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Planning Commission – Analysis. Right move to scrap it?

edited September 2014 in SSC
In the 1950s, India was a capital starved country that its leaders felt needed a body that could “rationally” allocate scarce resources. The Planning Commission was evolved as the entity that would be free from the burden of day-to-day administration and yet be in constant touch with the government. To cement this symbiotic relationship between the two key entities, the chairman of the Planning Commission was the prime minister and the deputy chairman was a permanent invitee to cabinet meetings. Originally, the Planning Commission too was expected to be a think-tank. But within some years, prime minister Jawaharlal Nehru observed that the Commission had become another government department complete with a bunch of secretaries.
Why the Planning Commission should go
1. India is now quite a different country now from what it was two decades ago. It was more decentralized, both politically and administratively.
2. Post-1991, the private sector had become perhaps the most significant force in the economy, and was now an important participant in even areas which had for decades been solely the government’s domain, such as infrastructure—from telecom to power to roads and civil aviation.
3. The Indian economy is far more strongly connected now with the global economy.
Clashes Observed:
A. Planning commission Vs. Finance Commission:
B. Planning commission Vs. NDC: Right now, NDC is bereft of such advice and whatever inputs the Planning Commission gives it are taken with a pinch of salt. In effect, NDC is an organ where “grievances” against the Planning Commission are aired, openly.
C. Planning commission Vs. Finance Ministry: clashes between the finance ministry and the Planning Commission were common, though they did not often become public. The Planning Commission deputy chairman saw his role as thinking big, and usually that demanded a lot of money to be invested by the government. The finance minister saw his primary task as keeping expenditures and the fiscal deficit down.
D. Planning commission Vs. State Governments: : State govt. had to urge to the planning commision for allocation of funds.If the central ministries can deal directly with the state governments without going through the bottleneck of the Planning Commission. This will certainly streamline governance and bring more accountability into the whole process.

Where did the P.C. failed?
1. Growth in last decade - It also failed to read the nature of employment challenge that accompanied the high-growth years of the first UPA.
2. Jobless growth - Not only did it fail to recognize jobless growth but also failed to respond to the employment challenge. The state has no viable plan to resolve the problem of unemployment.
3. Poverty and Health Problems - No less than 27 per cent of Indians are below the poverty line. The BPL is flexibly drawn which addresses merely people’s existential condition; health facilities still remain a distant dream for the majority of Indians.

Independent Evaluation office: (IEO) was formally launched in February 2014, attached to the Planning Commission, under a governing board chaired by the commission’s deputy chairman (which of course begs the question: how’s that ‘arm’s length’?) to monitor and evaluate the efficacy of the government’s flagship programmes.
IEO suggestion: that the Planning Commission be replaced by a Reforms and Solutions Commission, staffed, not by generalist bureaucrats, but by experts. The Commission would report to the prime minister and “have a defined relationship with Parliament”.


  • Why the Planning Commission should not go?
    False allegations:
    1. Policy paralysis - the Planning Commission is hardly to be blamed.
    2. Scams- Be it the telecom spectrum, coalfield allocation, Commonwealth Games or the numerous scams which characterized the process of policymaking in the country, the onus of decision-making rested with the Prime Minister’s Office (PMO) rather than the Planning Commission.
    3. Inflation- Nor can the Commission be blamed for the unprecedented spell of inflation that has continued to be a problem even for this government in the short period that it has been in existence. The Commission certainly was not Reserve Bank of India (RBI), entrusted with the task of bringing inflation down.
    4. Retrospective taxation - which industry and companies felt to be the reason for lack of investment, the Commission had no role.
    5. Fiscal Policy - While it did not have any role in fiscal policy, monetary policy or the allocation of natural resources, for public imagination the Planning Commission was the culprit and not the PMO, RBI or the finance ministry.
    1. The gradual rise of the market economy progressively undermined the need for a planned economy. Not surprisingly, the Commission moved away from planning outcomes to indicative planning. However, along the way, the Commission evolved as the secretariat for the National Development Council, the apex body for cementing centre-state relations.
    2. It certainly acted as an expert advisory office of the Prime Minister (since he is the chairperson of the Commission). But it also acted as the secretariat of another important body in our federal structure, which is the National Development Council (NDC).
    3. The other important part was the mediation between centre and states as far distribution of central resources for state plans are concerned.
    4. It certainly did act as a catalyst for many of the interventions that the current government is keen to take credit of. The idea of the direct benefit transfer and the urgency for financial inclusion, including the banking correspondent model, were incubated by the Commission.
    5. given the complexity of federal structure of decision-making between states and centre and the social reality of high poverty, high malnutrition and high deficit of access to basic services such as health and education, the idea of planning and an institutional framework to deal with these challenges may still be relevant.
    6. For National integration, regional equality and planning - If states are left free to follow their own planning priorities, it is a given that some states will be winners and others will lose out. The problem of regional inequalities threatening national integration is one example. There may be states that are handicapped due to geographic reasons where requisite investment may not take place. Regional disparities may rise to a level that they become a political issue.
    7. A think-tank within the government that observes such trends—not only in the case of inequalities but also growth and other economic and social parameters—can play a useful role. It can serve as a feeder of ideas to two very different bodies that can then take ameliorative steps: The National Development Council (NDC) and the Finance Commission.
    8. P.C. Is ideologically neutral. The 12th Plan is an ideologically-neutral, NDC-approved, growth policy document with inclusion and sustainability as its pillars - Since indications are that the role of making plan allocations to States for development spending will be transferred to the Finance Ministry, there are likely to be implications of this for India’s federal system. Will the States, especially those governed by the Opposition parties, readily accept allocations from the Union Finance Ministry is the question.
    9. At present, the Finance Ministry does not have the expertise or capacity to decide fresh allocations for States and Ministries at the Centre and more importantly over time it could gain too much power with such a role.
    10. Despite the differences, there is not a single case of a State government in over 60 years ever having rejected an annual plan approved for it by the Commission,

