In his Independence Day speech the Prime Minister announced the end of the Planning Commission.  There will be a few mourners at the funeral, mainly old war horses like me. So this is in the nature of an obituary for an institution which I served for a decade and a half and where I learnt to understand the complexities of India's political economy.

When the Commission was launched in 1950 it was basically Pandit Nehru's instrument for providing a coherent vision for the development actions of the Central and State Governments. Along with his letters to the Chief Ministers, it was also an instrument for high level policy education.  In those days it attracted some of the best economic brains from India and around the world to its portals and for several decades every Indian economist of note was associated with the Commission in one capacity or another.

Twice in its long history the Commission put its stamp on development policy - first in the fifties and then in the mid sixties.

In the fifties, Prof. Mahalanobis and Pitamber Pant were the ones who articulated development strategy, the former with his machines-to-make-machines strategy of priority for heavy industry and the latter with the preparation of long term perspectives for development that provided a quantitative framework for macro-policy and sectoral target setting. Many economists have criticised this as a mistaken import substitution policy. But this planning approach was formulated at a time when Europe and Japan were still in the throes of recovery from the war and the prospects for export led growth did not look promising even to the Indian economists who put forward a wage goods oriented development strategy.

The achievements of this phase of planning in terms of capacity building are substantial.  Apart from the steel plants and heavy machinery factories, these years saw the establishment of the IITs and  IIMs, the Commissions for atomic energy and space, CSIR labs and much more that is the basis for the scientific and technical capacities that underlie today's success stories. Nor was this capacity building confined to the urban industrial sector. The system of agricultural research and extension, the expansion of the rural credit network, community development were all started in this phase also.

The second time the Planning a Commission made a real difference was in the mid sixties, when, with the emergence of non-Congress governments in some States, the discretionary system of state plan financing faced political problems. This is when a Planning Commission, a little distant from the pressures of competitive politics, could and did come up with a solution in the shape of the Gadgil formula of Central Plan assistance to the States.

There was a third time when the Commission looked like playing a seminal role in shaping development policy and that was in the early seventies when Mrs. Gandhi went in for a leftist policy of bank nationalisation, monopoly control, state trading in food grains, etc. The instigators of this policy were more her kitchen cabinet, though from Yojana Bhavan, D.P.Dhar and Prof Sukhamoy Chakravarty did play an important role. But this phase of policy did not last very long and by 1975 the roll back from leftist policies started and gathered pace after Mrs. Gandhi returned to power in 1980.

The missed opportunity was in the sixties when the boom in world trade greatly improved the advantages of export led growth. Unfortunately, two wars, two severe droughts, the loss of two Prime Ministers and the conflicts within the Congress led to a loss of policy coherence as the Government coped with the basics of survival.

Since then the Commission has played a relatively low key role, working within the interstices of the dense structure of the sectoral ministries to influence policy.  I personally was associated with the division that appraised public investment projects, mainly to assist the Finance Ministry in its responsibilities for project approval and indirectly  to orient public investment  projects towards efficiency, equity and environmental protection.

There were other attempts like the brave effort at reorienting agricultural planning around agro-climatic zones that my friend Yoginder Alagh pushed. A more recent instance is the role of the Planning Commission in promoting public-private partnerships in infrastructure and galvanising infrastructure development where its role was openly criticised by at least one senior minister.

The fact is that the policy revolution of 1991 rendered obsolete much of the methodology of planning that had evolved over decades and gotten congealed in the minds and working practices of Yojana Bhavan. Quantitative targeting of domestic production was irrelevant with delicensing of production and trade; approval and monitoring of public investment became problematic with the growing integration of the public sector into the market economy.  Moreover, with the growth of competitive populism, public spending shifted away from investments in the productive economy to social welfare doles.

The role of the Planning Commission in federal finance also declined.  The allocative power shifted to the loose confederation of sectoral ministries with the proliferation of Centrally Sponsored Schemes which are in essence conditional transfer of resources to the States.The block plan finance grants became a very small part of the budgets in the more prosperous States and Chief Ministers like Narendra Modi saw little value in State Plan discussions and resented the implicit erosion of federalism.

The status and role of the  Planning Commission has been the subject of debate for several decades now. Attempts to reorient it have usually characterised the start of every new regime iat least from the early seventies.  Yet after Nehru no Prime Minister has reposed faith in the capacity of the Planning Commission to guide development. Even in the UPA, it was the personal relationship between Montek Singh Ahluwalia and Manmohan Singh that mattered rather than an institutional linkage between Yojana Bhavan and the PMO.

In Narendra Modi we have a Prime Minister who is capable of imposing his vision of development on the sectoral ministries and the States. The new institution to replace the Planning Commission will be shaped by him and will carry the clout that Nehru's Planning Commission had. If this clout is combined with a clear public vision of development  then we will be back to the halcyon days of the fifties when the government did something innovative month after month.