India's Modi ends an era of socialist-style planning

India's Modi ends an era of socialist-style planning
In a speech marking India's 68th year of independence from British colonial rule, Prime Minister Modi acknowledges that times have changed since the Planning Commission for the 12th Five-Year plan, and promises that a new institution would be set up.

NEW DELHI - India's national Planning Commission certainly tried to present a modern image, with a Twitter profile that promised "Faster, More Inclusive and Sustainable Growth".

But, on the 68th anniversary of the country's independence, Prime Minister Narendra Modi finally condemned to oblivion the lingering vestige of India's early attempt to mimic the Soviet command economy.

Its 12th Five-Year Plan, covering the period until 2017, will go unfulfilled. "Times have changed since the Planning Commission was created," Modi said on Friday, in a speech to mark India's liberation from British colonial rule.

A new institution would be set up "in a short span of time", added the 63-year-old leader, who swept to power in a general election in May.

Wearing a white kurta tunic and saffron turban, Modi spoke from the ramparts of the 17th-century Red Fort in old Delhi, continuing a tradition begun by independent India's first prime minister, Jawaharlal Nehru.

Yet while respecting one tradition, Modi broke with another.

It was Nehru, a socialist who admired Josef Stalin's drive to industrialise the Soviet Union, who in 1950 set up - and chaired - the Planning Commission to map out a development path for India's agrarian economy.

The collapse of Soviet communism in 1991 killed off Gosplan - as that country's State Planning Committee was known. Yet its Indian counterpart survived the ensuing economic shock and cautious market reforms that followed.

"Parking lot" for cronies

Modi never had a high opinion of the Planning Commission - as leader of the industrial powerhouse of Gujarat, he stunned the panel last year by turning up at a meeting with a video that accused it of high-handedness and hobbling India's states with one-size-fits-all policies.

This June, a government-backed report suggested replacing the Planning Commission with a think tank more in line with a US-style Council of Economic Advisors. "Since the Planning Commission has defied attempts to reform it to bring it in line with the needs of a modern economy and the trend of empowering the states, it is proposed that the Planning Commission be abolished," the report said.

Arun Shourie, an influential member of Modi's ruling Bharatiya Janata Party, had derided the Planning Commission - set in a hulking New Delhi building with 500-600 employees - as a "parking lot" for political cronies and unwanted bureaucrats.

In 2012, it was pilloried for spending $50,000 to renovate two office toilets, and then it was lampooned for suggesting that citizens who consumed goods worth 27 rupees or more a day (44 US cents) were not poor - in a country where millions struggle to survive on less than $2 a day.

Centralised power, not planning

Modi has focused on bringing to order India's unruly state apparatus. He has beefed up the prime minister's office, ordered bureaucrats to get to work on time and - in a law passed this week - restricted the power of judges to appoint each other.

In so doing, Modi has taken a leaf from the book of another leader in Moscow - Vladimir Putin. Following the chaos of the 1990s, the Russian leader established a centralised "vertical of power" that underpins his power in the Kremlin.

Political analysts and economists say that Modi's focus on process - summed up by his slogan "maximum governance, minimum government" - should increase the effectiveness of his administration and yield benefits to voters over time.

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