The Planning Commission is likely to be declared dead soon. Last week, the media reported that the Centre has zeroed in on the role and structure for a new body that would replace the 64-year old commission. Earlier in his Independence Day speech, PM Modi had told about this. People's suggestions were sought. And now the government is in the final stage of making announcement of a new body. The finer details, as reported, will be chalked out after discussion with state Chief Ministers this week.

There is little doubt that the plan panel has outlived its utility. The institution was set up in 1950 after India won independence with the belief that it would help meet the enormous amount of development work needed to be done across several sections of the economy. In addition, those were the days when socialism seemed triumphant. Our leaders, including Jawaharlal Nehru believed in a socialist model of economics. Many economists of the period, including P C Mahalanobis nurtured the faith in the system of state controlled economy. However, now we have come a long way from the days of government control over industry.

The commission was originally founded to play only an advisory role, but unfortunately it gradually became an economic cabinet not only for the Centre but also for the states and this, in turn, fueled Centre-states conflicts. Till 1967, this, however, failed to harm the Centre-states relation much due to one-party (Congress) rule at the Centre and in most of the states. But after 1967 elections, the scenario changed as the party was defeated in nine states and the non-Congress state governments opposed the increasing centralization. During the last two decades, we have seen the end of single-party dominion even at the Centre. It sounds more logical now to structure a new institution that can contribute to the federal structure of the nation.

Recently, Finance Minister Arun Jaitley has said that each state should be allowed to decide and plan how it intends to use the national resources. I think this is the right approach. Under the present mechanism, the plan panel monitors and regulates the Centre allocated resources to a state of which only about 10 percent is allowed to be used by the state government as it deems fit and outside the framework designed by the Centre. In addition, the requirement that the state Plans are to be approved by the planning commission is irksome for the states. These anomalies need to be fixed.

I invite your feedback.