinion. She tries to balance her academics, societies, MBA preparation and attendance together and hopes to be fluent in Dothraki one day!

Posted by The Indian Economist | For the Curious Mind