The revamping of the centrally sponsored schemes effectively giving states greater freedom in deciding how the Plan funds allocated to them would be spent was also a step in the direction of cutting the remit of the commission, a vestige of the Nehruvian era and now recognised to have outlived its purpose.
In fact, the writing on the wall over the future role of the commission was clear from UPA finance minister P Chidambaram's interim budget where, of the central assistance for states and union territories, the component of funds that goes straight to state treasuries was trebled to R3.39 lakh crore for 2014-15 from a revised estimate of R1.19 lakh crore in 2013-14. The budget support for the Central Plan (the component routed through ministries via the commission) was slashed to R2.17 lakh crore from 3.56 lakh crore.
Modi's finance minister Arun Jaitley followed the same pattern in his maiden budget on July 10 as he tinkered with the figures a bit the central aid for state and UTs for FY15 was put at R3.38 lakh crore while the support for the Central Plan was revised to R2.37 lakh crore.
For the record, the commission's role practically includes an involvement in designing India's medium-term economic strategy through the formulation of Plan targets and priorities. But its primary function is to determine the (quantum) of allocation of Plan funds out of the gross budgetary support it receives to states, as opposed to the constitutionally mandated role for the finance commission which evolves the formula for sharing of central tax receipts with states.
Says Arun Maira, who was a member of the commission during UPA rule: Narendra Modi has caught the bull by the horn. The commission has become old, large and also part of a large system where civil servants get a parking lot. It was the resistance from these (bureaucrats) that prevented an overhaul of the commission for long. Even during my tenure at the commission, then PM Manmohan Singh had looked at forming a new institution to replace the commission. The new body was to act as a nodal agency interacting with other thinktanks both within and outside the country, leveraging the powerhouse of knowledge in order to produce customised solutions for India."
Maira, who is also the former chairman of Boston Consultancy Group's Indian unit, said: "We need a body that understands the problems and gets systems to help in building capacities across states."
Agrees Anwarul Hoda, also a former member: "The commission in its current role already functions more on the lines of a thinktank. The central planning was given up by the commission long ago. In my stint there, I functioned more as an adviser. That is what I was also told to do by former deputy chairman Montek Ahluwalia. But we do not know what would be the structure of the proposed thinktank."
The plan panel of late has made some changes in rules that allowed states flexibility in using 10% of plan funds as per requirement as compared with the earlier mandate of 5%. The panel during the last 10 years of UPA rule had been involved directly or indirectly in advising the government on many other policy issues, ranging from PPP contract modelling and funding of infrastructure to relaxation in rules for forest clearances.
However, some experts are apprehensive in agreeing to the idea of demolishing the existing framework and roles of the panel. Pronab Sen, chairman of National Statistical Commission and former principal adviser of PC, warned: "You don't wind up an institution without giving proper thought. Every institution performs a function and gives direction to address a situation. How much of this is taken up by the new structure will need to be seen."
Sounding a note of caution, BK Chaturvedi, a former cabinet secretary who went to become a member of the plan panel, said: "We should understand that the Planning Commission was not just allocating plan resources but undertaking other important activities that have a bearing on economic policymaking. The question of bifurcating or trifurcating this old institution should not result in loss of key policy directions that the commission gave from time to time."
Mihir Shah, former member, listed five critical functions that need to be incorporated in the new body: Make pioneering efforts towards inclusive planning, evolve policies and give innovative ideas for policy framework at the national level, act as a reformer and facilitator of reforms, act as spoke-sperson of states for the Centre and break government silos for efficient functioning to take holistic view of issues and arbitrator of disputes. "A vacuum will be created in governance after the panel is wound up and I hope this will be offset by a new empowered body," he added.