Record caFE - Planning Commission should be the PMs sole economic advisory body: Pronab Sen

Written by Santosh Tiwari | Updated: Jun 27 2014, 07:03am hrs
The chairman of the National Statistical Commission, Pronab Sen, who has been associated with the planning process for over two decades, says the Prime Minister should work more closely with the Planning Commission. Sen explains to Santosh Tiwari why the idea of scrapping the Planning Commission should not be pursued.

There has been a debate over the role of Planning Commission; some have even talked of scrapping it. Will this be a good idea

Before any such talks, there is a need to first understand what are the functions such an institution performs. Then you have to list out which functions are necessary and which are unnecessary. After that, you need to decide can those necessary functions be handled by one institution or should be divided among different institutions. Unless you have completed this full process, you will not be able to do full justice.

Which, then, are the necessary functions of the Planning Commission

The first, of course, is the Plan itself. Is it that the country does not need planning It is a vision for the future, for development in the next five years, based on an integrated view. Then, there is a responsibility of delivering various components of the Plan on several playersfinance ministry, ministries handling specific components and the state governments. How much of the responsibility lies with whom needs to be decided. And then the allocation of resources between the states and the Centre, and among different ministries of the central government. This is the function that will always be there. The Centre-state part, perhaps, can be given to the Finance Commission. Above all, somebody has to take an independent view on how much money needs to be allocated to a particular scheme. Different ministries here have competing demands. Whether a particular scheme fits into the objectives of the Plan also needs to be looked at.

Does the Planning Commission play an independent role

Let me be clear here. The Planning Commission is a part of the government. It was, essentially as envisaged, an extension of the Prime Ministers Office (PMO). The appraisal part has to be done by an independent body like Planning Commission, not having the implementation responsibility. Evaluation is then the next function. It was being done by the Planning Commission, it has now been hived off to the Independent Evaluation Office. Another significant function of the Commission is that of an advisory body to the PM. Earlier, the Planning Commission was the only advisory body to the PM, then bodies like Economic Advisory Council and National Advisory Council were invented. Now, if the PM needs an advisory body, then the Planning Commission can play that role with great advantage of having an institutional back-up, its secretariat. The Planning Commission is also a buffer between the PM and different ministries and also between the PM and the states. So, the PM becomes an appellate authority helped by the Planning Commission in taking a decision whenever there is a dispute. The Planning Commission also provides checks and balances on the finance ministry in the absence of which the ministry would be unilaterally deciding on the allocations. In the absence of the Planning Commission, it will be very difficult to have different point of views on a subject in the system. Apparently, if one agency has to perform these roles, it is the Planning Commission.

From another perspective, the states now need to be given freedom in deciding where they want to spend the money that they are getting and that they can do this talking directly to the ministries or, say, the PMO. Isnt it

This is a wrong perception that the Planning Commission has one framework for all the states. In fact, the ministries have such a mindset and the Planning Commission in its communication to the ministries has been pushing for allowing the states more freedom in designing their own schemes. The Commission has insisted that you must have an objective method of allocating funds. Like, for education, it is the extent of deprivation of education in a state that should drive the allocation of funds. All this straight-jacketing emanates from the ministries. It doesnt come from the Planning Commission.

So, states directly dealing with the ministries or the PMO is a bad idea

This is why the states come to the Planning Commission. All the states complain about shortage of funds but that is a resource availability issue. They also complain about too little untied funds. These are bargain issues and the Planning Commission is the place where these bargains happen.

You mean the moment the Planning Commission goes, this bargaining platform goes

And the states will be the losers as the central ministries will then decide on the allocations. The straight-jacketing of fund allocation has been fought by the Planning Commission for quite some time but ultimately ministers are part of the Cabinet and powerful ministers win in the Cabinet. But the discussion on the flexibility required by the states continues because of the Planning Commission. When schemes are multidimensional, you need to weigh various aspects of the scheme and that is what the Planning Commission does. Ministries by their very nature tend to be unidimensional.

What will happen if the Planning Commission is scrapped

The allocation role will be handled completely by the finance ministry. The design of programmes will be pulled by each ministry. The moment the finance ministry allocates funds for a scheme to the administrative ministry, it will unilaterally decide how the fund will be spent. It will be more of a budgetary function on the one side and linear decision-making on the other side.

And the balancing role will then be performed by the PMO

Then it is the Planning Commission which has to do this. The Commission is a part of the PMO and it has performed its job very well when it has worked in close coordination with the PMO. Jawaharlal Nehru used to come to the Planning Commission every week and spend one day. Then it broke apart during the Rajiv Gandhi period. It came back during the Vajpayee period and then Montek Singh Ahluwalias proximity with the PM ensured there was close coordination. It depends on how the PM views the Planning Commission.

So, the better idea would be to keep Planning Commission as close to the PM as possible

The right manner would be to do the way Jawaharlal Nehru did it. Which is to say that I am not going to have a council of economic advisers. I am going to have the Planning Commission only, rather than having multiple bodies. Which is my council of advisers, it has sectoral experts also so it is more than an economic adviser.

In that case, the PM would be in a better position to handle states demand for more freedom. Isnt it

You have to recognise the functions of the Commission and organise it to perform its role effectively. It has to function in a collegiate manner with members from different segments and to my mind the deputy chairman should be a politician. A politician will be adept at reconciliation. And the secretariat has to help him perform that function.