The Planning Commission is an institution in the Government of India, which formulates India’s Five Year Plans, among other functions. It was setup to replace the rudimentary economic planning existing in the country prior to independence. The Planning Commission does not derive its creation from either the Constitution or statute, but is an arm of the Central/Union Government. From a highly centralized planning system, the Indian economy is gradually moving towards indicative planning where the Planning Commission concerns itself with the building of a long-term strategic vision of the future and decide on priorities of nation. It works out sectoral targets and provides promotional stimulus to the economy to grow in the desired direction. It also plays an integrative role in the development of a holistic approach to the policy formulation in critical areas of human and economic development.
The planning commission has faced a lot of criticism recently for 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. It has also faced criticism for overstepping its role or its jurisdiction and arrogated to itself certain executive functions.
Addressing the nation from the Red Fort on Independence Day, India’s Prime Minister Mr. Narendra Modi said that the 64-year-old Planning Commission, a vestige of socialist era, would be soon replaced with a new institution to address the current economic challenges and strengthen the federal structure.
“We need a new body with a new soul. We will have to think about giving a new shape to the Planning Commission. Very soon this new institute will start working in place of the Planning Commission,” he said.
He had said that it was set up to cater to the needs of earlier times and has participated in its own way in the development of the country.
“The internal situation of the country has changed, global environment has changed. Government is no longer the center of economic development. Economy is much broader based now”.
“State government is also a center of development. I feel it is a good sign. If we have to take India forward, then states have to be taken forward,” the Prime Minister said.
Justifying the need to replace the Commission, he said: “Sometimes it becomes necessary to repair a house. It costs a lot of money. But it does not give us satisfaction. Then we feel it is better to make a new house.“
Here are some of the pointers on how Mr. Narendra Modi plans to change the face of the Planning Commission:
- Think Outcomes, not Resources: Planning has been reduced to resource-based planning, rather than outcome-based. The new body must begin to think in terms of desired outcomes and design solutions backwards from there.
- Think Access, not Incomes: It’s time to rethink poverty alleviation. Poverty is not about income and spending, which is how the Planning Commission, borrowing from the World Bank’s $1.25 a day definition, viewed it. Poverty and its associated ills, as Nobel laureate Dr. Amartya Sen says, are about the lack of access to life’s basics. How can we ensure that every Indian has access to these?
- Think Innovation, not Allocation: There is never enough money. Innovation happens, when planning begins with thinking how to achieve goals with the least amount of money and in the quickest time.
- Think Abundance, not Scarcities: Thinking based on European economic ideas from an era of scarcities—when “the life of man was nasty, brutish and short”—is outdated. Rather, this is the era of abundance. Think distributed solar power, think distributed clean water technologies, think Massive Open Online Courses and skills missions, think digital technology, telemedicine and wearables-based, prevention-based healthcare, and think brainpower. All of these are in abundance today. These must be the tools of the new institution’s thinking.
- Think Scenarios, not Budget Plans: Linear, centrally-planned trajectories are myths. Instead, the new institution must envision alternative scenarios and work to achieve the best of them. In advanced economies such as the US, organizations such as the National Intelligence Council prepare ‘Global Trends’ reports. It’s the kind of thing the ‘think-tank’ part of Modi’s new institution should be doing.
- Think Governance, not Politics: The new institution must think how to increase ‘governance time’ and decrease ‘politics time’ in the states. Its mandate must be to drag states into the era of economic and policy reforms.
- Think Future, not Playing Catch-up: There isn’t a great deal of time for India’s people to play catch up with the West. Scarce human resources have spurred advanced economies to move towards the final frontier of automation. In business and in war, these economies are moving towards self-organizing, self-repairing systems and a new do-it-yourself era. India faces the danger of being left behind in this new Industrial Revolution.
What remains to be seen is if this new face of Planning Commission will be more successful than its contemporary body, and how it will achieve Mr. Modi’s vision of addressing the current economic challenges and strengthening the federal structure to take India forward.
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