Baljit Dhaka
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Why in news?

Recently the Government has reconstituted NITI Aayog, renaming Rajiv Kumar as its vice-chairman and appointing Home Minister Amit Shah as an ex-officio member. 


Planning Commission was initially set up in 1950 as an agency to direct investment activity in a country.


Planning Commission of India had two key duties to perform i.e.; to implement a five-year plan and second was to provide the finances to the state.  

The disenchantment with the Planning Commission could be traced on two important fronts:

the perception that it was not able to capture the new realities of macro-economic management at the national level,

it had not been conducive to sound fiscal relations between the Union and the States.  

This did not fit well with the imperative for an inclusive and equitable path of economic development in India.

In this context, National Institution for Transforming India (NITI Aayog) was constituted in 2015 as a think tank and advisory body of the government.

This did not fit well with the imperative for an inclusive and equitable path of economic development in India.

In this context, National Institution for Transforming India (NITI Aayog) was constituted in 2015 as a think tank and advisory body of the government.

The relevance of NITI Aayog

Competitive Federalism: Various reports of NITI Aayog like Healthy states Progressive India etc which

Give performance-based rankings of States across various verticals to foster a spirit of competitive federalism. It helps to identify the best practices in different States in various sectors and then try to replicate them in other States.

Cooperative federalism: Due to the composition of NITI Aayog, it gives a better representation of states in this body which facilitate direct interactions with the line ministries, also helps to address issues in a relatively shorter time.

Greater Accountability: NITI Aayog has established a Development Monitoring and Evaluation Office which collects data on the performance of various Ministries on a real-time basis. The data are then used at the highest policy-making levels to establish accountability and improve performance.

Earlier, India had 12 Five-Year Plans, but they were mostly evaluated long after the plan period had ended. Hence, there was no real accountability.  

Think tank of innovative ideas: NITI Aayog is visualized as a funnel through which new and innovative ideas come from all possible sources — industry, academia, civil society, or foreign specialists — and flow into the government system for implementation.

By collecting fresh ideas and sharing them with the Central and State governments, it allows states to progress with these new ideas. 

Hence it helps in improving governance and implementing innovative measures for better delivery of public services.

Convergence for resolution: Being a common point for similar issues faced by different sectors, states, etc., it acts as a convergence point and platform to discuss these issues.  

Concerns with NITI Aayog

Biasness towards government & private sector: While generating new ideas, NITI Aayog should maintain a respectable intellectual distance from the government of the day. However, concerns have been regarding NITI Aayog’s offering rather uncritical praise of government projects.

Concerns have also been raised regarding NITI Aayog’s treatment of the public sector while advocating the private sector in almost every sphere as the savior of the Indian economy.

Financial constraint: NITI Aayog has no powers in granting discretionary funds to states, which renders it toothless to undertake a “transformational” intervention.

While during the Planning Commission days, it was easy for the commission to give to shape the idea as it had control over funds and hence over an agenda. 

Only recommendatory body: It acts as an advisory body only which advises the government on various issues without ensuring the enforceability of its ideas.

Lack of decentralization power: One of the envisaged goals of the NITI Aayog was to develop mechanisms to formulate credible plans at the village level and aggregate these progressively at a higher level. Very little of this cherished goal has indeed been accomplished.  

Missed opportunities for transformative change – The body has missed some opportunities to make a qualitative difference.

For instance, CSS had to be reformed in the light of the recommendations of the 14th Finance Commission. Instead of reforms in the design and implementation of the Schemes that were promised when the Planning Commission was wound up, changes were made only to shift greater responsibility onto States in terms of financing.  

A second opportunity arose when the distinction between Plan and non-Plan was removed. At that point, the organization had an opportunity to insist on taking a sector-wise comprehensive view of capital and revenue expenditures. However, that has not been done.  

Not supporting states enough – The major complaints of States regarding the functioning of the Planning Commission remain unaddressed. The complaints have largely been on the perception that the Centre is encroaching upon States’ responsibilities and is continuing to advocate a one-size-fits-all approach in administration.

It is difficult to find evidence that policies and programs initiated in the recent past evolved out of consultations between the Union and the States. NITI Aayog was supposed to co-opt States as partners while preparing a development agenda.

How can it be further strengthened?

Balancing with finance commission: NITI Aayog should be given a funding role so that it can help deal with the development experience between states.

Another possibility is to convert the Finance Commission into a permanent body that can oversee fiscal transfer mechanisms rather than just give a tax-sharing formula every five years.   

A federal balance needs an institutional mechanism that entails either a more effective NITI Aayog or a permanent Finance Commission.

Increasing accountability: Bureaucracy will need to change from generalist to specialist, and its accountability will have to be based on outcomes achieved, not inputs or funds spent. NITI Aayog should spell out how these reforms will be implemented.  

More funds: Towards the task of cooperative federalism, NITI Aayog 2.0 should receive significant resources (say 1% to 2% of the GDP) to promote accelerated growth in States that are lagging, and overcome their historically conditioned infrastructure deficit, thus reducing the developmental imbalance.

More stakeholder involvement: It should instead invite, through expert members, research inputs on identified areas and should synthesize recommendations based on the empirical weight of the research. This will cut time, cost, and effort and will increase timely policy inputs for the government. 

Performance of NITI Aayog

Launching of various initiatives and programs

Measuring performance and ranking States on outcomes in critical sectors

Sustainable Action for Transforming Human Capital (SATH)

Ek Bharat Shreshtha Bharat

Development Support Services to States (DSSS) for Development of Infrastructure

Public-Private Partnership in Health

Resolution of pending issues of States with Central Ministries

‘Aspirational District Programme (ADP)’: to realize the vision of ‘Sabka Saath, Sabka Vikas’, and ensure that India’s growth process remains inclusive

Enabling evidence-based policymaking and enhancing production efficiency with a long-term vision

Three Year National Action Agenda and the Strategy for New India @75 which allows better alignment of the development strategy with the changed reality of India.

Reform of Central Public Sector Enterprises (CPSEs)

Balanced Regional Development

Development support to the North East

NITI Forum for North East

Health & Nutrition Sector Reforms

Launch of the POSHAN Abhiyaan

Evolving the National Nutrition Strategy

Pushing Reforms in Pharmaceuticals Sector

In the energy sector

NITI has prepared and launched a report on ‘India’s Renewable Electricity Roadmap 2030.’

Roadmap for revising the National Mineral Policy, 2018

Partnerships with National and International Organisations and Promote Stakeholder Consultation in Policy-Making Promote entrepreneurial and innovation ecosystem

Atal Innovation Mission, which established Atal Tinkering Labs in India, has already done commendable work in improving the innovation ecosystem in India.

Global Entrepreneurship Summit 2017:

Women First: Prosperity for All

Women Entrepreneurship Platform