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National Institution for Transforming India Aayog (NITI Aayog)

Narendra Modi government has taken a historical decision by annulling Planning Commission, the body that overstayed its purpose.
The Commission was replaced by National Institution for Transforming India Aayog (NITI Aayog), a think-tank that provides policy prescriptions to the state and central governments.

Planning Commission
The Planning Commission was an institution in the Government of India, which formulated India's Five-Year Plans, among other functions. The idea of a national body for planning traces its roots back to pre-independence India. Rudimentary economic planning, deriving from the sovereign authority of the state, was first initiated in India in 1938 by Congress President Netaji Subhash Chandra Bose, who had been persuaded by renowned physicist Meghnad Saha to set up a National Planning Committee.

The British Raj also formally established a planning board that functioned from 1944 to 1946. Some scholars have argued that the Planning Commission as a central agency in the context of plural democracy in India needs to carry out more functions than rudimentary economic planning.

After India gained independence, a formal model of planning was adopted, and accordingly the Planning Commission was established on 15 March 1950, with Prime Minister Jawaharlal Nehru as the Chairman. It was established in accordance with Article 39 of the Constitution which is a part of directive principles of state policy. However, the authority for creation of the Planning Commission was not derived from the Constitution of India or statute; it is an arm of the Government of India.

Criticism on Planning Commission
The Planning Commission was successful in its initial years; the first two plans had worked wonders for India. But, it then became a budgetary allocation body and failed to provide timely developmental prescriptions to the states as well as Centre.

The PC has failed to live up to its task for the following reasons:
  1. Its centralised and bureaucratic functioning style and inability to provide development solutions according to the changing times had rendered this body an obsolete one.
  2. The Commission had over focused on budgetary allocations and less on the social impact created by the spending. Pratap Bhanu Mehta of the Centre for Policy said “Instead of taking the lead on how socially desirable objectives could be met, its entire approach was to act as a kind of fiscal police.”
  3. The Commission had failed to provide innovative and timely developmental prescriptions to the Centre and states, which could have lead to development of the country. Pratap Bhanu Mehta in the same article said - “It is difficult to find any major innovative social sector scheme — whether it is food, health, employment or education — whose intellectual origins were in the Planning Commission.”
  4. The top-down policy making approach of the Commission failed to understand the changing needs of the state governments and central government departments, which have disliked the overarching powers enjoyed the Planning Commission and the way it imposed its will on them.
  5. Post-liberalisation, the states were not entirely dependent on the Centre as they were before thanks to the new revenue streams opened up with the economic growth of the country. However, their development aspirations were not properly understood and nurtured by the Planning Commission.
  6. Availability of investment to the states after liberalisation also rendered the planning process redundant, according to Prof. Prabath Patnaik.
  7. While the governments have had their focus on growth-oriented policies, the Planning Commission must have focused on distributing the fruits of development to all strata of people, which it had utterly failed to do. It only played the role of technical team.
  8. The Planning Commission also failed to prepare strategies for employment generation and agricultural development, which has put India behind its Asian contemporaries in terms of growth and development.
The present Prime Minister Modi did not like the way the Commission was functioning when he was the CM of the Gujarat. In this backdrop, the National Institution for Transforming India has been established by BJP-led NDA government.

Birth of a New System
Prime Minister Modi has declared that his government will dissolve the Planning Commission in his first Independence Day speech last year. He substantiated his decision with former PM Manmohan Singh’s opinion, who felt India has lacked foresight after introducing reforms. He has put forward a new idea called ‘Cooperative Federalism’.

The NDA government has started its discussion with experts, right after it came into power. The first Independent Evolution Office (IEO) Assessment Report was submitted to the PM on May 29, three days after he was sworn in. The report had categorically recommended the replacement of Planning Commission with a Control Commission.

The NDA government has minimised the funds and functions of Planning Commission as a first step towards its annihilation. It directed the important central ministries and departments to submit their planned budget estimation to the Central Government directly.

On January 1, the new body named NITI Aayog has replaced the Planning Commission with immediate effect.

