Yojana Bhawan, the headquarters of the Planning Commission, is an imposing six-storied structure in the
heart of New Delhi, a short drive from
South and North Blocks, the seat of ultimate executive power in the country.
Yet, the distance between the two has
increased in the last few years. The divide
culminated August 15 when Prime Minister
Narendra Modi announced the Planning
Commission would have to wind up to be
replaced by a think-tank-like institution.
With it, the curtains have come down on
the organization that, for 64 years, was responsible for the
country’s planned development.
In recent years, far from being the cornerstone of India’s
economic and social policy, it had come to be seen as an
obstacle to fast decision-making. Instead, it had become a
hub of stress-free jobs for an army of bureaucrats. Rajiv
Gandhi, the former prime minister, had called the Planning
Commission ‘a bunch of jokers.’
His son and Congress vice-president, Rahul, has said that
even a villager has better knowledge than members of the
Former Union minister Arun Shourie called it a ‘parking
lot’ for political cronies and unwanted bureaucrats.
It is not that the panel’s demise came instantly. In fact, the
downfall started in the 1990s when the government clipped
the powers the Planning Commission exercised on the states.
It tried to remain relevant by exercising its authority through
other avenues, but could not ever reach its old glory.
Modi has been able to mothball the Planning Commission
because it is not a Constitutional body, unlike the Finance
Commission. It was created in 1950 through a resolution of
the government and was headed by the then prime minister,
Jawaharlal Nehru. (The prime minister is the chairman of
the Planning Commission.) Gulzarilal Nanda was its first
Nehru felt the need to create an over-arching body to monitor, implement and execute development programs because
most of the newly-created states of the country had little
experience in handling such work.
It played a vital role right up to the 1980s. One of its biggest
contributions was ushering in the public-sector revolution in
“In those days, the Planning Commission played a vital role
in deciding even the location of most of the public sector
units,” says N C Saxena, a former secretary of the Planning
It was from the 9th Five-year Plan (1997-2002) that its role
started diminishing. The state governments were granted
freedom to devise and execute their own schemes and were
not required to seek the permission of Yojana Bhawan for
every small matter.
Though the state chief ministers came to Yojana Bhawan at
least once a year, these visits were largely to discuss the dis-
cretionary funds available with the Planning Commission
deputy chairman. (The deputy chairman enjoys the status of
a Cabinet minister, though he takes part in Cabinet meetings
only as a special invitee.)
The untied funds (not linked to a scheme or program) in
the hands of the Planning Commission too gradually dwindled because they were passed on to the ministries, rendering its work merely ornamental.
“In earlier days, almost 90 percent of untied funds granted
to the state governments were routed through the Planning
Commission, while just 10 percent went through the ministries. After the 1990s, this changed and only 5 percent of
the untied funds were routed through the Planning
Commission, while the remaining went through the ministries,” Saxena says.
Many states, especially those ruled by the Opposition,
would complain of step-motherly treatment. Shivraj Singh,
the Bharatiya Janata Party chief minister of Madhya
Pradesh, had recounted at an event in Bhopal some years ago
how he took up farm-sector reform aggressively only after his
request for assistance after a drought was snubbed by the
This might have played on Modi’s mind when he made the
announcement during his Independence Day speech at the
As this role diminished, the Planning Commission re-ori-ented itself and started exerting greater control over the ministries, which is where differences with the ministries and
their heads cropped up. The ministers thought it was unnecessary interference in their work.
In the last decade, during the United Progressive Alliance
rule, the Planning Commission got embroiled in too many
controversies like the one over poverty numbers, which had
little to do with its primary objective.
“The priorities of the government too changed from supporting the public sector to playing a more inclusive role
focused on rural development, education, health and so on,”
a senior official says. But amidst all the changes that the
Sanjeeb Mukherjee reports on the Indian government’s decision to abolish the 64-year-old Planning Commission
Planned development stemm - ed from Jawaharlal Nehru’s deep belief in socialism — of
the Fabian type.
Under Nehru’s influence, the All
India Congress Committee resolved
in May 1929 that “in order to
remove the poverty and misery of
the Indian people and to ameliorate
the condition of the masses, it is
essential to make revolutionary
changes in the present economic
and social structure of society and
to remove gross inequalities.”
What strengthened his belief in
the years that followed were the
rapid strides made by the Soviet
Union under the Five-year Plans,
Planning Committee by the Congr-
ess. In 1944, the government estab-
lished a Department of Planning
After Independence, the issue of
planning was reviewed in 1949 by
the Advisory Planning Board appo -
inted by the interim government.
In his 1950 budget speech, then
finance minister John Mathai
announced the setting up of the
It was established in March 1950
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
The objective of the Commission
was defined as initiating “a process
of development which would raise
living standards and open up for the
people new opportunities for a richer and more varied life”.
Another objective of the commission was to stabilize the growth of
population over a reasonable period, and to ensure that the economy
became self-reliant over time.
Nehru’s vessel for resource allocation
The first meeting of the Planning Commission in New Delhi, August 22, 1950. G L Mehta is seen addressing the meeting. To his left are then finance minister Chintamani Deshmukh, the first deputy chairman of the commission Gulzarilal Nanda, then prime minister and chairman of the commission Jawaharlal Nehru, and Indian Civil Service member R K Patil.