

Economic planning in India

Tales of the unexpected

The glories and agonies of India’s central planners

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With all its limitations, viz., it does not implement programmes and has recommendatory powers, the Planning Commission has tried to support new ideas on economics and development.

If functions like a "corporate planning" cell in a big company, evaluating new proposals from line ministries. This latter function is necessary to prevent empire building, not dissimilar to large corporations, when ministries gain importance due to the size of their spending budget. While its structure may be obsolete in many aspects given the national needs, and it is grossly overstaffed, it has attempted to be pro-active and forward looking. The politics of the times has impeded decision making, not the Planning Commission.

Jai Prakash Sharma

Post-economic liberalisation though the Planning Commission of India has lost much of its importance as a key body responsible for setting country's economic priorities and direction of development, nonetheless the Planning Commission along with the National Development Council- a forum to give representation and voice to the federal units, the states, of Indian federation- it still performs the crucial task of providing inputs involving resource data and its perspective priority planning for the formulation of development policy for the country. Now as for Arun Maira's contention about a direct inter-face between the Planning Commission and the people, it's a bit out of place, considering the fact that the Prime Minister of India also happens to be the chairman of the planning body, and as head of the government, he can always approach the people, directly or through the elected representatives.


RUBBISH: Since 1991 the private sector has boomed, taking more responsibility for things such things as telecoms and infrastructure.

FACT: It was pure profits, Watson. 1991 lead to reducing the control of the government in many areas. Funding avenues not only gained depth also widened. The entrepreneurial instinct of Indians got unshackled. There was freedom in the air. Under Indira Gandhi, businesses were treated as frauds and hence a stupendous tax rate of 97 % was not unheard off.

Best wishes

Kishore Nair


Those who credit him for reforms of 1991 forget that his record as P-Comm chief and/or as various other govt responsibilities speaks loads about his socialist/communist tendencies. Left alone, he just cannot change anything in the right direction. Whatever good has happened in the country is due to individual enterprise. Montek and the PC are probably the most overrated issues in India. like this newspaper is in the world.
Anne Marie
Manager, Unsolved Mysteries

Garib Singh

Great article and you have the point spot on. The Planning commission is the bar at the hotel called Indian Government. Ofcourse there are the sleaze rooms at the hotel too, but the bar is the go-to happening joint. Unfortunately all the plans made here in the evenings end up with a hangover in the morning. Hope and waiting for the unexpected is all we have...
I like your article. Cheers

No Mist

Anybody who has heard Montek speaking will know immediately that he has this job only because of Manmohan. It is hard to escape the conclusion that Montek is a typical bureaucrat for whom all goals are achieved the moment it is put on paper. He doesn't consider it necessary to check any ground reality or actual implementation. Manmohan, when he was the P-Comm chief worked exactly the same way. Those who credit him for reforms of 1991 forget that his record as P-Comm chief and/or as various other govt responsibilities speaks loads about his socialist/communist tendencies. Left alone, he just cannot change anything in the right direction. It was only PVN Rao (the PM in 1991) who initiated and carried forward the reforms.

Now Manmohan has chosen his clone to be the P-Comm chief and since there is no Rao in today's govt, no reforms are being carried out. These two folks have screwed all potential of India.


A look at the cities, infrastructure, water problems, crime statistics tells you this is pure and unadulterated bullshit.

AB ve

This article failed to mention the biggest blunder Planning Commission did recently.
They declared that anyone in India who earns more than Rs.32/- or 0.60$ is above poverty line.

This, with all the data on its hand. What are these guys smoking?

Grubbiz in reply to AB ve

What you (and many India bashers) don't realize is that someone who gets Rs.32 a day can survive in India. I know for a fact that one can get atleast 2 meals for Rs. 32. So, in that sense, it's quite alright if we make up our own poverty line. The equivalent $0.60 will not even buy a candy bar in the US for example.

AB ve in reply to Grubbiz

Dear Grubbiz,
Your conclusion that I am in India basher, is devoid of facts as much as Indian Planning commission's view on poverty line.
Pointing out weakness in the system is not bashing.

The Planning commission's view was roundly criticizes by everyone, and it itself withdrew it. It never presented to the people the data on which its assessment was based. Same is true for its projections on economic growth and inflation.

My criticism, is that the planning commission in neither transparent nor answerable for what they do.

I hope you agree with my criticism and that I am not bashing India.

Thanks for your reply, it gave me an opportunity to put my thoughts.

Grubbiz in reply to AB ve

You misunderstood my comment. I did not accuse you of India bashing. I was just pointing out what India bashers often bring up on the issue of poverty in India.

While I agree that the planning commission is flawed in many aspects, I think it's more acceptable to use a poverty line different from the one defined by the World Bank


I don't think India needs more planning. For 40 years India planned itself into hindu rate of economic growth. Another 40 years of planning isn't going to do much better.

There is a difference between pure central planning and setting industrial policy. The former gave us Gorbachev and Nagorno Karabakh, the later gave the world Samsung and Mitsubishi.

guest-ilmlmnm in reply to rep3

Please don't name the "Pseudo-secular Congress rate of Growth" as the "hindu Growth Rate". The same Hindu has shown what is achievable if they are provided an opportunity. It is in the interest of these so call secular (Communcal to the core) parties to keep the status quo as it allows them to come up with moronic schemes named after their clan leaders and to loot the nation. The cost of the Congress to India has been very heavy and incalculable and to repair the damage will take another 100 years.