Structure of NITI Aayog
The NITI Aayog was established by a resolution of the central government. It will be governed by the Governing Council and will have a team chaired by the Prime Minister.

Governing Council
Governing Council is the highest body of NITI Aayog. It consists of following members:
  1. Prime Minister of India as the Chairperson
  2. A Vice-Chairperson and a CEO, nominated by the Prime Minister
  3. The Chief Ministers of all the states and Lieutenant Governors of Union Territories
  4. Members: Two (Full-time)
  5. Part-time members: Maximum of two from leading universities research organizations and other relevant institutions in an ex-officio capacity. Part-time members will be on a rotational basis
  6. Ex Officio members: Maximum of four members of the Union Council of Ministers to be nominated by the Prime Minister
The first team of NITI Aayog:
Prime Minister Narendra Modi
Vice Chairperson: Arvind Panagariya
Ex-Officio Members: Rajnath Singh, Arun Jaitley, Suresh Prabhu and Radha Mohan Singh
Special Invitees: Nitin Gadkari, Smriti Zubin Irani and Thawar Chand Gehlot
Full-time Members: Bibek Debroy & VK Saraswat
Governing Council: All Chief Ministers and Lieutenant Governors of Union Territories
CEO: Sindhushree Khullar

Organisational Framework
The body will function from a secretariat and engage experts, specialists and practitioners with relevant domain knowledge as special invitees nominated by the Prime Minister.

Regional Councils will be formed to address specific issues and contingencies impacting more than one state or a region. These will be formed for a specified tenure. The Regional Councils will be convened by the Prime Minister and will comprise of the Chief Ministers of States and Lt. Governors of Union Territories in the region. These will be chaired by the Chairperson of the NITI Aayog or his nominee.

Aims and Objectives
NITI Aayog will seek to provide a critical directional and strategic input into the development process by consulting the states, Centre and different stakeholders. Its aims and objectives are as following:
  • The top-down centre-to-state one-way flow of policy, that was the hallmark of the Planning Commission era, is now sought to be replaced by a genuine and continuing partnership of states.
  • NITI Aayog will emerge as a think-tank that will provide Governments at the central and state levels with relevant strategic and technical advice across the spectrum of key elements of policy.
  • The body will also seek to put an end to slow implementation of policy, by fostering better Inter-Ministry coordination and better Centre-State coordination. It will help evolve a shared vision of national development priorities, and foster cooperative federalism, recognizing that strong states make a strong nation.
  • The NITI Aayog will develop mechanisms to formulate credible plans to the village level and aggregate these progressively at higher levels of government. It will ensure special attention to the sections of society that may be at risk of not benefitting adequately from economic progress.
  • The NITI Aayog will create a knowledge, innovation and entrepreneurial support system through a collaborative community of national and international experts, practitioners and partners. It will offer a platform for resolution of inter-sectoral and inter-departmental issues in order to accelerate the implementation of the development agenda.
In addition, the NITI Aayog will monitor and evaluate the implementation of programmes, and focus on technology upgradation and capacity building.

Objectives of NITI Aayog
Through the above, the NITI Aayog will aim to accomplish the following objectives and opportunities:
  • An administration paradigm in which the Government is an ‘enabler’ rather than a ‘provider of first and last resort’.
  • Progress from ‘food security’ to focus on a mix of agricultural production, as well as actual returns that farmers get from their produce.
  • Ensure that India is an active player in the debates and deliberations on the global commons.
  • Ensure that the economically vibrant middle-class remains engaged, and its potential is fully realized.
  • Leverage India's pool of entrepreneurial, scientific and intellectual human capital.
  • Incorporate the significant geo-economic and geo-political strength of the Non-Resident Indian Community.
  • Use urbanization as an opportunity to create a wholesome and secure habitat through the use of modern technology.
  • Use technology to reduce opacity and potential for misadventures in governance.
The policy-making body aims to enable India to better face complex challenges, through the following:
  • Leveraging of India's demographic dividend, and realization of the potential of youth, men and women, through education, skill development, elimination of gender bias, and employment
  • Elimination of poverty, and the chance for every Indian to live a life of dignity and self-respect
  • Reddressal of inequalities based on gender bias, caste and economic disparities
  • Integrate villages institutionally into the development process
  • Policy support to more than 50 million small businesses, which are a major source of employment creation
  • Safeguarding of our environmental and ecological assets
Challenges before NITI Aayog
India’s growth rate has been hovering around 5% for the past three years. NITI Aayog shall focus on improving the growth rate of country. It must also focus on levelling regional disparities in growth. Agriculture, which has been neglected by the successive governments at the Centre and states, is an area that requires immediate attention. This sector requires more investments and policy care.

