PLANNING COMMISSION...SOCIALIST ERA HERITAGE

The 64-year-old Planning Commission, a vestige of the socialist era, will soon become history. Prime Minister Narendra Modi, in his Independence Day speech, today announced that the Commission, set up in 1950 at a time when government gave public sector the commanding heights of economy, would be abolished and replaced with a more relevant institution. Greatly impressed by the Soviet planning system, the country's first Prime Minister Jawaharlal Nehru had set up the Planning Commission to steer the nation's economic destiny. Set up by a Cabinet Resolution, the Commission enjoyed immense power and prestige as it had always been headed by the Prime Minister. Its most important function was to fix targets for sectoral growth and allocate resources to achieve them. The Deputy Chairman of the Commission has often been a political stalwart holding the rank of a Cabinet Minister. The stalwarts who had been the deputy chief of the panel included Gulzarilal Nanda, V T Krishnamachari, C Subramaniam, P N Haksar, Manmohan Singh, Pranab Mukherjee, K C Pant, Jaswant Singh, Madhu Dandavate, Mohan Dharia and R K Hegde. The last deputy chairman was Montek Singh Ahluwalia. The Soviet-era style planning body, however, lost its relevance after the opening of the economy in the 90s. With the dismantling of the licence raj, it functioned only as an advisory body without any effective power.

The Commission was set up by Nehru with the explicit objective to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering opportunities to all for employment in the service of the community. It was charged with the responsibility of making assessment of all resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of resources and determining priorities.

India had launched the first Five-year Plan in 1951 and two subsequent five-year plans were formulated till 1965, when there was a break because of the Indo-Pakistan Conflict. Two successive years of drought, devaluation of the currency, a general rise in prices and erosion of resources disrupted the planning process and after three Annual Plans between 1966 and 1969, the fourth Five-year plan was started in 1969. The Eighth Plan could not take off in 1990 due to the fast changing political situation at the Centre and the years 1990-91 and 1991-92 were treated as Annual Plans. The Eighth Plan was finally launched in 1992 after the initiation of structural adjustment policies. For the first eight Plans the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced and the current thinking on planning in the country, in general, is that it should increasingly be of an indicative nature. Currently, the 12th Five-year-plan is on and will end in March 2017.