Story Of The Week

Prospective role of NITI AAYOG in scripting India’s growth story

By Sreekanth K N, IIFT New Delhi

Jawaharlal Nehru, during his legendary speech as the head of the National Planning Committee, said that “dams and laboratories are the temples of modern India”. It was a time when Leninist model of scientific revolution had percolated into the ideas of Indian scientists such as Meghnad Saha and    M. Visvesvaraya. The famous Bombay plan, MN Roy’s People’s plan and JP Narayan’s Sarvodaya plan were all but foundations of the planning commission formed right after independence.


The Nehruvian planning era had some of the famous architects such as PC Mahalanobis, who crafted the path of rapid industrialisation through the five year plans. But the glory of planning faded very soon and reached its nadir during the Emergency, due to the inappropriate handling of family planning and urbanization. The Planning Commission was manned by senior IAS officers rather than subject experts.  It was also incapable of holding the States or departments responsible for not achieving targets.  Finally in the August of 2014, the newly elected government decided to replace the Planning Commission with National Institution for Transforming India (NITI) Aayog. This signalled a tectonic shift from Soviet-style reforms to dynamic policy making which could nurture large-scale change.

NITI Aayog vs Planning Commission (PC)

The major fallacy of the erstwhile Planning Commission was that policy reforms always played second fiddle to plan expenditures without any social benefit analysis. NITI Aayog seeks to break away from this status quo by:

  • Designing policy frameworks and continuously monitoring the programmes for their progress and efficacy
  • Advising and encouraging partnerships between key stakeholders and national and international like-minded Think tanks, as well as educational and policy research institutions.
  • Focussing on technology upgradation and capacity building for implementation of programmes and initiatives

The one-size fits all approach of the Planning Commission was done away with, by giving equal representation for all States and UTs in the Governing council of NITI. However, a few pointers could have been taken care of during its implementation. For instance, NITI Aayog is a statutory body like planning commission and there is a possibility that the next government could replace it with another body. There is also a fear that the free market economists who head the institution could significantly curtail welfare spending.

NITI Aayog: A Chinese NDRC?

NITI Aayog often warrants comparison with the planning body in China, the NDRC. Structurally, both are different. While NITI is headed by the Prime Minister, NDRC is headed by Chinese State Council – the most powerful agency in the Government of China. While the varied composition of the State Council ensures participations from all ministries, NITI consists of only 3 cabinet ministers and hence it is not as inclusive as the NDRC. The Chinese body is much more authoritarian and has a larger mandate covering all aspects of economic, political and social policies, while NITI is more of a think-tank and follows a bottom-up approach. But despite embracing socialist paradigms, NDRC continues the framework of five year plans.

 1 year progress card of NITI

There has not been much action for the last one year as most of the time was consumed in the restructuring of NITI Aayog.  The institutional structure is divided into two large hubs.

  • A knowledge and innovation hub was created to aid NITI in its think-tank policies, with expertise across sectors such as trade and macro, health, rural development, education and skill development.
  • A Team India hub was created to coordinate between states, central ministries and the knowledge and innovation hub.

The major achievements during this period include quarterly evaluation of various infrastructure projects to avoid bottlenecks and expediting innovative projects such as the High Speed Rail between Ahmedabad and Mumbai.

Opinion and way forward

Recently, the government announced scrapping of the National Development Council and transferring of its powers to the Governing Council of NITI Aayog. NDC dealt with the final approval of plans and expenditures and hence how the government wishes to delegate this part through the Council is yet to be seen. A lot of ambiguity needs to be cleared and some speedy measures need to be taken, if the institution is to really transform the growth story of India:

  • The 14th Finance commission abolished the system of Plan expenditure and Non-plan expenditure and increased the devolution of funds to the States to 42%. The Plan expenditure fell under the ambit of the planning commission role of NITI Aayog in this process is vague.
  • The transition towards smooth functioning, replacing the erstwhile Planning commission has to be quick. NITI Aayog has slashed the positions to 600, and most of it remains to be filled. In-house expertise is the need of the hour to implement reforms to boost the economy.
  • The core Centrally Sponsored Schemes (CSS) under NITI Aayog, such as MNREGA, demand compulsory participation by the States. But the scheme is currently suffering from lack of funds and has seen a drop in employment. Policies could be made to channel the focus on stimulating the employment-intensive sectors and allocating more funds to States.

NITI Aayog should make its process more transparent and make the best use of ICT to pave way for broad based planning, keeping the federal structure of the country in mind. It has to aid in the shift from traditional manufacturing to using scientific methods, in line with the Prime Minister’ s Make-in-India campaign, so that India can stay ahead of its South-east Asian neighbours.



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