    If the Planning commission is going to be scrapped then what should be the responsibility and nature of the new institution?

    First, the question is should there be body like Planning commission?
    There are two areas where some sort of planning across the country—whether it is allocational or strategic in its outlook—is required.
    1. First, in one class of investment problems, a perspective that transcends a state-level vision is necessary.
    2. Second, strategic, long-term planning concerns. In many cases—the inter-linking of rivers and large river valley projects across states, to give two examples—decision-making and planning may not be possible at the state-level. These decisions pose collective action problems that cannot be resolved even at the regional level. In this case, a national-level body is needed not only for analysing the problem but also for allocating money between states.

  • Another point to be borne in mind is that an extra-constitutional, non-statutory body gained such prominence during the 60 years bears testimony to its importance. It also overshadowed the FC (constitutional body) and the M/o Finance (executive department) during the said period.

    Yes, the planning paradigm has changed significantly but that just necessitates a more specialized body to play the balancing beam of cooperative federalism.

    Scrapping may not be the ideal solution. Reinventing and restructuring the body will work-- sooner than later.
    ForumIAS Moderator | Indian Revenue Service 2014 | Indian Administrative Service 2015
  • In the clashes section point B that there was a clash between NDC and pc was never true. The reason why NDC became defunct was that it had been transformed into a politicking body, nothing to do with pc.

    But another prob - pc's plan are always brilliantly crafted with great detail but pc does not (and cannot) ensure that steps enumarated in the plan are implemented. For examples the 12th fyp was launched in 2014 while the plan period started in 2012. One can imagined how much the plan influences actually policy.

    Another task that new body needs to perform - inter-ministerial co-ordination and evaluation of social sector schemes which the ministries themselves are not technically capable of doing. For eg. a issue like water spans the ministries of agri, urban development, fertilisers, rural development, environment. None of these ministries would take a wholesome view of water resources issues and sometimes the irrigation department won't know what the urban development department is doing with the same water source. Hence a co-ordinating mechanism is needed which cannot be solved by a think thank as the the think tank might not have the clout enough to influence policies.

    Again long term planning and a vision can be best drawn by a body like PC.

    Every country has a economic research unit co-habitated by experts. The new body should certainly take up this function which now the pc performs

    CSM 2015 - Economics
  • Planning comm's removal was an early decision. Afterall we need some central body with experts and plan accordingly considering long vision.. As india is still at young age towards thr goal of development and growth..
  • edited September 2014
    As Gopalkrishan Gandhi said"it needed mending,not ending"
    BTW....@legendelite......thanks for getting everything under one roof
    Helps in quick revision
    "You can't stop the waves, but you can learn to surf"
  • Planning Commission Presentation in PM's Consultation Meeting with Chief Ministers for Replacing Planning Commission.

    http://pib.nic.in/archieve/others/2014/dec/d2014120701.pdf (download presentation)

    Source : http://pib.nic.in/newsite/PrintRelease.aspx?relid=112782
    Prelims : 2/5; Mains : 0/2; Interview : 0; Remainder : 1+1 (Tired but not; Retired) / Medical Science / Kolkata / Nihilist extraordinaire | Thanks a lot...
  • @ArindamSarkar
    Bro....I don't know about other questions but Ab PC par question Aaya toh main phodh dunga
    All thanks to you for sharing the link
    Really good presentation
    "You can't stop the waves, but you can learn to surf"
  • as i see from proposed new institution:


    > Provide a platform for structured and regular interaction with the States.
    > States will tailor their plans to suit their needs and requirements rather than getting scheme based allocations under more than 40 CSS. Greater flexibility for State specific needs in each Scheme.

    negatives :
    > No role of PRIs/ULBs. Then how can plan not become top-down ?
    > Sounds too much faith in private sector.

