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'Plan panel does not have powers to distribute resources'

BS Reporter  |  Chennai/ Hyderabad 

The Planning Commission of India does not have any powers to distribute the resources or taxes to the states as it is an extra constitutional body, pointed out TN Srinivasan, Samuel C Park Jr Professor of Economics, Yale University.

Delivering the 'Growth, sustainability and Indian economic reforms' lecture series at the Icfai Business School here, he said the Planning Commission was formed by a Cabinet decision and through the Constitution. “The body has limited powers so far as distribution of resources is concerned,” he said.

It may be recalled that recently differences flared up between the Planning Commission and the road transport ministry after the latter's minister Kamal Nath questioned the quality of reports produced by the Plan panel.

Planning in India was based on the assumptions of success of plans in Soviet Union. India did not go for new reforms even as other countries went ahead with reforms as she was stuck in the “old mindset,” he said.

Though much is said about financial inclusion, no serious effort has been made to achieve this, he said, adding earlier years had seen the Reserve Bank of India automatically monetising the gross fiscal deficits as demanded by the finance ministry.

“The country had implemented several subsidies without any sunset clause. As a result, the system failed to achieve the set objectives as the beneficiaries of the schemes were overly depending on the subsidy component. Smaller nations like Bangladesh ensured that subsidies were discontinued after a certain period of time. India still continues to dole out subsidies despite several recommendations to curtail them,” he said.

First Published: Fri, July 16 2010. 00:12 IST
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