7 Role of Planning Commission

Dr. Nasra Shabnum

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Course Outline

 

1. Introduction

 

2. Objectives

 

3. Functions of The Planning Commission

 

4. Overview of Achievements of Planning Commission

 

4.1. High Rate of Growth

 

4.2.  Economic self-reliance

 

4.3.  Social justice

 

4.4.  Modernization

 

4.5.  Economic stability

 

5. Critical Evaluation of the Role of Planning Commission

 

6. Conclusion

 

 

INTRODUCTION

 

The erstwhile Planning Commission was established in March 1950 by an executive resolution of the Government of India on the recommendation of the Advisory Planning Board constituted in 1946, under the Chairmanship of K.C. Neogi. Constitution does not provide the provision of Planning Commission. It was constituted in the form of an advisory and specialized institution by the Government. Thus, the Planning Commission was neither a constitutional body nor a statutory body. In other words, it was a non-constitutional or extra-constitutional body (i.e. not created by the Constitution) and a non-statutory body (not created by an act of Parliament). Planning Commission by this resolution of the government was, thus, expected to perform a key-role in the economic development of the country and it worked as the supreme organ of planning for social and economic development. The Commission was only a staff agency- an advisory body and had no executive responsibility. Consequently the Government had been changing its nature and organization from time to time.

 

The Prime Minister was the chairman of the commission. India’s first Prime Minister, Pandit Jawahar Lal Nehru became the “ex-officio” first Chairman of the Planning Commission. He presided over the first meeting of the commission. The commission had a full time Deputy Chairman. He was the “de – facto” executive head of the commission. The commission had four to seven full time expert members and some Central ministers as part time members. To ensure to perform its desired role, the Planning Commission maintained a close liaison with the cabinet.

 

OBJECTIVES

 

After going through this unit the learners will be able to:

  1. Understand the functions of the Planning Commission.
  2. Narrate the thrust areas of planning in India.
  3. Assess the achievements of Planning Commission.
  4. Critically evaluate the role of Planning Commission in India.

FUNCTIONS OF THE PLANNING COMMISSION

 

The executive resolution of March 15, 1950, setting up the Planning Commission outlined its functions as to:

  1. Make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation’s requirement;
  2. Formulate a Plan for the most effective and balanced utilization of country’s resources;
  3. On a determination of priorities, define the stages in which the Plan should be carried out and propose the allocation of resources for the due completion of each stage;
  4. Indicate the factors which are tending to retard economic development, and determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the Plan;
  5. Determine the nature of the machinery which will be necessary for securing the successful implementation of each stage of the Plan in all its aspects;
  6. Appraise from time to time the progress achieved in the execution of each stage of the Plan and recommend the adjustments of policy and measures that such appraisal may show to be necessary; and
  7. Make such interim or ancillary recommendations as appear to it to be appropriate either for facilitating the discharge of the duties assigned to it, or on a consideration of prevailing economic conditions, current policies, measures and development programs or on an examination of such specific problems as may be referred to it for advice by Central or State Governments.

Besides, the Government of India (Allocation of Business) Rules had assigned responsibilities to the Planning Commission in respect of

  1. Public co-operation in National developmen
  2. Specific programs for area development time to time
  3. Perspective Planning
  4. Institute of Applied Manpower Research.
  5. Unique Identity Authority of India(UIDAI)
  6. All matters relating to National Rain fed Area Authority (NRAA)

Besides above functions, many other roles had been entrusted to the Planning Commission from time to time. Planning Commission had generally two sets of objectives for planning, namely the short-term objectives and the long-term objectives. While the short-term objectives vary from plan to plan, depending on the immediate problems faced by the economy, the process of planning was inspired by certain long term or main objectives. Therefore, economic planning of India was an important instrument of achieving the nation’s main aims and objectives.

 

OVERVIEW OF ACHIEVEMENTS OF PLANNING COMMISSION

 

In order to assess the role of erstwhile Planning Commission it is quite essential to study the achievements of the planning of the country. Some of the thrust areas of planning were:

 

(i) A high rate of Economic Growth with a view to improvement in standard of living.

(ii) Economic Self-reliance

(iii) Social Justice

(iv) Modernization

(v) Economic Stability

 

  • (i) High Rate of Growth

The main task before Planning Commission was to undertake some positive development measures to initiate a process of development, which can be done effectively only through the instrument of planning.All the Indian Five Year Plans had given primary importance to higher growth of real national income. During the British rule, Indian economy was stagnant and the people were living in a state of poverty. The Indian economy was caught in a vicious circle of poverty. The pervasive poverty and misery were the most important problem that had to be tackled through Five Year Plan. During the first three decades of planning, the rate of economic growth was not so encouraging in our economy. Till 1980, the average annual growth rate of Gross Domestic Product was 3.73 percent against the average annual growth rate of population at 2.5 percent. Hence the per-capita income grew only around 1 percent.

