Wednesday, August 27, 2014

Why was Planning Commission not merely extra-constitutional 


  • The Planning Commission was a powerful centre of extra-constitutional authority, but not because the Constitution overlooked the need for the roles that it played. 
  • The prescription of fiscal flows from Centre to states was assigned under Article 280 to Finance Commissions, set up every five years with what by convention has been a two-year term. 
  • The need for co-ordinated policy between Centre and states was likewise foreseen and assigned. Article 263 provides for an Inter-State Council (ISC), for "investigating and discussing subjects in which some or all of the States, or the Union and one or more of the States, have a common interest; or making recommendations upon any such subject and, in particular, recommendations for the better co-ordination of policy and action with respect to that subject". 
How much more explicit could our Constitution have been? 
  • The Planning Commission in that sense was not merely extra-constitutional but actually anti-constitutional, since its existence effectively blocked for 30 years the appointment of the ISC.

What INJUSTICE was done to Inter- State Council  ?

  • The ISC was eventually born in the 1980s, but it has existed wanly and apologetically in the shadows as a poor cousin of the Planning Commission. 
  • Both bodies were headed by the prime minister who had no time for either, but the Planning Commission had a full-time deputy chairman with Cabinet rank, where the Council had none. 
  • Appointment to the ISC as secretary was regarded by bureaucrats as a punishment posting.
  • Many of the schemes for which the Planning Commission assumed authorship actually originated in the states. The employment guarantee scheme in Maharashtra and the mid-day meal scheme in Tamil Nadu were the pioneers that led to national adoption. 
  • Their spread to other parts of the country, voluntarily rather than by fiat, could easily have happened through exchange of ideas in the Inter-State Council.

What kind of DAMAGE did Planning  Commission do ?

  • The actual damage done by the Planning Commission extended to both the small and the big. Small damage, to give one example, might be a handout towards the corpus of a social science institution of a crore, say, where this amount was actually deducted from the Plan flow due to the state (in which it was located) as support to the state Plan. So the state was actually done out of its due by this diversion towards an institution, in which decision it had no say. But these were mere nibbles at the margin.
  • There was bigger damage. The constitutional channel for central assistance to states is through Finance Commissions. The statutory flows prescribed by these bodies are formulaic, and admit of no discretion. These flows are what have held the Indian federation together. The governments at the Centre and states might be bitter enemies, but the state could not be denied the funds that were its statutory right, as prescribed by the Finance Commission.

  • The Planning Commission destabilised the federation by the manner in which state governments were made to engage with it. The ISC, as constitutionally conceived, is a multilateral body where Centre and states were meant to sit around a table together, on an equal platform. The Planning Commission, on the other hand, engaged with state governments serially, one by one. Elected heads of state governments were made to appear before the Planning Commission singly, and justify the outcomes of Plan funds. Its eight or nine Members sat before them in judgement, while not being electorally or otherwise accountable themselves.

Historically  Speaking !!

  • The Nehruvian years of planning had a halo of the power and resonance of knowledge. The second Five-Year Plan became legendary in its emphasis on heavy industrialisation. But, by then, the ironies begin. Meghnad Saha, defying the powerful B.C. Roy, stands as an independent to go to Parliament to challenge Nehru’s “betrayal” of the idea of planning. He was the only scientist to have ever been elected directly to Parliament. Saha died of a heart attack, in 1956, a few hundred yards from the institution he created.)
  • The later history of planning has many other legendary movements. One thinks of the great consultants to the Planning Commission like Nicholas Georgesceau-Roegen, E.F. Schumacher and the Polish economist Kalecki. One also thinks of J.C. Kumarappa, the Gandhian. The story has it that Kumarappa wanted to attend a Planning Commission meeting in a horse-driven Tanga and was detained by security, which did not quite believe that Planning Commission members travelled in Tangas. It needed a phone call from Jawaharlal Nehru to clear the impasse.)

PC Mahalanobis

The National Planning Committee of 1938 was chaired by Nehru .Nehru invited Professor P.C. Mahalanobis (PCM) founder of the Indian Statistical Institute (my alma mater) in 1934 to help the Committee on statistical matters . After independence PCM joined the Planning Commission and was the author of the Second Plan (1956-61) that set India's Development Strategy of industrialization with emphasis on heavy industry until the reforms of 1991. The analytical basis for the strategy was PCM's Two Sector Growth Model which was essentially the same as Feldman's 1928 model for the Soviet Union. PCM independently formulated his version. Incidentally the Agriculture Sub- Committee on the Planning Committee recommended collectivization of agriculture as in the Soviet Union. Only J.C. Kumarappa's down to earth post independence report saved India from the disasters of collectivization.

Post 1967 election

  • It was only after the 1967 elections, when states elected governments not politically aligned with the Centre, that Planning Commission assistance to state Plans became subordinated to a formula (Gadgil-Mukherjee), after a two-year lag. In a 2007 research paper,formulaic share of total flows from Centre to states over a 55-year period from 1950, aggregating across statutory and Plan flows, rose (or fell) systematically for every rise (fall) in political diversity among states, with a two-period lag.

  • By the 1990s, planning was no longer a major social gestalt. It was now a technocratic, bureaucratic body, centred around fragmentary debates. The legend had shrunk but its power to determine life chances remained.


What should the new INSTITUTION be like ?

The suggestions made by the in its report on the are a useful starting point. 

The report recommends a Reforms and Solutions Commission as a successor, encompassing three sets of objectives: 
  1. serve as a knowledge bank and exchange for schemes and programmes that are being implemented both across Indian states and in different countries;
  2. provide ideas for reforming the system; 
  3. anticipate future constraints to growth and welfare, and suggest to address them proactively.

The knowledge repository and exchange objective will require a combination of knowledge-gathering, management and dissemination skills, along with domain knowledge that helps keep the exchanges constructive. The alignment objective will draw on principles and frameworks rooted in organisational theory and behaviour. And the scenario-building will need both quantitative and qualitative forecasting skills.


Planning was once a great idea, a wonderful fable of the dreams, even the arrogance of knowledge. It was a great experiment which became erratic, but its history, its genius, its innovations need to be told and told fully.  The old order has to change yielding place to the new. But planning cannot be abolished. Only what is planned and who does the planning and how will change.

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