Pathu from India

what can one expect from educated ignoramuses like MSA sitting in planning commission and have the cheek to say that with Rs. 30 a day a family of four can survive. One should should read an article "Profile of Poverty" published in www.livemint.com few months back to know the ground reality about poverty.



The Planning Commision is actually empowering the Indian private sector. Some of the best reform ideas comes from them. They are still able to push some kind of market friendly reforms in the states even without significant political backing just on the strenth of their ideas.It can be revamped, but it would be unfortunate if they had to go. Montek is there because he is a smart thinker on policy - not because he is the PM's friend.


Set up during the early 1950's, the Planning Commision reigned supreme as the facilitator of India's planned development till the time when weight of an over-regulated economy became too heavy for it to carry in the late 1980's.The forces of economic compulsion have now reduced the role of the Planning Commission mainly to the planning of India's problematic social-sector.To add to its woes,even in the area of social sector planning it has to, time & again, yield space to the unwritten authority of the National Advisory Council- a think-tank enjoying the patronage of the all-powerful President of the ruling Congress Party, Mrs. Sonia Gandhi.In short, in the political scenario presently obtaining, the Planning Commission is a mere shadow of its initial 'avtaar'.


Interesting because India is at a a watershed when future economic policy needs to be revised, clearly thought through, and consensus achieved internally: The weaknesses and the strengths of economic policies implemented by different countries in the West during periods of growth are important learning points and need to be taken into account when considering India's unique dynamics. Then, of course, there are the multinationals waiting in the wings desperate to cash in. This could be an advantage if they are regulated: Gandhi and Indira Gandhi were no fools, and the issue of how international trade is managed needs to be confronted. India has its own unique economic history and Its great that the think tanks have intellectual weight and that there are many bright youngsters (ie50-30 year olds) versed in international economics coming through the system.


In this age of reforms oriented economy the planning commission's role is irrelevant and mostly it has become a hindrance by central planning instead of planning for specific needs of the variuos states which are bound to be different. It's activity has delivered only skewed and inefficient development in the country. My suggestion is that it's role should be advisory in developing each state's plan by interacting with State's planning organisations and their suggestions should not be mandatory. It should be transformed into a rearch organisation mandated to deliver reliable statistics.In the current fast developing scenerio pplans have to be fast originating and the enterpreneurs are better placed to formulate their strategies.Finally i think central planning initiatives should not be there as individual departments of Governments can formulate their activities in tune with the real requirements of the economy.


From what I understand from the article the planning commission creates good policy and is also a an excellent data source that is entirely separate from the Treasury and Central Bank. I am actually not familiar with this group but I find such organizations have a deep sense of history and culture that is valuable - but their mission is not.
My recommendation would be:
1. Realign the objective
2. Rename as MITI which India does really not have. Most East Asian Countries have a MITI and Japan's is the most famous and was behind Japans rise in the 50's and 60's. I think Indian Industry (not society) is at a similar state of development.
3. Create a cabinet level role
4. Decrease staff by 50% through voluntary retirement and outsource data crunching and basic economic analysis to financial number crunching companies in Bangalore.
5. Retain policy, business and academic staff only.
6. Rebrand and become a player at the global stage like MITI Japan. By garnering respect from business abroad you have a lot more leverage over politicians on economic policy.
Transforming an organization is a great way to align their input with realizable goals and also not add another department from scratch (A disaster in recent India).


It would be a gross mistake to term the Planning Commission as 'defunct'
Nehru was immensely inspired by the USSR's state planned economy, and being a Fabian Socialist, he tried to find a conjecture between a Planned Economy and State-Regional development. Nehru failed miserably, choosing to produce lanterns in factories instead of armaments, leading to the defeat of the Sino-Indian war of 1962.
Moving on, it must be noted that the Planning Commission needs to revived with a very specific blueprint. Technocracy in the PC is imperative, but then again, it should be in full compliance with general public policy. While the USSR ceaselessly achieved and exceeded the deemed expectations of their "Gosplans", India has always been miles behind its own grossly exacerbated targets. One needs to get his head out of the clouds and out his feet firmly on the ground. The Planning Commission should focus on ways to increase energy efficiency in a country that has a population of 1.31 billion people. It should also put on its rotting, cobweb infested thinking cap and find a solution to the Public Distribution of resources and basic necessities, set Pollution reduction targets, reform the country's SLOC(Sea Lines Of Communication) policy in collaboration with the Armed Forces, and find ways to reduce imports and increase exports. (Autarky) It needs to find a way to narrow the burgeoning 150 billion $ trade deficit that looms over our rapidly growing economy.


The Planning Commission should have gone defunct after India's reforms in 1991. However, it still stumbles on, producing plans that are not followed by anyone and missing targets. Its head may be a bureaucratic rock start but his irrelevant job has been saved by his friendship with the Prime Minister, who also has become quite irrelevant as the private sector surges ahead.
It is India's destiny to carry some white elephants. The Planning Commission is one of them.


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