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Managerial Economics

NITI Aayog

NITI Aayog replaced the Planning Commission on 1 January 2015. What it is, how it differs from the old Commission, and why the Commission was wound up.

By 3 min read

NITI Aayog is the Gov­ern­ment of Indi­a's pol­icy think-tank, con­sti­tuted under Prime Min­is­ter Naren­dra Modi to replace the Plan­ning Com­mis­sion. The main objec­tive behind its cre­ation is to increase the par­tic­i­pa­tion and involve­ment of the state gov­ern­ments in the eco­nomic pol­icy-mak­ing process. It fol­lows a bot­tom-up approach to plan­ning, which is totally oppo­site to the Plan­ning Com­mis­sion’s tra­di­tional approach of “top-down” deci­sion-mak­ing. One of its key man­dates is to pro­mote coop­er­a­tive and com­pet­i­tive fed­er­al­ism. This was seen when the Prime Min­is­ter appointed three sub-groups of chief min­is­ters for mak­ing sug­ges­tions in three key areas (cen­trally spon­sored schemes, skill devel­op­ment and Swachh Bharat). NITI Aayog gives the states and Union Ter­ri­to­ries (UTs) of India an oppor­tu­nity, which the old Plan­ning Com­mis­sion lacked, to rep­re­sent their eco­nomic inter­ests. The Prime Min­is­ter is the Chair­per­son of NITI Aayog.

The Union Gov­ern­ment of India announced for­ma­tion of NITI Aayog on 1 Jan­u­ary 2015, and the first meet­ing of NITI Aayog was held on 8 Feb­ru­ary 2015. NITI Aayog brings together peo­ple, includ­ing experts, entrusted by the gov­ern­ment to help shape pol­icy on social and eco­nomic issues.

Major High­lights of NITI Aayog

  • Its Gov­ern­ing Coun­cil includes the Chief Min­is­ters of all the states and of Union Ter­ri­to­ries with leg­is­la­tures, and the Lieu­tenant Gov­er­nors of the other UTs. The Prime Min­is­ter is the chair­man, and the full-time mem­bers, includ­ing a Vice-Chair­per­son and a Chief Exec­u­tive Offi­cer, report to the Prime Min­is­ter.
  • The new National Insti­tu­tion for Trans­form­ing India (NITI) works as a think tank and forum, advis­ing on pro­grammes and shap­ing them together with the States. This is in sharp con­trast with the defunct Plan­ning Com­mis­sion which imposed five-year-plans and allo­cated resources while run­ning roughshod over the requests of the var­i­ous States.
  • NITI Aayog was also meant to end slow and tardy imple­men­ta­tion of pol­icy by fos­ter­ing bet­ter Inter-Min­istry coor­di­na­tion and bet­ter Cen­tre-State coor­di­na­tion. and to help evolve a shared vision of national devel­op­ment pri­or­i­ties, and fos­ter coop­er­a­tive fed­er­al­ism, rec­og­niz­ing that strong states make a strong Nation.
  • The oppo­si­tion Con­gress called the launch a cos­metic rela­belling exer­cise, point­ing out that the Hindi name means sim­ply 'Pol­icy Com­mis­sion', a less bold depar­ture than the Eng­lish ver­sion sug­gests.
  • The Plan­ning Com­mis­sion had remained pow­er­ful over the decades because it had emerged as a sort of par­al­lel cab­i­net with the Prime Min­is­ter as its head.
  • Despite being blamed by crit­ics for the slow growth that long plagued India, the Com­mis­sion sur­vived the mar­ket reforms of the early 1990s, ril­ing Mr Modi with its inter­ven­tions when he was Chief min­is­ter of indus­try and investor friendly Gujarat.
  • Mr Modi, elected by a land­slide in 2014 on a promise to revive flag­ging growth and cre­ate jobs, had vowed to do away with the Plan­ning Com­mis­sion that was set up in 1950 by Con­gress­man and Prime Min­is­ter Jawa­har­lal Nehru.
  • In 2012, the Plan­ning Com­mis­sion was pil­lo­ried for spend­ing some Rs. 35 lakh to ren­o­vate two office toi­lets, and was lam­pooned for sug­gest­ing that peo­ple in rural areas who spent Rs. 27 or more a day were not poor.
  • The Com­mis­sion’s power in allo­cat­ing cen­tral funds to states and sanc­tion­ing cap­i­tal spend­ing of the cen­tral gov­ern­ment was deeply resented by states and var­i­ous gov­ern­ment depart­ments.

Key terms

National Insti­tu­tion for Trans­form­ing India (NITI)
The full name of NITI Aayog, the Gov­ern­ment of Indi­a's pre­mier pol­icy think-tank, set up to sup­port the coun­try's eco­nomic growth.
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