India Abolishing the Planning Commission

Planning Commission India

India is abolishing its Planning Commission while Pakistan is trying to infuse new blood into its. In case of Pakistan the idea that a new and changed Planning Commission might do better than the old planning commission is overlooking a more pertinent question. Is there even a need for a Planning Commission? Is the governments job to run businesses or simply ensure personal and property rights?

India has at last decided on abolishing its planning commission. It took the government over 65 years to come to the conclusion that the planning by the government of the whole economy is a practice in futility.

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

Soviet Union did use an extreme form of control economy and look at the devastation and the lives lost as a result. Following the correct principles, as B. R. Shenoy in India, a student of Fredric Hayek, had proposed over six decades ago that which the government is reluctantly doing now, namely the same abolition of the planning commission.

Must we do the same? Must we also continue trying newer and fresher blood and when it fails some other combination in hopes that a legless mule might gallop? Planning and control by the government have proven to be failures time and again. What we need is private property, where people can choose to do as they please with their property. That is the only way out of misery and poverty for both India and Pakistan.

The term “Five-Year Plan” conjures up clanking Soviet bureaucracy and Mao Zedong’s disastrous attempts to remake the Chinese economy by force. Even Beijing uses the term “guideline” these days instead of “plan.”

We plan many things in life. Yet, we can amend our plans in response to the changing conditions as new and important information is made available. This is the beauty of private plans that they are not set in stone. Now compare this to a government plan. When the government comes up with a plan, special interest groups are formed to put pressure on the government and make sure the plan never changes. This enables this special interest groups to benefit from the plan despite the fact that the plan may turn out to be very costly to the society at large. As Raymond Zhong states in The Wall Street Journal:

The term “Five-Year Plan” conjures up clanking Soviet bureaucracy and Mao Zedong’s disastrous attempts to remake the Chinese economy by force. Even Beijing uses the term “guideline” these days instead of “plan.”

India is abolishing it’s planning commission because the leaders there have recognized the futility of it. What is better for both Pakistan and India is to let the private owners, the businessmen, the entrepreneurs, and the visionaries work freely without interference from the government. Both countries can energize their economic development and raise the standard of living of their people by leaving the decision making in the hands of private owners instead of the government.

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