Demise of Yojana Bhawan

Jawaharlal Nehru chairing a meeting of the Planning Commission

Like other relics of the Nehruvian era  - smoke-belching Ambassador cars, huge unwieldy Murphy radio sets, urban sprawls of ugly, box-like, post-World War flats, the fashion statement of the Nehru jacket and Godrej typewriters – the Planning Commission, housed just three buildings away from the Indian Parliament, is now destined for history’s dustbin. 
The body, housed in the appropriately named Yojana Bhawan (Planning House), was a warren of offices where in its heydays, economists and Babus decided how many bicycles could be made in a factory, what should be the price of a bar of steel and whether a planed factory should see the light of the day or not.
The concept of economic planning was borrowed from the Soviets, who in the eyes of Third World leaders seemed to have done a wonderful job of pulling their poor, backward Russia into the 20th century. Interestingly, the concept planning and a body which would plan for India was first floated in 1938, by Subhash Bose, as newly elected Congress President. He decided, his rival within the Congress, Jawaharal Nehru was the right man to be dumped with the task of dreaming up plans for India’s  economic greatness.
Nehru, himself a Fabian Socialist,  was nevertheless attracted by the Soviet model of centralised planning and a command economy. In 1950, he issued an executive fiat based on a cabinet resolution setting up the powerful plan panel, something which was said to have upset his finance minister John Mathai to resign, and eventually forced him to resign.  Old timers say, what galled Mathai’s was that the body, which did not even have any constitutional authority, was to take away his powers to decide how much money he could spend for India’s development.
The first man to head it was Gulzari Lal Nanda, a simple, honest Congressman who later went on to be twice acting Prime Minister, before breathing his last in a tiny flat atop a shop in Delhi’s  Khan market.
However, the real spirit behind the planning commission was the statistician P.C.Mahalanobis, a personal friend of Nehru, who came up with an input-output matrix for planning or a spread-sheet method on how much capital to invest to get a required targeted rate of growth for any given industry. Nehru and Mahalanobis’s plan model became something of a rage for development economists across the world, with many making the pilgrimage to Delhi to study the new methodology.

P.C Mahalanobis with Nehru

The Second five year plan, which he authored was a remarkable success with the economy growing at 4.5 per cent. However, before and after that growth floundered, with India’s GDP growth prior to 1991, averaging a poor 3.5 per cent and in some years dipping below 1 per cent!
However, with each passing year and the deepening of India’s License Raj,  Yojana Bhawan came to be seen as politically and financially all-powerful. Though the prime minister was nominally chairman of the Planning Commission, the real master of the house, was the full time deputy chairman. He had the "discretion" to distribute "plan funds" to state governments.  To decide which industry could get how much bank financing, how much machinery they could import, how many shifts they could run and even which industries were at all necessary for India.
At its best, however, economists point out, that it was responsible for much of what Nehru described as temples of modern India – Bhakra Nangal multi-pupose dam project, Durgapur Bhilai, Bokaro and Rourkella steel plants. However, critics also point out how the same commission also recommended setting up stainless teel plant at Salem in Tamil Nadu, under the influence of Mohan Kumarmangalam, without any coal or iron ore available anywhere within 1,000 kms of the plant. Steel made at Durgapur and Roukella was sent by train to be melted down again to be rolled into stainless steel, a remarkable planned exercise in duplicating effort and costs.
The Deputy Chairman of the Commission was more often than not a political stalwart – thir ranks included the likes of V T Krishnamachari, C Subramaniam, P N Haksar, Rama Krishna Hegde, P.V. Naramsimha Rao, Pranab Mukherjee, , Madhu Dandavate, K C Pant and Jaswant Singh, who could skilfully deal with chief ministers and top industrialists alike.
However, not everyone accepted the diktats of the plan panel happily. Two years back, ," Tamil Nadu Chief Minister J Jayalalithaa, sarcarstically told journalists, "We have come to Delhi just to be told by the Commission how we should spend our own money.”
Critics also pointed to the waste and lack of monitoring by the planning body. Bridges which were to have built by the Third Five year plan, were found to have remained unbuilt even after the lapse of 8 more 5-year plans!  Panel members gave themselves a Rs 35 lakh toilet and the panel’s deputy chairman Montek Singh Ahluwalia spent a daily average of Rs 2.02 lakh during a six month period in 2011 on foreign tours, even as the Commission recommended that people could live on Rs 28 a day!