The agrarian distress can be solved by making use of the unused resources at village level. To decrease dependence on agriculture sector, rural infrastructure shall be developed and skill development schemes shall be taken to the villages.

Power sector is another critical area. The NITI Aayog must focus on solving the problems of state electricity boards. Development of power sector energizes the development of industry, service and agriculture sectors.

NITI Aayog must also focus on distributing the fruits of development to the poor, who couldn’t be benefitted by economic reforms so far. Appropriate schemes shall be developed with this objective. It must take up all the important tasks that its predecessor refused to. Otherwise, it will be nothing more than the old wine in new bottle.

Planning Commission vs. NITI Aayog
  1. Organisation
    The Prime Minister was Ex-officio Chairman of Planning Commission and the Deputy Chairman was given cabinet status. It had eight full-time members and some central ministers as its ex-officio members. Secretaries or member secretaries were appointment through the usual process and there were no part-time members.
    The NITI Aayog’s Chairperson is Prime Minister and actually administration is vested in the Vice-Chairperson. Two full-time members, two part-time members, Chief Ministers of the states and Lieutenant Governors of the Union Territories, four central ministers as ex-officio members and a CEO constitute the policy-making body. It engages experts, scholars and practitioners from different fields in its policy-making process.
  2. Divisions
    Unlike in Planning Commission, there are four divisions in NITI Aayog viz. – 1). Inter-state Council, 2). Plan Evolution Division, 3). Unique Identification Authority of India and 4). Direct Benefit Transfer. These divisions engage subject experts time to time according to the need.
    The Planning Commission had no divisions, no provision for expert engagement; by and large ran by the bureaucrats, members of Indian Economic Service.
  3. Role of States
    States play an important role in policy-making of NITI Aayog. Indeed the policy goes from bottom to top – from village level to Delhi level and states will have substantial say in this exercise.
    The Chief Ministers and Lieutenant Governors of the UT are members of the both Council of State as well Regional Councils. The final policy prescriptions factor in the states’ opinions, unlike in the process of Planning Commission, in which they could only attend the meetings of National Development Council and their opinion was not considered seriously. For Planning Commission, the country was the unit, hence states were neglected. States' role was limited only to the National Development Council and annual interaction during Plan meetings
  4. Financial Powers
    The Planning Commission enjoyed the full financial powers as to the funds allocation to the states and the central ministries. It was almost a parallel cabinet, which had power to decide allocation of government funds for various programmes at national and state levels. This power was not exercised properly by the Planning Commission and attracted criticism from all quarters.
    NITI Aayog is only an advisory body, or a think-tank and it has no power to allocate funds. The powers to allocate funds might be vested in the finance ministry. The policy-making body has the mandate to provide prescriptions for judicious and proper use of funds by different governments.
  5. Cooperative Federalism
    Cooperative Federalism, in which states and the Centre cooperate with each other in a friendly manner is the idea behind the establishment of NITI Aayog. Now, the planning process is reversed and turned on its head. The local bodies and states are supposed to play an important role in the processes of NITI Aayog.
    This was no way the case in Planning Commission. It had severely undermined the spirit of federalism and handed down the policy prescriptions to the states and had no feedback mechanism. The Planning Commission ensured states’ compliance to the policies of centre by leveraging its power to allocate funds to the states.
Published date : 27 Jan 2015 05:58PM

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