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Time to scrap the Planning Commission?
Tue, 15 Jul Pre-Open

A curious thing has happened in recent days. Ever wondered that someday there would be plans to do away with Planning Commission? Sounds unbelievable? However the experts today think so. A closer look at the nuts and bolts of the Planning Commission tells us that it has turned out to be a complete hogwash.

The Planning Commission is an institution in the Government of India, which formulates India's Five-Year Plans, among other functions. That's the Wikipedia definition! It is the report diary of the financial interaction between the Union government and the states. Over the years it has grown into a large organization. Basically it is a think-tank on economic matters. It binds the centre-state relationships. It serves as a doorway to access the economic matters with the government. Now that's what it is supposed to be! But today its role has been whittled down to a monopolistic and a static organization. And it has been marred with pointless agendas.

What's the cause of the problem? Today India is evolving and maturing as a nation. The Planning Commission has failed to respond to that. And hence has sparked criticism from the experts. Primarily, the Commission has fallen foul of allocation of resources, especially capital allocation. Now that shouldn't be a concern for the government. Capital allocation is best to be left to the markets. Instead the government should focus on creating an enabling environment. Future thinking and alternative methods of increasing convenience and adoption of sound practices should be put at the centre-stage. Also, the government should separate the two activities of economic ideation and the process of financial dissolution. It's best to decentralize the ideation function of the Commission. More competing think-tanks should be involved to generate new ideas. High time the Planning Commission template underwent a sea change. More than a revamp, scrapping the existing setup and starting afresh sound more logical.

Remember, India's first plan was not carved by the Planning Commission. It was the brainchild of few astute businessmen then. Perhaps they happen to be the better judges. Essentially, the Planning Commission should devote to the long-term strategic vision of the future and decide on priorities of nation. Unfortunately the Commission stands miles away today from the exploration of bold ideas. It is time to change the architecture of the institution and make it more involved in economic planning that serves the need of the hour. The Commission needs to be strengthened in terms of balancing out the resource mobilization and devising development programs to fulfill the sectoral targets. While the Chair at the helms of the Commission lays vacant post the exit of Montek Singh Ahluwalia, the time has come for the government to address the shortcomings on a war-footing.

Our belief is that India would do better with a complete overhaul of the Planning Commission. The centre and the states should join hands and take a call. And work in unison. If the authorities plan to junk the Planning Commission and start afresh, there would be nothing better than that.

Do you agree that the new government should take decisive moves over the much needed reforms and revamp the system? Share your views on Equitymaster Club.

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