Planning Commission

Topic: Politics of Planned Development · NCERT: Class 11, Ch 7 "Federalism"; Class 12, Ch 3 "Politics of Planned Development"

Meaning

The Planning Commission was an advisory body that made India's five-year plans. The government set it up on 15 March 1950 by a Cabinet Resolution, which is a simple executive order, so it was neither constitutional nor statutory [2]. It was replaced by NITI Aayog, whose resolution came into force on 1 January 2015 [3].

For 65 years it was the main engine of India's planned development. Critics called it a "parallel cabinet": a body that no law created but that controlled big economic decisions and large grants to states.

Explanation

How it was born and its legal status

• Created by a government order, not by law:
• It was set up through a Cabinet Resolution. Parliament passed no law to create it [2].

• The order's official number was Resolution No. 1-P(C)/50 [3].

• Not constitutional. No article of the Constitution created it, and the Constitution does not mention it.

• Not statutory. No Act of Parliament created it either.
• So it was an extra-constitutional, non-statutory body, created only by an executive order.

Who ran it

• Chairperson: the Prime Minister. Jawaharlal Nehru was the first.
• Deputy Chairman: ran its day-to-day work. Gulzarilal Nanda was the first.
• Senior Union ministers also sat on it.

What it did, and the limits on its power

• It was only advisory:
• It drafted plans and gave advice.
• Its advice took effect only after the Union Cabinet approved it.

• The Central and State governments took the decisions and carried them out. The Commission only planned and coordinated [4].

• Its first task was the First Five-Year Plan (1951-52 to 1955-56) [4].

• How a plan was made, step by step: 1. The Planning Commission drafted the five-year plan. 2. The National Development Council (NDC) gave it final approval. The NDC was a body of the PM, all Chief Ministers and the Planning Commission members [4]. 3. The Union and State governments carried out the plan.

• Plan grants: it gave its own plan grants to states under Article 282 (grants for any public purpose). These grants went outside the Finance Commission, the constitutional body under Article 280 that recommends how tax money is shared.

Where its goals came from

• The 1950 resolution based its work on the Fundamental Rights (Part III, rights a court can enforce) and the Directive Principles of State Policy (Part IV, goals for the state that no court can enforce, Art. 37).
• It named three clauses of Article 39:
• Art. 39(a): men and women have an equal right to an adequate means of livelihood.
• Art. 39(b): ownership and control of material resources should serve the common good.

• Art. 39(c): wealth and the means of production should not gather in a few hands to the common detriment (harm to everyone).

• NCERT calls it "the most influential and central machinery" for India's development plans.

In the Constitution and practice

• Place in the Constitution:
• No article creates it.
• "Economic and social planning" is a subject on the Concurrent List (Seventh Schedule), so both the Union and the states can act on it.

• Its mandate was drawn from Part III and Art. 39(a), (b) and (c) in Part IV.

• Key milestones:

• 15 March 1950: set up by Cabinet Resolution [2].
• 1951-52 to 1955-56: the First Plan [4]. The final plan document came out in December 1951 and was widely debated by academics, journalists, industrialists, farmers and politicians.
• 6 August 1952: the NDC was set up to bring states into planning [4].
• 1956: the Second Plan. Public excitement about planning peaked here and lasted to some extent until the Third Plan (1961).
• 1966-69, the plan holiday: three annual plans (one-year plans) replaced a five-year plan. This came after the 1962 China war, the 1965 Indo-Pak war, the 1965-66 drought and the devaluation of the rupee. The Fourth Plan was put off until 1969 [6].
• 2012-17: the Twelfth Plan, the last five-year plan. Its theme was "Faster, More Inclusive and Sustainable Growth" [7].

• 1 January 2015: NITI Aayog (National Institution for Transforming India) replaced it. The new resolution replaced the 15 March 1950 resolution [3][8].

• Lasting effect:

• The Union Budget's split between plan expenditure (spending on plan priorities) and non-plan expenditure (routine costs) ended from Budget 2017-18. Budgets now focus on revenue and capital expenditure [5].
• Most of the NDC's role passed to the Governing Council of NITI Aayog: all Chief Ministers plus the Lieutenant Governors of Union Territories [8].

Don't confuse with

• Finance Commission: a constitutional body under Art. 280 that recommends how tax money is shared between the Union and the states. The Planning Commission was created by an executive order and gave plan grants under Art. 282.
• National Development Council (NDC): set up on 6 August 1952. It approved plans, and all Chief Ministers were members [4]. The Planning Commission only drafted them.
• NITI Aayog: its successor (2015). It is a policy body that does not make five-year plans or hand out plan funds, and its Governing Council gives every state a seat [8].
• Statutory body: a body created by an Act of Parliament. The Planning Commission was not one. It was extra-constitutional and non-statutory.

Prelims Hooks

• Planning Commission was set up on 15 March 1950 by a Cabinet Resolution [2]. Trap: it was neither constitutional nor statutory, and it was only advisory.
• Chairperson: the Prime Minister (first: Nehru). First Deputy Chairman: Gulzarilal Nanda.
• Its mandate cited Art. 39(a) (equal right to livelihood), 39(b) (material resources for the common good) and 39(c) (no concentration of wealth). All three are Directive Principles.
• Drafted plans: the Planning Commission. Gave final approval: the NDC (6 August 1952) [4].
• Plan holiday: three annual plans in 1966-69 [6]. Last plan: Twelfth (2012-17) [7].
• NITI Aayog's resolution came into force on 1 January 2015 and replaced the 1950 resolution [3].

Mains Points

• Planning and federalism (GS-II):
• A body created only by an executive order controlled plan grants under Art. 282, outside the constitutional Finance Commission (Art. 280).
• States had to fit their projects into plans made in Delhi, and the NDC gave them only a limited voice. Critics called it a "parallel cabinet" or "super cabinet".

• NITI Aayog's Governing Council tries to build cooperative federalism, where the Union and the states work as partners [8].

• Advisory on paper, powerful in practice (GS-II):

• Formally it only advised the Cabinet [4]. But the PM chaired it and senior ministers sat on it, so its "advice" carried great weight.

• This shows how a body outside the Constitution can shape governance and blur who is accountable to Parliament.

• Promise versus practice (GS-I/II):

• Its mandate came from Art. 39(a)-(c), which aim at fair sharing and stopping wealth from gathering in a few hands.
• NCERT asks whether plan priorities such as heavy industry and big dams actually reduced inequality. Answers should weigh the growth these plans delivered against how fairly it was shared.

Related concepts

• National Development Council
• Five-year plan
• Plan and non-plan expenditure

Read more

• The Planning Commission, the NDC and the five-year plan