Institutional Framework – Planning Commission of India

Establishment and Background

The Planning Commission was set up in March 1950 through a Government of India Resolution, not by an Act of Parliament or Constitutional amendment, making it an extra-constitutional and non-statutory body. Its creation was driven by the government’s objective of promoting a rapid rise in the standard of living through efficient exploitation of resources, increased production, and generation of employment opportunities.

• First Chairman: Jawaharlal Nehru (also the Prime Minister).
• First Five-Year Plan: Launched in 1951.
• Break in Plans: After the Third Five-Year Plan (1961–66), the planning process was interrupted due to the Indo-Pak war (1965), droughts, devaluation of currency, and inflation. Three Annual Plans (1966–69) followed.
• Eighth Plan (1990–95): Delayed due to political instability; implemented from 1992 after LPG reforms.
• For the first eight Plans, emphasis was on the public sector and heavy industries. From the Ninth Plan (1997) onwards, planning became more indicative, giving a larger role to the private sector.

Functions as per 1950 Resolution

The Planning Commission was entrusted with the following functions:

1. Assessment of resources – material, capital, and human – and augmenting deficient resources.
2. Formulation of a plan for effective and balanced utilisation of resources.
3. Determination of priorities and defining stages of plan implementation.
4. Identification of factors retarding growth and laying down conditions for successful execution.
5. Creation of machinery for plan implementation across all levels.
6. Appraisal of progress and recommending policy adjustments where necessary.
7. Advisory role – making interim or ancillary recommendations to Central/State governments.

Evolving Functions and Role

Over time, the Commission’s role evolved from centralised command planning to indicative planning.

• It developed long-term strategic visions, set priorities, and worked out sectoral targets.
• Acted as an integrator, ensuring a holistic approach in critical sectors like health, drinking water, literacy, rural energy, and environment protection.
• Shifted focus from higher outlays to efficiency in resource utilisation.
• Played a mediatory role in resource allocation between states and central ministries, especially under fiscal constraints.
• Functioned as a systems-change agent, advising on governance reforms and promoting productivity and efficiency.
• Acted as a consultant within government and as an information disseminator to spread best practices.

Organisational Structure

Chairman

• The Prime Minister of India has been the ex-officio Chairman of the Planning Commission since its inception.
• The Commission worked under the overall guidance of the National Development Council (NDC).
• The Prime Minister participated in the most important meetings, giving direction on major policy issues and ensuring that the Commission’s proposals were objectively examined before being placed before the Cabinet.

Deputy Chairman

• The Deputy Chairman was a full-time functionary responsible for the day-to-day functioning of the Commission.
• Usually a senior politician from the ruling party, though sometimes distinguished economists were appointed (e.g., Prof. D. R. Gadgil, Dr. Montek Singh Ahluwalia).
• Enjoyed the rank of a Cabinet Minister, but need not necessarily be a member of the Council of Ministers.
• A Minister of State for Planning was also appointed to ensure Parliamentary accountability.

Members

• The full-time Members of the Commission held the rank of Union Ministers of State.
• Members included eminent public figures, administrators, economists, and technical experts.
• In addition, key Cabinet Ministers were also part-time members, attending meetings on critical policy issues.
• The Commission held two kinds of meetings:
  • Full Commission Meetings (attended by all members including Cabinet Ministers, covering major decisions).
  • Regular meetings (attended by the Deputy Chairman and full-time members for day-to-day plan formulation).

Functions of Members

• The Deputy Chairman and full-time members formed the core team, handling detailed plan formulation, monitoring, and evaluation.
• Each member looked after a specific sector or subject area, guiding subject divisions, preparing approach papers, and supervising annual and five-year plans.
• They also oversaw programmes, projects, and schemes, ensuring implementation efficiency.
• Though individual members dealt with their assigned subjects, all major policy decisions were taken collectively by the Commission.
• Members did not have a fixed tenure; they usually served until the government changed. In exceptional cases, changes were frequent (e.g., in 1990, full-time members were changed thrice in one year).

Supporting Structure (as of 1 February 2006)

The Planning Commission had a large team of officials assisting in its functioning. These included:

• Chairman (Prime Minister)
• Deputy Chairman
• Minister of State (Planning)
• 13 Members (6 + 7)
• Secretary
• 4 Principal Advisers
• 20 Advisers
• 2 Senior Consultants
• Joint Secretary and Additional Secretary & FA
• Director (IAMR – Institute of Applied Manpower Research)
• Joint Secretary
• Joint Adviser
• Adviser to the Deputy Chairman

In total, there were 48 contributors in the organisational set-up.