The Relevance of Planning Commission

Reference to the article “India’s public planners couldn’t end poverty, but its private sector can”, by Mr. M.J. Akbar in Times of India dated 2^nd November 2014, the author has welcomed the demise of our Planning Commission, which was set up by our first Prime Minister in 1950, to guide our newly independent nation towards a “progressive widening of the public sector and the reorientation of the private sector, to the needs of a planned economy.”

That it did meet its desired objectives against the backdrop of the challenges confronting a newly independent nation, is far from any doubt. Furthermore, its role in shepherding our economy amidst the challenges in successive decades, such as wars, droughts etc is also well established.

The key premise behind the argument that Planning Commission now deserves a decent burial is that the pubic sector and the government institutions can no longer be entrusted with the role of assuming the commanding heights of our economy, and need to be replaced with the private sector.

Prima facie, post liberalization, there seems to be much merit in this assumption. However, the rude jolt experienced by the most ardent proponents of a free economy post the collapse of Lehman Brothers in 2008, together with the sub prime crisis in the US that occurred due to the emergence and collapse of the housing bubble there, is still fresh in our memories. The corrective actions taken by the US Treasury and the quantitative easing by the US Federal Reserve, to fight perhaps the most serious threat to the US economy since the Great Depression belies the simplistic premise as indicated above.

In the Indian context, cases of Kingfisher Airlines, Satyam scam, National Spot Exchange Crisis, arrest of a former CMD of a well known Public Sector Bank for extending loan to companies with weak financials, as well as the caution by our former Comptroller and Auditor General, that the proportions of Non-Performing Assets in the banking system are a  crisis waiting to unfold, all together point towards the serious limitations of private enterprise the live up to the expectations as envisaged by the proponents of a free economy.

As a corollary, it only lends sufficient credence to the theory that the role of the Planning Commission as a key catalyst to ensure planned development of our economy, with adequate checks and balances to prevent catastrophic consequences of certain decisions can never be dispensed with.

In a nutshell, while the Planning Commission should have been allowed to evolve and adapt as per the changing times both internally (within our country) and externally (rest of the world). Sounding death knell was certainly inadvisable.

It goes without saying that given our Public Sector Enterprises with the kind of resources, both in terms of managerial talent, skilled manpower, assets etc, is still capable of retaining their past glory, both domestically and internationally, and provided there is a serious attempt by the government to address the key issues plaguing some of them.

To conclude – while we need to ‘unleash our animal spirits’ and create world class private enterprises, public sector enterprises and the government sector in general can be facilitated run neck- to-neck with their private sector counterparts. The government cannot lose sight of the need to create an egalitarian society, as economic imbalances are the breeding grounds for social unrest, and other serious law and order related issues. Article 399 (a) of our constitution directs the state to ensure that “….the citizen, men and women equally, have the right to an adequate means of livelihood.” Or in other words jobs.

Is it not possible for the Planning Commission to facilitate such objectives?

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