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What does the Planning Commission do? Business Desk | July 19, 2004

After many years the Planning Commission is back in the news.

On Sunday, July 18, Prime Minister Dr Manmohan Singh asked Montek Singh Ahluwalia, deputy chairman of the Planning Commission, and the Commission's other members to create a delivery mechanism to ensure that the government's economic programmes benefit segments of the population they are meant for.

After many years of operating from the margins so to speak, the Planning Commission has returned to the centrestage of the nation's economic planning.

To make the Commission more relevant, the Manmohan Singh government has recruited some of the finest economic minds in the country to be its members, including former finance secretary Ahluwalia who returned to Delhi from his job at the International Monetary Fund, at Dr Singh's invitation.

Younger readers may be unaware about what the Planning Commission does, and's Business Bureau is happy to provide a ready reckoner to what the Commission does.

What is the Planning Commission?

It was set up by the Union government to promote a rapid rise in the standard of living of the Indian people by efficient exploitation of national resources, increasing production and offering opportunities to all for employment in the service of the community.

The Planning Commission is charged with the responsibility of making assessment of all resources in the country, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of resources and determining priorities.

The prime minister is the chairman of the Planning Commission, but the Commission is actually run by the deputy chairman (who enjoys the rank of Cabinet minister or minister of state, depending on his years in public life; for instance, K C Pant, deputy chairman during the NDA government, had the rank of Cabinet minister; Dr Montek Singh Ahluwalia too enjoys the status of a Cabinet minister), and members of the Commission.

Whom does the Planning Commission report to?

The Planning Commission works under the overall guidance of the National Development Council, India's prime policy-making body, which guides the nation on the development process.

The Commission advises and provides guidance for the formulation of India's Five-Year Plans, Annual Plans and state government plans. It also monitors plan programmes, projects and schemes.

When was India's Planning Commission set up?

The Planning Commission was set up by a resolution of the Government of India in March 1950.

Who was the first deputy chairman of the Planning Commission?

Gulzarilal Nanda.

When was the first Five-Year Plan launched?

The first Five-Year Plan was launched in 1951.

Two subsequent Five-Year Plans were drawn up till 1965, when there was a break because of the Indo-Pakistan war. Two successive years of drought, devaluation of the rupee in 1966, a rise in prices and erosion of resources disrupted the planning process.

After three Annual Plans between 1966 and 1969, the fourth Five-Year Plan was launched in 1969.

The Eighth Plan could not take off in 1990 due to the swiftly changing political situation at the Centre and the years 1990-1991 and 1991-1992 were treated as Annual Plans. The Eighth Plan was finally launched in 1992 after the initiation of liberalisation.

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.

What does the Planning Commission do?

The Planning Commission's functions as outlined by the government's 1950 resolution are:

  • To 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.
  • To formulate a plan for the most effective and balanced utilisation of country's resources.
  • To define the stages, on a determination of priorities, in which the plan should be carried out and propose the allocation of resources for the due completion of each stage.
  • To indicate the factors that tend to retard economic development.
  • To determine the conditions which, in view of the current social and political situation, should be established for the successful execution of the plan.
  • To determine the nature of the machinery that will be necessary for securing the successful implementation of each stage of the plan in all its aspects.
  • To 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.
  • To 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 programmes or on an examination of such specific problems as may be referred to it for advice by central or state governments.

What are its other functions?

From a highly centralised planning system, the Indian economy is gradually moving towards indicative planning where the Planning Commission concerns itself with the building of a long-term strategic vision of the future and decide on priorities of nation.

It works out sectoral targets and provides promotional stimulus to the economy to grow in the desired direction.

The Planning Commission plays an integrative role in the development of a holistic approach to the policy formulation in critical areas of human and economic development.

In the social sector, schemes that require coordination and synthesis like rural health, drinking water, rural energy needs, literacy and environment protection have yet to be subjected to coordinated policy formulation. It has led to multiplicity of agencies. An integrated approach can lead to better results at much lower costs.

The Planning Commission functions through several divisions, each headed by a senior officer.

What does the Planning Commission focus on?

The Commission concentrates on maximising output by using our limited resources well.

Instead of looking for mere increase in Plan outlays, the effort is to look for an increase in the efficiency of utilisation of the allocations being made.

With the emergence of severe constraints on available budgetary resources, the resource allocation system between the states and Union ministries is under strain.

This requires the Commission to play a mediatory and facilitating role, keeping in view the best interest of all concerned.

It has to ensure smooth management of change and help in creating a culture of high productivity and efficiency in government.

The key to efficient utilisation of resources lies in the creation of appropriate self-managed organisations at all levels.

In this area, the Planning Commission attempts to play a systems change role and provide consultancy within the government for developing better systems.

In order to spread the gains of experience more widely, the Planning Commission also disseminates information.

Who are the Planning Commission's new members?

  • Dr Kirit Parikh, former director, Indira Gandhi Institute of Developmental Research, Mumbai.
  • V L Chopra, former director general, Indian Council of Agricultural Research.
  • Dr Balchandra Mungekar, Vice-Chancellor, Mumbai University.
  • Abhijit Sen, Professor, Jawaharlal Nehru University.
  • Syeda Hamid, Member, National Commission for Women.
  • B N Yugandhar, former director, Lal Bahadur Shastri National Institute of Administration, Mussoorie.
  • Dr Anwar-ul Hoda, former deputy director general, World Trade Organisation.

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