    Preliminary=4 ; Main=3; PT= 2 ; Recommended=1 cse2015 The End
  • ^^ All thanks to PIB and the officers who actually made this presentation for the PM and CMs. :)
    Prelims : 2/5; Mains : 0/2; Interview : 0; Remainder : 1+1 (Tired but not; Retired) / Medical Science / Kolkata / Nihilist extraordinaire | Thanks a lot...
  • Negative pointed out by u related to PRI can be added as our opinion and suggestion in conclusion
    "You can't stop the waves, but you can learn to surf"
  • @ArindamSarkar
    Yup but thanks for pointing it out
    At this time....these things generally go unnoticed
    "You can't stop the waves, but you can learn to surf"
  • @MD47 : :) Welcome :)
    Prelims : 2/5; Mains : 0/2; Interview : 0; Remainder : 1+1 (Tired but not; Retired) / Medical Science / Kolkata / Nihilist extraordinaire | Thanks a lot...
  • @ArindamSarkar @MD47

    do you see any proposed function as a exceptional change ? or any negatives ?
    Preliminary=4 ; Main=3; PT= 2 ; Recommended=1 cse2015 The End
  • Will read the document today. :D
    Prelims : 2/5; Mains : 0/2; Interview : 0; Remainder : 1+1 (Tired but not; Retired) / Medical Science / Kolkata / Nihilist extraordinaire | Thanks a lot...
  • If one look closely.....they are only going for restructuring and giving more leeway to private sector.... That could hv been done without dismantling the existing structure.....
    Personal vendetta against Nehru????
    But can't write this in exam
    "You can't stop the waves, but you can learn to surf"
  • @FordCoppola
    I'm studying it
    Will tell once I'm finished with it
    "You can't stop the waves, but you can learn to surf"
  • After going through, I would stick with ManMohanSingh suggestion - PC has to reinvent itself .

    But, now i feel that planning commission question might turn up in paper1 as part of History @-)
    Preliminary=4 ; Main=3; PT= 2 ; Recommended=1 cse2015 The End
  • @FordCoppola : Obviously, the major criticism of the existing institution was that it was a wholly central body. Now, with coperative federalism, a consensus would be reached on the national development strategy. It is actually like a dettol on the wound.

    Manzil mile na mile ye to muqaddar ki baat hain, Hum koshish bhi na kare ye toh galat baat hain.
  • But yeah, i second you. This could have been done by restructuring the PC.
    Manzil mile na mile ye to muqaddar ki baat hain, Hum koshish bhi na kare ye toh galat baat hain.
  • Some relevant points which i noticed.

    1. It will result into rationalisation and economy of scale regarding CSS as states have been given flexibility to make their plans according to their needs and requirements.

    2. Instead of Annual plan discussions, states will be having the privilege to have regular consultations and advices which will result into removing the bottlenecks enroute.

    3. Not anymore a Central Body-Coperative federalism. This way, expertise of states, their suggestions, practises could be included into the plans.

