Experts are debating the role of the Planning Commission as an advisory body, if the recommendations of the committee headed by Prime Minister's economic advisor C Rangarajan are adopted.
While many feel the role of the Plan Panel, which is actively involved in allocating resources for Plan expenditure, should change amid the new dynamics in the economy, others fear it is a ploy to reduce the importance of the body set up by a cabinet resolution under Prime Minister Jawaharlal Nehru.
Ficci Secretary General Rajiv Kumar said since private investment was now much larger than the government expenditure, states should focus much more on inviting private capital than preparing presentation for the Planning Commission.
"As an advisory body, the Commission should be given a status to coordinate between different government departments so they do not remain in silos," he said.
But former minister of state for planning Y K Alagh finds the report to be designed to erode the role of the bodies such as the Commission. "The report, I feel is one of the most ill-advised reports that has come out in recent times. These (like the Planning Commission) are the institutions which have been created decades ago and the advisors to the UPA government are systematically eroding them," he said.
In a report released on Thursday, the Rangarajan Committee suggested sweeping changes in the process of annual budgets, including doing away with the distinction between Plan and non-Plan expenditure in both central and state budgets. If the recommendations are accepted, the budgetary Plan allocation, currently decided by the Planning Commission, would be the responsibility of the finance ministry. The panel, however, would have a role in deciding the total budgetary allocation, including non-Plan expenditure, at a conceptual level.
“At the central level, the Planning Commission may be responsible, for the sake of convenience and domain knowledge, for guiding the overall development priorities of the government, setting of outcome targets and review of performance of departments. The ministry of finance may be responsible for guiding the fiscal policy, preparation of Budget and financial decisions,” said the committee in its report on ‘Efficient Management of Public Expenditure’.
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Ravi Srivastava, Professor of Economics in Jawaharlal Nehru University, said the Commission has a role to play in various developmental programmes, which has to be backed up by resources. He said the Commission has the importance in its involvement in allocating resources for development programmes and monitoring them.
“If that role is curtailed, how will those programmes be monitored in an environment when states don't listen to the Centre?” he questioned.
He said one had to be careful in changing the role of Plan Panel to merely an advisory body, while the need to do away with the distinction between the plan and non-plan expenditure should be recognised.
National Advisory Council member N C Saxena said he had been a votary of the distinction between Plan and non-Plan expenditure for long.
"They (the Planning Commission) will still deal with the plan expenditure. In addition, as the report says, they will also have a say in non-Plan expenditure, which I feel is widening their ambit not restricting it as was being suggested by some," Saxena said. He had earlier served as the member-secretary of the Planning Commission.