Story Of The Week

Niti Aayog

NITI Aayog or National Institution for Transforming India Aayog is the replacement of Planning Commission of India, marking the end of the Nehruvian institution that pioneered India’s five-year planned development approach. The primary job of the new body—described as a Think-Tank—will be to advise the government on social and economic issues.

Unlike the Nehruvian plan panel, the new body will not have the power to disburse funds to central ministries and state governments. NITI Aayog is being set up “to provide a critical directional and strategic input into the development process”. It will act as a “think-tank” and advise the Centre and states on policy matters. The Aayog seeks to end “slow and tardy implementation of policy, by fostering better Inter-Ministry coordination and better Centre-State coordination”, the press release says. It will also monitor and evaluate the implementation of programs.

Planning Commission failed to meet expectations

When the Commission was launched in 1950, it was basically Jawaharlal Nehru’s instrument for providing a coherent vision for the development actions of the central and state governments. In the fifties, P C Mahalanobis and Pitambar 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.

But over the time planning commission gained more power and worked at the whims and fancies of ruling political party. The Commission’s role also became relatively low- key.

Despite a good number of policy measures and interventions made at different levels, the development policies have not benefitted majority of the people in the country, which is evident from the wide imbalance in development across states and within states.

The fact is that the policy revolution of 1991 rendered obsolete much of the methodology of planning that had evolved over decades and became congealed in the minds and working practices of the Planning Commission.

There are several reasons behind Planning Commission gradually becoming a totally decadent organization, finally leading to the close of its shutters-

  • The country’s apex think tank has almost consistently failed to deliver whenever the government faced any crisis and was in need of guidance. Be it the period 1966-1969, wherein India faced a trying situation precipitated by drought, currency devaluation and inflation, or 1990-1992 when Planning Commission seemed clueless and unprepared for the prevailing balance of payment crisis, Planning Commission has been of little help when it was required the most.
  • There had been no mechanism for the Planning Commission to be held accountable for the ramifications of its framed policies. Even a serious results-based retrospective evaluation has been severely lacking. Not only was there a glaring gap between planning and budgeting, there was always a lacunae in monitoring the implementation which resulted in repeated failure in delivering the desired results.

For instance, UIDAI looked like an emancipating idea on paper but never managed to take off in a sizable way from the drawing board despite the crores spent.

A planning body is always expected to take an unbiased view towards growth and socialism, while keeping an unwavering eye on availability of funds. This is where Planning Commission seemed to have failed completely. The close and complete entanglement of the Planning Commission with the government of the day literally converted the Planning Commission into an unfortunate government’s mouthpiece.

In a more detailed manner, the following fallacies of the Planning Commission also rendered it as almost useless-

  • Quantitative targeting of domestic production became irrelevant with de-licensing 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 transfers of resources to the states.

The status and the role of the Planning Commission had been the subject of debate for several decades now. Attempts to reorient it have usually characterised the start of every new regime at least from the early 1970s.  Yet after Nehru, no prime minister has reposed faith in the capacity of the Planning Commission to guide development. Even in the United Progressive Alliance, it was the personal relationship between Montek Singh Ahluwalia and Manmohan Singh that mattered rather than an institutional linkage between Yojana Bhavan (Planning Commission Office) and the Prime Minister’s Office.


The new institution to replace the Planning Commission will be shaped by Narendra Modi and will carry the clout that Nehru’s Planning Commission had. The dismantling of the Planning Commission offers an opportunity to create a platform for ideas, for evolving solutions to seemingly intractable issues, for designing systems to enable implementation. If this clout is combined with a clear public vision of development, then we will be back to the halcyon days of the 1950s when the government did something innovative month after month.


Break from the past?

A key difference NITI Aayog has from the Planning Commission is in its constitution. The new body has state chief ministers and lieutenant governors as members in the governing council.

NITI Aayog will also have a vice-chairperson and a CEO in addition to five full-time members and two part-time members. Four union ministers would also serve as ex-officio members. The Planning Commission had a Deputy Chairman and Full-time members with a member secretary as a convener.

Key Objectives of Niti Aayog:-

  1. To foster cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognizing that strong States make a strong nation.
  2. To ensure, on areas that are specifically referred to it, that the interests of national security are incorporated in economic strategy and policy.
  3. To design strategic and long term policy and program frameworks and initiatives, and monitor their progress and their efficacy. The lessons learnt through monitoring and feedback will be used for making innovative improvements, including necessary mid-course corrections.
  4. To provide advice and encourage partnerships between key stakeholders and national and international like-minded Think Tanks, as well as educational and policy research institutions.
  5. To maintain a state-of-the-art Resource Centre, be a repository of research on good governance and best practices in sustainable and equitable development as well as help their dissemination to stake-holders.


‘Bharatiya’ governance model unveiled

The Indian Government unveiled its ‘Bharatiya’ governance model in the resolution for setting up the NITI.

The resolution, approved by the Cabinet, reaffirms that India is a diverse country with distinct languages, faiths and cultural ecosystems. “This diversity has enriched the totality of the Indian experience,” the resolution says.

India no longer seeks the alleviation of poverty, states the resolution, but rather its elimination. “Poverty elimination remains one of the most important metrics by which alone we should measure our success as a nation.”

The essence of effective governance is defined to include pro-people agenda, citizens’ participation, all-round women empowerment, equality of opportunity to the youth and transparency. Inclusiveness with special attention to the socially and economically disadvantaged sections and minorities is also included in the scheme of effective governance.

Arvind Panagariya appointed as Vice Chairman

Renowned economist Arvind Panagariya has been appointed Vice Chairman of the Niti Ayog.




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