I was privileged to be the director-general of the National Council of Applied Economic Research in New Delhi when that distinguished organisation celebrated its golden jubilee in 2006. At that time, I searched for documentation on how the institution came into existence and came across an essay prepared by Peter Geithner, the deputy head of the Ford Foundation in Delhi in the 1950s.1 The Ford Foundation had recently established its first overseas office in New Delhi, and its head, Douglas Ensminger, was requested by Pandit Jawaharlal Nehru to support the new venture.

As narrated by Mr Geithner, while the Planning Commission was first established in 1950, it really came into its own in the run up to the second Five-Year Plan in 1956. In this process, the issue arose of where capacity should be created for objective analysis to underpin the design of that Plan. After considerable discussion it was concluded that such capacity was best located outside government in an independent, board-run organisation, rather than as part of the government machinery.

The basic argument was that an entity situated within government would inexorably find itself drawn to support and rationalise government policy, rather than provide disinterested advice. More controversially, it was also decided that the way to keep the proposed institution focused on practical problems was to make it dependent on contract research.

Those discussions took place almost 60 years ago. India, the world and India’s position in the world are fundamentally altered from that era. It is entirely appropriate that the role and function of the Planning Commission should be under review, and it is encouraging that the prime minister has stimulated public debate on the subject. From my perch here in the Netherlands, it has been easier for me to follow the debate in the press than to participate in live discussions. I have followed with interest the debate sponsored by the advocacy group CUTS, as well as recent columns by Shankar Acharya and C Rangarajan.

From these sources and other press reports, it appears that a decision in principle has been taken to hive off many executive functions that over time had been assigned to the Planning Commission while strengthening its role as a central, influential and (ideally) objective policy commentator. While not perhaps impossible, it is certainly tricky for such a body to maintain its independence from the government of the day, and much depends on the formal governance mechanisms and informal conventions that emerge. Some would argue that this is exactly the balancing act that the chief economic adviser (CEA) to Union government has been required to perform these many years, often with distinction. But this only deepens the question of why a second such locus is needed, particularly as the CEA is supported, at least in theory, by the professional cadre of the Indian Economic Service. Read full story

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