The IEO, which was set up by the government in November 2010, from February this year began independently assessing the effectiveness of government programmes and institutional policies. It submitted the assessment report on Planning Commission to Prime Minister earlier this month.
"An assessment of the Planning Commission by the Independent Evaluation Office has found that the plan body exceeds the scope of its authority by acting as a control commission, particularly its influence on the allocation of funds to the state governments.
"Since the Planning Commission has defied attempts to reform it to bring it in line with the needs of a modern economy and the trend of empowering the States, it is proposed that the Planning Commission be replaced," IEO said in its assessment.
IEO recommended that Planning Commission's role as an allocator of resources to the States should be taken up by the Finance Commission and the allocation of resources amongst the Central Ministries should be carried out by the Finance Ministry.
The assessment sent to the Prime Minister recommended that a new think tank be set up with experts of domain knowledge to replace the plan body.
"It is clear that the Planning Commission in its current form and function is a hindrance not a help to India's development. In my experience it is not easy to reform such a large ossified body and it would be better to replace it with a new body that is needed to assist states in ideas, to provide long term thinking and to help cross cutting reforms" said IEO's Director General Ajay Chhibber, while releasing the report to the public.
As per the assessment, the opaqueness in the functioning of the Planning Commission is a matter of concern considering its role as a major allocator of resources to states and central ministries.
The appointment of the Deputy Chairman by the Prime Minister, the lack of Parliamentary oversight over its leader and the lack accountability of the members of the Planning Commission are also singled out in the assessment.
The assessment said that Planning Commission is staffed largely by non-specialist bureaucrats and the plan body lacks the expertise to act as a think tank to identify emerging issues or serve as an oversight body to review implementation of programmes and policies in the states.
IEO was set up in August 2013 under the then Planning Commission Deputy Chairman Montek Singh Ahluwalia with the objective to evaluate policies and programmes for assessing their impact and outcomes.