June 17, 2024


Should the Planning Commission be revived?

A new government, coalition or not, should hit the ground running. Part of that includes formulating policies and figuring out how to implement them. It has been a feature of every Indian government at the Centre to have sound economic policies for the betterment of the country and economy.

For decades, the Planning Commission played a pivotal role in this effort. That changed when the BJP government under Narendra Modi came to power in 2014. The Commission was dissolved, and NITI Aayog came in its place. Given the economic complexities and issues at play for India, should the Commission be revived in some capacity, or does NITI Aayog suffice?


As Subhas Chandra Bose’s popularity rose in the mid-1930s thanks to his dogged commitment to the freedom struggle, his speech at the 51st annual session of the Congress at Haripura in 1938 stands out. In it, he outlined a strategy for socioeconomic development that the country would follow for several decades.

When he spoke about economic and industrial development, he said solving issues like poverty and illiteracy can be achieved. The first step would be for a future national government to set up a commission to come up with a comprehensive reconstruction plan. It would need to decide which home industries could be revived and where large-scale production should be encouraged.

Bose wanted a balance between not wanting to return to the pre-industrial era and acknowledging the need to minimise corporate-backed industrialisation. He concluded by saying it should work to gradually socialise the agricultural and industrial system.

In early 1938, the Conference of Ministers of Industry was organised in Delhi. It concluded with the decision to appoint a Planning Committee. Jawaharlal Nehru soon became its head. At its meeting in Bombay, 15 experts, including scientists like JC Ghosh and economists like KT Shah, were in attendance. This was seen as the beginning of something that would change the country’s development trajectory for decades.

The Committee continued its work till 1940. The Planning Commission was formed in 1950, reporting directly to the Prime Minister. In the 1950s, the Committee and its work was the base upon which India embarked on its five-year plans.

In the decades that followed, the plans focused on growing the public sector with investments in basic and heavy industries. The 10th and 11th economic plans were implemented in the 2004-2014 period, which witnessed economic growth of over 9%.

In 2014, the Independent Evaluation Office submitted a report to Prime Minister Modi recommending replacing the Planning Commission with a control commission. In 2015, a resolution was passed to replace it with the newly formed NITI Aayog. It was to become the government’s official think tank.

With everything that’s happened to India’s economy, the good and the bad, and the evolving economic and financial issues the country faces, should the Planning Commission be brought back in some capacity?

VIEW: It would be a good idea

For over six decades, the Planning Commission was one of the most important institutions within India’s central government. A note prepared for the Cabinet in 2014 described the Commission as a ‘relic’. That could not be further from the truth. While the Commission wasn’t perfect, reviving it in some form would do the country and economy some good. At the very least, to maintain a focus on policies needed to balance short-term risks and long-term growth.

Modi never liked the Commission and its development model through the federal structure when he was Gujarat’s Chief Minister. While the intention was cooperative federalism for development, scrapping the Commission was a mistake and had a negative effect. If the goal was better cooperation between the Centre and states, then it’s a failure.

The Planning Commission never wanted to create competition between states and use national indices to call out the weak performers. It would’ve been antithetical to the concept of federalism. In fact, it was a crucial part of Centre-state fiscal relations, disbursing planned funds from the Centre to state governments. It would be better to go back to the rules-based resource allocation.

COUNTERVIEW: No need for it

One of the things that hampered India’s economic growth in the past was excessive governmental management of resources and assets. It led to mismanagement, rent-seeking, and corruption. Scrapping the Planning Commission gave the new government a chance to replace inefficient central planning with something better.

As countries began to focus on large-scale economic growth post-World War II, it took some time for India to catch up. The liberalisation policies in the early 1990s were perhaps the beginning. But that wasn’t enough. One of the criticisms of India’s planning infrastructure was a heavy reliance on technocrats disconnected from the realities on the ground. NITI Aayog gave way to a decentralised and more democratic approach.

The results are there for everyone to see with revolutionary policies like the Goods and Services Tax (GST) and competitive federalism through indices, which help to see how states perform. Besides, with the Planning Commission came constant tussles with the Finance Ministry for more money. It also decided to set a ceiling on how much states could borrow thereby stepping into the Finance Ministry’s turf.

Reference Links:

  • Subhas Chandra Bose, Meghnad Saha and the Birth of the National Planning Commission – The Wire
  • Planning Commission is now ‘Niti Aayog’ – The Economic Times
  • Reimagining Indian economic planning: Planning Commission 2.0 – ORF
  • The weakening of cooperative federalism – The New Indian Express
  • India’s finance ministry had complex ties with its Planning Commission—’Always a tussle’ – The Print
  • Paradigm shift in economic planning through NITI Aayog – The Sentinel

What is your opinion on this?
(Only subscribers can participate in polls)

a) The Planning Commission should be revived.

b) The Planning Commission shouldn’t be revived.


For the Right:

A decade of ‘gaslighting’ in Modi’s India

For the Left:

Surat’s industrial renaissance is a model for India’s economic growth