Narendra Modi ends Nehru-era monument – planning panel to give way to 'creative' institution

With a firm wave of his hand, with the long-tailed Rajasthani headgear, safa, fluttering like a red rag in the background, prime minister Narendra Modi did away with one of the monuments of the Nehruvian era, the Planning Commission.

Modi said from the ramparts of the Red Fort that times have changed, and that the Planning Commission, which was relevant once, is not of use anymore. The states are more dominant players in the national economy and therefore they should be brought into the reformed and restructured re-incarnation of the commission, now named the National Development and Reforms Commission.

Fine so far. But the burial of the Planning Commission is another indication that crucial powers are going to be vested with the PM. In the case of the UPA, Planning Commission chairman Montek Singh Ahluwalia was the third in the economy troika along with Manmohan Singh and Chidambaram.

Such an overbearing official will no longer be there. But the increasing concentration of power in the hands of the PM does not bode well for the government in which ministers have been living in self-doubt and unsure of taking game-changing measures.

Modi said he would like to turn the centre-states power equation in favour of the states. He must have been smarting from the overbearing treatment he got from the commission when he was the chief minister of Gujarat and had to come every year to the Yojana Bhavan, the Planning Commission's office, to finalise the state's plan.

So the annual trip of chief ministers to Delhi for funds is over but it is clear now that most of the powers of the new restructured commission will stick to the PM. Whichever way the new commission grows, the PM will have a say in economic matters, though this has been done in the name of larger good and changing environment.

There are other indicators that the PMO's tentacles will be spread far and wide. Three months on even the defence minister has not been appointed and major decisions are pending since Arun Jaitley who is also defence minister sees this as a stop-gap arrangement. Modi definitely would not want big-ticket defence purchases to happen without him having a say.

So as of now the PMO has a frim grip on finance and defence ministries as well.

Also, confusing signals have emanated from the the PMO, which took a leftward turn in the WTO talks, scuttling a deal by talking of India's poor and again in the case of GM trials, listening to the swadeshi lobby within the parivar.

There has been mixed reactions to the axing of the commission. Bhartrihari Mahtab, MP, told dna: "It has outlived its utility ever since 1993 when India turned into a pro-market economy. It is not relevant now."

CPI-M politburo member and former Rajya Sabha member Brinda Karat said: "We don't support the closure of the commission. Ever since the economic reforms, the role of the Planning Commission had been diluted. National resources are being diverted to the private sector. The PPP mode is now being brought into institutions. We are opposed to the Modi sarkar on this."

Gurcharan Das, author and ardent advocate of the market economy, who strongly believes that government should not be an economic actor, said that Modi did not say anything specific about what the new institution would be. He has, however, cautioned that it should not become a government department. He was of the view that new commission should be an autonomous body and it should be funded by the government. "Government institutions have low credibility," he said.

Rajeev Kumar, economist and senior fellow with the Centre for Policy Research in the capital, said: "The new commission could play a more coordinating role not between the ministries only but also between the states. The idea should be to strengthen the economic federalism of our country. Principally the job should be to bring new ideas to the table.

And all this plan and non-plan related work should be taken away and handed over to the finance commission."

Economist and columnist Bibek Debroy said there was nothing surprising about the Modi announcement. He thinks that one has to wait to see the specific new structure, and that it would be premature to comment on it right away. Debroy said the commission is only be replaced with something else, implying that it was being simply done away with.

On his first ID speech, Modi has gifted himself with more and overwhelming powers.