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India PM axes Soviet-style economic planning body

India's new right-wing premier Narendra Modi announced on Friday (Aug 15) an end to Soviet-style economic planning in an Independence Day speech as he pressed ahead with overhauling cumbersome government policymaking.

NEW DELHI: India's new right-wing premier Narendra Modi announced on Friday (Aug 15) an end to Soviet-style economic planning in an Independence Day speech as he pressed ahead with overhauling cumbersome government policymaking.

Modi said he was scrapping the Planning Commission - a relic of socialist policies put in place by India's first prime minister, Jawaharlal Nehru, who was impressed by the former Soviet Union's centralised planning and five-year economic blueprints. The commission, set up in 1950 to set economic growth and social development targets, was relevant for India in its immediate post-independence days, said Modi, who took office in May after a landslide election win by his Bharatiya Janata Party.

"But the prevalent situation in the country is different," Modi told a huge crowd at the historic Red Fort in Old Delhi in a speech marking India's 68th year of independence. "To take India forward", the commission must be replaced by a body that will have "a new soul, a new thinking, a new direction... based on creative thinking."

Modi's failure to use his hefty mandate to introduce "big bang" steps to reform India's still largely state-dominated economy and spur stumbling growth has sparked criticism among some commentators that he should be bolder. But the commission's axing was very much in line with Modi's steps to revamp government departments to boost productivity and end regulatory bottlenecks that have kept big industrial projects on hold.

Modi has clubbed departments under super-ministries to simplify administration and accelerate decision-making.

The Planning Commission was important after independence from Britain in building institutions providing the country "with a modicum of self-reliance", Mumbai think-tank Gateway House analyst Rajrishi Singhal said. But the institution now appeared "out of step with changing times," Singhal said, adding the commission could be dissolved by a simple cabinet resolution.

When chief minister of Gujarat, Modi had also been critical of the commission's blanket prescriptive policies for states and said the new body would take India's federal structure more into account.

The commission's death knell was sounded by a government-backed report in June which said bluntly the body, a sacred cow under previous governments, had "defied attempts" to reform it. When the commission was excluded from planning of the government's July budget, its demise seemed certain.