[Policy & Planning] NITI Aayog: Is it a mere Nomenclature Change?

In the very first speech that the newly elected Prime Minister Narendra Modi's gave at Red Fort on Independence Day, contained an important policy announcement to discontinue with the Planning
Commission and to replace the Apex policy making body by a suitable organization. Now four months later as the first policy announcement in the New Year the formation of the new organization (Think-tank) NITI Aayog (NITI) was announced as the Institution which will replace Planning Commission. While some critics hold the view that the change is merely an old wine in a new bottle, there are some substantial changes to the structure and the nature of organization, which actually can bring a marked change in the way it was functioning.

Earlier the Planning Commission was criticized as being too bureaucratic and not inclusive enough in the resource distribution and planning for a federal structure. Considering the perennial criticism that it was a super constitutional body which even eclipsed the role and powers of constitutional bodies like Finance commission, the NITI would be an advisory body only. NITI is an acronym for National Institution for Transforming India.

Planning in Retrospective

Planning was perceived in the 1950s as the most appropriate tool for ushering in faster economic growth. The strategy for achieving this was discussed at great length, particularly at the time of the formulation of the Second Five Year Plan. This was consistent with the thinking at that time that the state must have control over the ‘commanding heights.’ However, in the post-liberalization period, the concept of planning itself has undergone a change. While we moved to an era of Indicative Planning, the planning commission was allowed to continue even though it was not consistent with it. (Note: Indicative planning is contrasted with directive or Mandatory Planning, wherein a state/central body sets quotas and mandatory output requirements)

Mandatory Planning has no relevance today, however, an organization is still required to look at the basic issues confronting the economy, and preparing a broad framework on how these can be tackled. If there is an acceptable framework on what the critical issues are and how they should be addressed, it will provide a suitable basis for policy formulation. While the state may play a diminishing role, it still plays a critical role in the economy. In the infrastructure sector, it still has a dominant role. If the Centre and States agree on a broad framework through discussions, it would facilitate the adoption of better policies.

Key differences between Planning Commission and NITI

The National Institution for Transforming India (NITI) will be more of a think tank or forum, distinctly different from the bureaucratic, socialist leaning, Soviet-styled Commission.

NITI would not have financial powers; instead the power to allocate funds would be vested in the finance ministry, while Planning Commission enjoyed the powers to allocate funds to ministries and state governments

NITI will include leaders of India's 29 states and seven union territories and they would play a more significant role than they did in the Planning Commission. As earlier the States' role was limited to the National Development Council and annual interaction during Plan meetings.

Another key difference would be the status of Deputy Chairman of Planning Commission and the Vice Chairman of NITI. While the former enjoyed the privileges and powers of Cabinet Minister and even some senior politicians and cabinet ministers reported to him, the new position of vice chairman would not enjoy any such benefits. Such benefits were against the spirit of constitution as the position was neither enshrined by it and nor the person was an elected official.

Objectives of NITI

• It 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.
• It will also seek to put an end to slow and tardy 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.
• It 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.
• It 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.

Key Responsibilities of NITI

In order to provide an administration paradigm in which the Government is an ‘enabler’ rather than a ‘provider of first and last resort’, the new body would ensure:

• progress from ‘food security’ to focus on a mix of agricultural production, as well as actual returns that the farmers get from their produce;
• that India is an active player in the debates and deliberations on the global commons;
• that the economically vibrant middle-class remains engaged, and its potential is fully realized;
• to leverage India`s pool of entrepreneurial, scientific and intellectual human capital;
• to incorporate the significant geo-economic and geo-political strength of the Non-Resident Indian Community;
• to use urbanization as an opportunity to create a wholesome and secure habitat through the use of modern technology; and
• to use technology to reduce opacity and potential for misadventures in governance.


On the outset, there seems to be a substantial difference between the two bodies and the NITI is likely to function as per constitution to achieve Cooperative Federalism instead of the super-constitutional and anti-federal nature of earlier body. Also, the nature of planning will be more Bottoms-up instead of former Top-down approach with a focus on implementation and execution as the policy paralysis that gripped governance in India in recent years was more of an implementation crisis due to poor leadership and dual centers of power.

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