 

But from the Sixth plan onwards, there had been considerable change in the Indian economy. In the Sixth, Seventh and Eight plans the growth rate was 5.4 percent, 5.8 percent and 6.8 percent respectively. The Ninth Plan, started in 1997 targeted a growth rate of 6.5 percent per annum and the actual growth rate was 6.8 percent in 1998 – 99 and 6.4 percent in 1999 – 2000. This high rate of growth was due to a significant role played by the Planning Commission. In the face of global recession, India posted 6.7% rate of growth in 2008-09 and 7.6% in 2009-10 and (is the second fastest growing major economy after China)The first half of 2010-11 saw the growth rate at 8.9%.

 

The economy of India is the sixth largest in the world measured by $2.628 trillion (nominal; 2017) and the third – largest $9.49 trillion (PPP; 2017). The country is classified as a newly industrialized country and one of the G-20 major economies, with an average growth rate of approximately 7% over the last two decades.

 

Poverty dropped to about. 12.4% of population below the poverty line of $1.90/day (2011–12, World Bank). Social indicators have improved but there is still a long way to go- IMR, MMR, literacy, disease eradication etc. The industrial infrastructure is relatively strong – cement, steel, fertilizers, chemicals, etc. Agricultural growth is also gaining momentum with food grains production. The long-term growth prospective of the Indian economy is positive due to its young population, corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy.

  • (ii) Economic Self Reliance

At the beginning of planning, we had to import food grains from USA to meet our domestic demand. Similarly, for accelerating the process of industrialization, we had to import capital goods in the form of heavy machinery and technical know-how. For improving infrastructure facilities like roads, railways, power we had to depend on foreign aid to raise the rate of our investment.

 

As excessive dependence on foreign sector may lead to economic colonialism, the planners rightly mentioned the objective of self-reliance from the third Plan onwards. In the Fourth Plan much emphasis was given to self-reliance, more especially in the production of food grains. In the Fifth Plan, our objective was to earn sufficient foreign exchange through export promotion and important substitution.

 

By the end of the fifth plan, India became self-sufficient in food-grain production. In 1999-2000, our food grain production reached a record of 205.91 million tons. Further, in the field of industrialization, now we have strong capital industries based on infrastructure. In case of science and technology, our achievements are no less remarkable. The proportion of foreign aid in our plan outlays declined from 28.1 percent in the Second Plan to 5.5 percent in the Eighth Plan. The Economic Survey makes an important note that food and nutritional security of India currently depends to a great extent on the production of wheat and rice. These two crops together constituted 78 per cent of total food grains production in 2009-10. However, in spite of all these achievements, we have to remember that hike in price of petroleum products in the international market has made self-reliance a distant possibility in the near future.

  • (iii) Social Justice

Social justice means to equitably distribute the wealth and income of the country among different sections of the society. In India, we find that a large number of people are poor; while few lead a luxurious life. Therefore, another role played by the Planning Commission was to ensure social justice and to take care of the poor and weaker sections of the society. The Five-Year Plans highlighted four aspects of social justice. They were:

  • (i) Application of democratic principles in the political structure of the country;
  • (ii) Establishment of social and economic equity and removal of regional disparity;
  • (iii) Putting an end to the process of centralization of economic power; and
  • (iv) Efforts to raise the condition of backward and depressed classes.

Thus the Planning Commission targeted to uplift the economic condition of socio-economically weaker sections like scheduled caste and tribes through a number of target oriented programs. In order to reduce the inequality in the distribution of landed assets, land reforms were adopted. Further, to reduce regional inequality specific programs were adopted for the backward areas of the country. In spite of various efforts undertaken by the authorities, the problem of inequality remains as great as ever. Thus the progress in the field of attaining social justice has been slow and not satisfactory.

  • (v) Modernization

Before independence, our economy was backward and feudal in character. After attainment of independence, the planners and policy makers tried to modernize the economy by changing the structural and institutional setup of the country. Modernization aims at improving the standard of living of the people by adopting a better scientific technique of production, by replacing the traditional backward ideas by logical reasoning’s and bringing about changes in the rural structure and institutions.

 

These changes aimed at increasing the share of industrial output in the national income, upgrading the quality of products and diversifying the Indian industries. Further, it also included expansion of banking and non-banking financial institutions to agriculture and industry. It envisaged modernization of agriculture including land reforms.

  • (vi) Economic Stability

Economic stability means to control inflation and unemployment. After the Second Plan, the price level started increasing for a long period of time. Therefore, the planners tried to stabilize the economy by properly controlling the rising trend of the price level. However, the progress in this direction has been far from satisfactory. Thus the main role of Planning Commission has been planning to ensure a non-inflationary self-reliant growth with social justice.

