Vajpayee, who is also the chairman of the Planning Commission, held detailed discussions on Friday with the deputy chairman, Jaswant Singh, finance minister, Yashwant Sinha, and other senior officials on a proposal forwarded by the commission, government sources said.

Among the options believed to be considered by Vajpayee are merging of plan and non-plan heads, shifting of Tariff Commission and World Trade Organisation (WTO) related works to the plan panel.

Amidst growing scepticism about the relevance and role of the commission in the liberalised economy, Jaswant Singh is believed to have mooted the idea of making it a ``useful'' body for accelerating the economic growth through interaction with the market forces. Former financesecretary, Gopi Arora, along with some retired economic bureaucrats had also submitted their recommendations to government on improving functioning of key economic ministries including finance and commerce, besides the commission.

Jaswant Singh is also believed to have informed the prime minister about the limitations of the Planning Commission and weaknesses in the system of plan allocations to States after discussions on their annual plans. Sources said that the Commission, constituted in early 1950s when India had a closed economy, was becoming ``redundant'' due to increasing marginalisation of its role in either implementation or funding of plans.

Even the Fifth Pay Commission had recommended downsizing the Planning Commission in the changed economic scenario while the world bank had suggested that developing countries should do away with the system of medium or long term planning.

Sources said that the deputy chairman had indicated to the prime minister that there was also need for streamlining theplanning process, wherein ``performance'' should be rewarded. He is also believed to have suggested that plan support should also be project-based in view of experiences of excessive time and cost over-runs in mega projects.

During the discussions on annual plans, some chief ministers have reportedly questioned the planning methodology of allocations on the basis of poverty elements and suggested that performance should be rewarded as incentive for effective implementation of schemes. The sources, however, said there could be some resistance from officials on merger of plan and non-plan heads, as it could reduce discretionary powers of the ministries.