    P.s. This all could have been done by restructuring PC.
    Manzil mile na mile ye to muqaddar ki baat hain, Hum koshish bhi na kare ye toh galat baat hain.
  • It can come anywhere..... Essay/Gs1/2/3
    "You can't stop the waves, but you can learn to surf"
  • edited December 2014
    Yaa u are right but can we indicate implicitly in our answer that govts step was not a right/ideal one although intentions were good
    "You can't stop the waves, but you can learn to surf"
  • Planning Commission:- Comprehensive debate-
    -Constituted in 1950 through a cabinet resolution. Thus neither a constitutional nor a statutory body. Designated to assist in the formulation, coordination and implementation of the policies of "Planned Economy". PE was the most expected alternative at that time. Even western countries felt constructive intervention of the govt to rebuild their war-ravaged economies, control prices and productivity. USSR had achieved spectacular success through PE. Internal situation of India (poverty, inequality, poor infra base, near absence of capital-based industry, illiteracy etc) also necessitated active and major role of the govt.
    -PC mainly tasked to utilize the national resources in a best possible manner, coordinate and guide the development processes of States, suggest ways to bridge regional economic disparity and monitor the efforts of States in implementing centrally sponsored social schemes.
    -Economists across the spectrum are unanimous on the need of a body like PC in Indian context-
    - to guide and coordinate the States policies, lobby for the poor, take care of environmental concern, strategize long term policies for example in energy sector, suggest allocation pattern which take care of migration problem and inter-state conflict.
    -Ministries have narrowed and concentrated viewpoint. They hardly look and thing beyond their administrative domain, busy in achieving their respective targets, sometimes disregarding the concerns of other ministries. We witnessed the conflict between environment and industry ministry, oil and renewable, defense and IT and so on so forth. This necessitates a coordinating body, which provides mechanism to minimize the inter-ministerial friction and orient their policies towards the interest of marginalized and underprivileged section of the society.
    -Further, India being a federal country, states in their respective domain independent to chart their development policies. Some states excelled in some field and other failed to even take off the ground. A body like PC requires pinpointing the best practices happening in some state and encouraging their replication in lagging states. For example, Tamil Nadu performed well in securing institutional delivery (and ICDS) and Chhassigarh implemented MGNREGA very well. Their model can be observed and expanded in poorly performing northern states.
    -China adopted economic reform in 1979, and since then the role of its planning body has become more intensive and relevant. Some African and Latin American countries gave up planning process and later repented. For them, it became extremely difficult to direct the economic path in a pro-poor manner once the thread of coordination and management slips from their hand to the corporate.
    Problem with the existing Planning Commission-
    -Ground reality quite changed since 1950. Then, private role was next to nil, India's integration with the world was very weak, we had almost one party rule, Center and States both under the administration of the Congress. Now, Federalism has blossomed into multi-party coalition politics. Most of the States being ruled by parties different from the part of the centre. Thus the nature of politics, centre-state relation, quality and the size of Economy, localization to globalization, all these witnessed change but PC failed to re-invent itself with the changing course of time. (Acknowledged by even our former PM Manmohan Singh)
    Therefore, Govt is right in restructuring the functioning and the mandate of the PC. In a functional federalism, no institution should be seen as a imposing instrument of the centre. Reformed PC should be made less political and more professional to remain politically neutral and administratively adept. It should facilitate down-top development process, contrary to the existing top-down mechanism.
    Mathematics CSE 2015
  • Govt renames Planning Commission as Neeti Ayog

    Planning Commission will now be called as 'Neeti Aayog'. Sources said, the Aayog will be chaired by the Prime Minister and will have one Vice Chairman to be appointed by him. It will have maximum of five full time members.

    Prime Minister Narendra Modi in his independence day address, had announced that the Planning Commission will be replaced by a new body which will be in sync with the contemporary economic world.

    Recently, the Prime Minister also had held consultation with all Chief Ministers where he talked about an effective structure which will strengthen cooperative federalism and the concept of Team India.

    The Planning Commission was established in 1950.
    -Source newsonair 01-01-2015
    Preliminary=4 ; Main=3; PT= 2 ; Recommended=1 cse2015 The End
  • So how would states get a louder voice? And what about all the clamour about neglecting the FC?
    Prelims : 2/5; Mains : 0/2; Interview : 0; Remainder : 1+1 (Tired but not; Retired) / Medical Science / Kolkata / Nihilist extraordinaire | Thanks a lot...
  • So how would states get a louder voice? And what about all the clamour about neglecting the FC?
    as per draft, they are doing away with "one size fits all approach" by greater flexibility for States in CSS. Apart , i dont see much . Do you see anything ?
    Preliminary=4 ; Main=3; PT= 2 ; Recommended=1 cse2015 The End
  • edited January 2015
    @aamengineer @ArindamSarkar
    small correction
    NITI (National Institution for Transforming India) Aayog will have a governing council comprising all Chief Ministers and Lt. Governors.

    The Planning Commission will be replaced by a body called NITI Aayog (National Institution for Transforming India) as part of a plan to restructure the institution, and like its predecessor, the Prime Minister will be the institution's chairperson.

    NITI Aayog will have a governing council comprising all Chief Ministers and Lt. Governors.

    PS: Asking apology for the mistake. Even National official government broadcasters are unable to understand Modi's style of working . So, they put NEETI in place of NITI.

    Source - Planning commission FB page.
    Preliminary=4 ; Main=3; PT= 2 ; Recommended=1 cse2015 The End
  • edited January 2015
    Government constitutes National Institution for Transforming India (NITI) Aayog

    Press Note: http://pib.nic.in/newsite/erelease.aspx?relid=114273

    NITI Aayog: Objectives and Composition : http://pib.nic.in/newsite/erelease.aspx?relid=114273
    Preliminary=4 ; Main=3; PT= 2 ; Recommended=1 cse2015 The End
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