In a budget speech made 75 years ago, the then finance minister John Mathai announced the setting up of a new expert body to coordinate and guide economic activities in India — the Planning Commission. Mathai resigned soon after the new body was set up as he felt that it would infringe on the powers of the Union cabinet.
Mathai was a well-known economist of that era, and his public disavowal cast a shadow over the expert body. It was left to Prime Minister Jawaharlal Nehru and his trusted band of technocrats to repair the damage. The planning body survived and came to play a pivotal role in shaping India’s economic destiny.
The Planning Commission’s intellectual heft played a big role in establishing its credibility. Research produced in the Planning Commission stirred and shaped debate on the key economic issues of the day. Two individuals played a major role in establishing the Commission’s reputation as a knowledge powerhouse in its early years — PC Mahalanobis and Pitambar Pant.
Mahalanobis is remembered by economists largely for his contribution to the second five-year plan. His more important legacy was the statistical and policy infrastructure for governing modern India. The major databases economists and analysts use today to track the economy such as the National Accounts series and the National Sample Survey (NSS), were shaped by Mahalanobis and his colleagues in the early years after Independence.
The perspective planning division set up by Mahalanobis at the Commission worked jointly with the planning unit of the Indian Statistical Institute (ISI) to build long-range projections for the economy. The man heading that division, Pitambar Pant, also acted as ISI’s honorary joint secretary, and secretary to the Commission chairperson (Nehru). The Mahalanobis-Pant duo recruited bright young scholars to work for the division and ensured that their analysis reached the highest political leadership.
A new generation of economists (such as Ashok Rudra, A Vaidyanathan, BS Minhas, Jagdish Bhagwati, Pranab Bardhan, and TN Srinivasan) and economic statisticians (such as Moni Mukherjee and Uma Dutta Roy Chowdhury) were recruited by the Mahalanobis-Pant duo to Analyze policy problems and suggest solutions. The economists picked up empirical skills that they used later in their own research on the Indian economy. The economic statisticians became acquainted with the database needs of policymakers.
From the 1970s onwards, the Planning Commission became increasingly politicised and faced a talent exodus. Gradually, it lost its moral and intellectual authority. No tears were shed when the Commission was finally dismantled in 2014.
Yet, 10 years of disappointment with its successor organisation, the Niti Aayog, seems to have created a whiff of nostalgia for the old Commission. At least one chief minister has demanded that the Planning Commission should be revived. Several officials view the Aayog as the Union government’s public relations and event management wing rather than a serious policy think tank.
The Planning Commission established its policy chops by tackling difficult problems. Even if its prescriptions went wrong, the quality of its research earned it respect across the board. The Aayog’s intellectual timidity has made it evade serious policy questions. Consider its stance on a poverty line for the country. It has neither rejected the old poverty lines established by the erstwhile Planning Commission nor come up with its own.
The Aayog’s ambivalence has contributed to the statistical ambiguity on the issue. When making changes to the household consumption survey (used to estimate poverty in the past), statisticians did not feel the need to ensure comparability with past survey rounds. If the country’s top policy think tank is not interested in the question of defining poverty thresholds, why bother with comparability?
The Planning Commission’s early research on poverty estimation influenced similar research globally, including in multilateral organizations. Its successor organization has outsourced its thinking on poverty to a British think tank and uses the latter’s methodology to rank Indian states based on a multidimensional poverty index. That too is not comparable with historical poverty estimates.
The Planning Commission, as conceived by Nehru, had two main weaknesses: It was an overly centralized body, and it lacked Constitutional backing. But it had one key strength: The experts working for it had agile brains and erect spines. The Niti Aayog has failed to address the original weaknesses of the Planning Commission. At the same time, it lacks the intellectual heft that the Commission enjoyed in its early years.
What India needs is a Constitutional body with federal representation that can address some of our toughest developmental challenges, whether it be addressing inter-regional disparities or mitigating the impact of the climate crisis. One way to address such challenges would be to revitalize the Inter-State Council and fund a think tank that reports to the Council. Another alternative would be to establish a permanent Finance Commission and vest it with additional powers.
Such a body should be allowed to recruit the best talent available in the country at competitive wages. The next Bhagwati or the next Vaidyanathan should find an inviting home in that institution.
Pramit Bhattacharya is a Chennai-based writer. The views expressed are personal