 

Besides the above thrust areas, many other roles and responsibilities entrusted to the Planning Commission from time to time. Since 1991 the Indian economy was gradually moved from a detailed planning system towards indicative planning where Planning Commission was expected to develop a long term vision of the future and identify the priorities of nation. Accordingly, it worked out sectored plans and provided promotional stimulus to the economy to grow in the desired direction. Further the Planning Commission played an integrative role, had to evolve a holistic approach to the policy formulation in crucial areas of human and economic development. In the significant social sectors, which require coordination and synthesis like rural health, drinking water, rural energy needs, literacy and environment protection etc. a coordinated policy system had to be put in place. There was multiplicity of agencies for the promotion of these social sector schemes and it was left to the planning commission to ensure that these agencies worked in harmony and for a common purpose. It had to act as a catalyst to such integrative endeavor so that better results were achieved at much lower costs. The Planning Commission laid emphasis on maximizing the output by using limited resources optimally. Instead of looking for mere increase in the plan outlays, efforts were made to increase the efficiency of allocations being made. It may be pointed out that in the context of severe constraints on available budgetary sources, the allocation system between the States and the Central Government Ministries was generally under strain. The demands of states were normally pegged at high point, while the ministries at the centre were also constrained by the ever increasing demands and pressures for resources. It is here that the Planning Commission had to play a mediatory and facilitating role so that mutual interests of the centre and the states co – exist at macro level as well as the middle range level. It had to help in creating a culture of high productivity and efficiency in the Government.

 

With a view to ensure an efficient utilization of resources, several self managed organizations at all levels had to contribute individually and collectively to the overall developmental process. Thus the Planning Commission expected to play a systemic transformation body and to provide consultancy to the Government for developing a better system.

 

An important role of Planning Commission was to disseminate information pertaining to resource availability in various sectors and to suggest a variety of development models and modules to be usefully employed by various states and even by the central government departments. Thus, it was expected to share its vision, approaches and experiences with the government organizations functioning at various levels.

 

In later years, the Planning Commission was entrusted with important matters relating to National Rainfed Area Authority (NRAA). A significant functional area in the last few years was the work related to the Unique Identification Authority of India (UIDAI) and related matters. The Planning Commission was also the administrative department of the institute of Applied Manpower Research, New Delhi, which was primarily a research and training institution.

 

CRITICAL EVALUATION OF THE ROLE OF PLANNING COMMISSION

 

The erstwhile Planning Commission was originally established with an advisory role but in the course of time it had emerged as a powerful and directive authority. It has been observed that instead of a stress on indicative planning after the inauguration of liberalization era in 1991, the planning paradigm in India continued to adopt its earlier mode of detailed planning in certain important sectors like poverty alleviation, agricultural development, rural development, drinking water, education and other social services. In addition there were certain areas in which the private sector entrusted with greater role and responsibilities for giving push to the economy. These areas generally relate to industry and trade. The Planning Commission accepted the important role of the private sector as well as of Public Private Participation (PPP) in a few crucial areas of development in adopting an indicative planning approach for such growth areas. Thus two approaches to planning co existed side by side, the traditional detailed planning and indicative planning.

 

It has also been argued that the Planning Commission had encroached upon the autonomy of the states under the federal system. The encroachment was seen in terms of the Planning Commission’s acceptance, modification or rejection of the states’ proposals for the development programs, for which central financial assessment was sought and which could be granted, only on the recommendation of the Planning Commission.

 

There has been, however, a criticism of the Planning Commission that, generally, it had overstepped its role or its expected jurisdiction and arrogated to itself certain executive functions. It may be recalled that the First Administrative Reforms Commission, in its Report on the Machinery of Planning, had underscored that the Planning Commission

should restrict itself to the formulation of perspective, five years and annual plans, resource assessment and evaluation, and should not interfere in the implementation of the plans which was the exclusive responsibility of the executive agencies. The commission also stressed that the Planning Commission should not be involved in functions of a purely executive nature.

 

As already mentioned, the Planning Commission was not a statutory body and it did not find any place in the Indian Constitution. Over the years, with the expansion in the scope of planning, its functions had extended substantially and had enveloped almost the entire sphere of administration, excluding only defense and foreign affairs. Little wonder, it was branded by critics as the ‘economic cabinet of the country as a whole’. It has been alleged that, because of its powerful position by virtue of the chairmanship of the Prime Minister, it had even encroached upon the functions of constitutional bodies such as the Finance Commission, and yet, it was not accountable to the Parliament. It built up a heavy bureaucratic organization which led even Jawaharlal Nehru, the commission’s first Chairman, to observe: “The Commission which was a small body of serious thinkers, had turned into a government department complete with a crowd of secretaries, directors and, of course, a big building.”

 

CONCLUSION

 

The composition of the Commission underwent considerable changes since its initiation. The Planning Commission was originally established as a staff agency with an advisory role but in the course of time it has emerged as a powerful and directive authority whereby its recommendations were considered both by the centre and the states. The critics had described it as a “Super Cabinet”, an “Economic Cabinet”, a “Parallel Cabinet” the “Fifth Wheel of the Coach” and so on. There appears to be some justification for the criticism that there was some overlapping of responsibilities between the Planning Commission and the Finance Commission. Since there was no clear distinction between plan expenditure and non-plan expenditure unambiguous distinction between the roles of the two bodies could not have been made. The First Administrative Reform Commission of India also showed its awareness of the problem of such an overlapping. On the 13th of August, 2014, the Government scrapped the 65 year old Planning Commission and announced that it would be replaced by a new body. Accordingly, on January 1, 2015, the (NITI) Aayog (National Institution for Transforming India) was established as the successor to the Planning Commission.

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