The government?s move to revamp and gradually transform the Planning Commission into a System Reforms Commission is a major step that can make the institution more relevant to a market economy. The idea to metamorphose the plan panel from a reactive agency into a strategic thinking group, which maps out risks and opportunities by focusing on issues, is very ambitious, given that the earlier efforts to restructure the Planning Commission since the early nineties have not made much headway. This is not very surprising, given that the pace of change in this expert body has been slow, even historically. It took more than two decades for the Planning Commission to drop the concept of physical planning, adopted in the Second Five-Year Plan, and use formal planning models based on input-output analysis in the Fifth Plan to ensure consistency in the sectoral growth targets. This scenario has largely continued even after the introduction of reforms at the start of the Eighth Plan and the significant increase in the role of private investments across almost all sectors of the economy?from agriculture to the consumer goods industry, from infrastructure and social sectors to defence, with PPPs emerging as the most viable vehicle for funding projects. But a changeover to a more reasonable indicative planning, which is a realistic option in a market economy, has proved elusive so far, with the changes mainly restricted to working out alternative growth scenarios. So, the shrinking role of the government in mobilising and controlling investments has pushed the Planning Commission to focus more on issues related to enforcing fiscal discipline in the central and state governments, including in the various ministries, departments and public sector enterprises. And even here, the disconnect between the plans and the government budgets has only grown with resource constraints forcing the Planning Commission to cut annual budget allocations much below the outlays envisaged in the plan.
So, the time is just right to opt out of the traditional planning model, which was the favoured strategy in the initial phases of industrialisation. There is no reason why the plan model cannot be jettisoned now, especially when even its original proponents emphasised the need for a flexible approach. In fact, they even opted to set up the Planning Commission under an executive order rather than through a constitutional statute so that it would be much easier to introduce changes and evolve the institution to the changing needs.