Experts propose a new think-tank to replace Planning Commission

Written by fe Bureau | New Delhi | Updated: Aug 27 2014, 01:43am hrs
Planning CommissionThere was virtual unanimity over conversion of the 64-year old body into a think-tank.
Following Prime Minister Narendra Modi's Independence Day pledge on replacing the Planning Commission with a new institution, experts on Tuesday brainstormed various ideas to set up a new body that could address the current economic challenges and strengthen the federal structure.

While there was virtually unanimity over conversion of the 64-year old body into a think-tank, some experts suggested the powers of allocation of plan funds should be handed over to the finance commission.

Although the plan panel has given up central planning over the last 20 years, it played a major role in allocation of plan funds to states. At present, the Constitution mandates that the Finance Commission determines the formula for sharing of central tax receipts among states while the Planning Commission determines the allocation of plan funds out of the gross budgetary receipts to states as per the Gadgil-Mukherjee formula.

The plan panel off late made some changes in rule that allowed states flexibility in using 10% of plan funds as per their requirement as compared with the earlier mandate of 5%. The plan panel during the last 10-year of UPA regime had been involved directly or indirectly in advising the government on many other policy issues ranging from PPP and funding of infrastructure to relaxation in the rules for forest clearances.

Former finance minister Yashwant Sinha, who chaired the meeting of experts, said "we have discussed what could be the new avatar of the Planning Commission. They (experts) have all given some brilliant suggestions. All these (ideas) would be compiled and would be sent to the Prime Minister."

"We also discussed upon how should the plan be allocated to states as well as upon the autonomy status to be granted to the new body," Sinha said.

Sinha said it was a long standing need to reinvent the Planning Commission and the Prime Minister has taken a bold step.

Apart from Sinha, the meeting was attended by former RBI governor Bimal Jalan, former finance secretary Vijay Kelkar, ex-Planning Commission members Saumitra Chaudhuri and Y K Alagh.

Another group of experts that included National Statistical Commission chairman Pronab Sen also discussed on the future course of action. "Old body is totally scrapped. The new body will come up and whatever body comes up, it will combine knowledge power along with some mandate for getting it executed," said Rajiv Kumar, an economist who had worked in finance ministry and CII.

Replying to a question on how the plan allocation to the states will be given, Kumar said it may be done through the Finance Commission.

Addressing the nation from the Red Fort on Independence Day, Modi had said that the 64-year-old Planning Commission, a vestige of socialist era, would be soon replaced with a new institution to address the current economic challenges and strengthen the federal structure. "We need a new body with a new soul....We will have to

think about giving a new shape to the Planning Commission.... Very soon this new institute will start working in place of the Planning Commission," Modi had said.

Modi has already invited ideas from people on what shape the new institution to replace the Planning Commission can take. A special open forum was created on the website for inviting suggestions on the

new institution.

Among those who participated in today's meetings are BJP spokesperson M J Akbar, Nitin Desai, former chief economic advisor Shankar N Acharya, senior journalist T N Ninan, Pratap Bhanu Mehta, Shekar Shah, senior journalist T C A Srinivasa Raghavan, ICRIER Director Rajat Kathuria, noted economist Surjit Bhalla and former finance secretary Sumit Bose.

The exercise to revamp the role of plan panel was actually initiated by the UPA. The interim budget presented by P Chidambaram in a way curtailed the role of Planning Commission to a great extent by trebling the central assistance for states and union territories, the component of funds that goes straight to state treasuries, to Rs 3.39 lakh crore for 2014-15 from a revised estimate of Rs 1.19 lakh crore lakh in 2013-14, while the budget support for central plan (the component routed through various ministries via PC) were slashed to Rs 2.17 lakh crore from 3.56 lakh crore.

NDA's finance minister Arun Jaitley followed the same pattern in his maiden budget on July 10 with minor adjustment -- the central assistance for state and UTs were hiked to Rs 3.38 lakh crore from Rs 1.19 lakh crore while the budget support for central plan curtailed to Rs 2.37 lakh crore from Rs 3.56 lakh crore.