SEMINAR PROJECT- NITI AAYOG

NITI AAYOG
A Project
Submitted for the degree of
B. A L.L.B (Hons.)
In the Faculty of Law
To
(Jamia Millia Islamia University, Delhi )
NOVEMBER-2015

Under the Supervision of

By:

Dr.Prof. ASAD MALIK

Sachin Sharma

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CONTENTS
Table of Contents
ACKNWOLEDGEMENT

CHAPTER 2

INTRODUCTION4
Statement of problem 5
Hypothesis of study

Objective of study

Research
methodology
8
Scope of
Study
.9

Chapter
3
10
Need of planning body
Further control over states

Chapter
4
16
Dawn of Niti Aayog
Demise of planning commission
Niti aayog Role and remit
Cooperative federalism

Chapter
5
21
Structure of niti aayog
Structure and composition

Chapter
6
26
Difference between planning commission and niti aayog

Chapter
7
39
Road Ahead

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200 Days of Niti Aayog

Conclusion
41
Bibliography
.43

ACKNOWLEDGEMENT
I take this opportunity to express my sincere gratitude towards my respected
sirand esteemed guide Dr. Prof ASAD MALIK, Professor of faculty of law,
Jamia Millia Islamia, Delhi. It would have never been possible for me to take
this project to completion without his ideas and support. I consider myself
extremely fortunate to have had a chance to work under his guidance. I am
grateful to our Dean Dr. Prof. Manjula Batra for providing with the best
facilities in the institute for completion of this work. For help rendered by nonteaching staff especially, Mr. Mudassar are sincerely acknowledged.
I sincerely acknowledge the help rendered to me by all my colleagues and
friends Vikramank, Amit, Rahul Pandita, Utkarsh, Nikhil, Sachin Gupta,
Mujeeb, Vikas during the course of my work.
I would like to thank my Father, mother, sister and brother for taking me to this
stage of Life. It was the blessing of them that gave me courage to face the
challenges and made my path easier.

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CHAPTER II
INTRODUCTION
NITI Aayog or National Institution for Transforming India Aayog is a policy thinktank of Union Government of India that replaces Planning Commission of India and
aims to involve the states in economic policy-making in India. It will be providing
strategic and technical advice to the central and the state governments. Prime Minister
of India heads the Aayog as its chairperson.
Government of India has replaced the old planning commission started in 1952
with a new institution called NITI Aayog on 1 January 2015. It works under the
chairmanship of Prime Minister. NITI Aayog (National Institution for Transforming
India) will seek to provide a critical directional and strategic input into the
development process. It focuses on co-operative federalism.
NITI Aayog seeks to facilitate and empower the critical requirement of good
governance, which is people-centric, participative, collaborative, transparent and
policy-driven. It will provide critical directional and strategic input to the development
process, focusing on deliverables and outcomes. This, along with being as incubator
and disseminator of fresh thought and ideas for development, is the core mission of
NITI Aayog.
National Institution for Transforming India Aayog ,(Policy Commission) is
a Government
of
India policy
think-tank
established
by
Prime
Minister Narendra Modi after his having dissolved the Planning Commission.
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Pronounced nithi, meaning "policy" in Sanskrit, the acronym stands for National
Institution for Transforming India.
The stated aim of NITI Aayog's creation is to foster involvement and participation in
the economic policy-making process by state governments of India, a "bottomup" approach in contrast to the Planning Commission's tradition of "top-down"
decision-making. The Prime Minister heads the Aayog as its chairperson. Thus,
while the Planning Commission had no representation for state and Union
Territories, the NITI Aayog has.
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 Blogs",
which provide public access to articles, field reports and work in progress as well as the
published opinions of NITI officials, are available to the public on the Aayog website.

STATEMENT OF PROBLEM
The transition from the Planning Commission to the Niti Aayog reflects the
completion of the transition from a state professing anti-imperialism to a neoliberal state.Niti Aayog will oversee a greater centralisation of powers in the
central government, and with the abolition of the National Development
Council and its replacement by regional councils, the limited say the states had
on policies and the flow of funds stands further eroded. In short, the constraints
on state governments will be tightened rather than loosened in theNiti Aayog
era.
Prabhat Patnaik is Professor Emeritus, Centre for Economic Studies and
Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi.
The idea of national planning had been in the air long before independence.
Indeed, the Planning Commission established in the Nehru era was the
descendant of the National Planning Committee that Subhas Chandra Bose had
set up at the suggestion of Meghnad Saha when he was the president of the
Congress, with economist K T Shah at its head.
One of K T Shahs outstanding intellectual contributions had been an estimate,
together with K J Khambatta, of the annual drain of surplus from British
India to the home country (a figure later used by Paul Baran in his classic
work,The Political Economy of Growth), which gives an inkling of Shahs
world-view. The idea of planning, in short, was closely linked to overcoming
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colonial exploitation and to redeeming the pledge of the anti-colonial struggle to
the people of India (expressed inter alia through the Karachi Congress
Resolution of 1931).
Legacy of Anti-Colonial Struggle
It is a travesty, therefore, to see the Planning Commission as a relic of the
Soviet era, a sort of ideological baggage borrowed from the Soviet Union that
has outlasted the Soviet Union. Only a person unaware of and unconnected with
the anti-colonial struggle can make such a claim. Though the Soviet
achievements of the time may have inspired the particular course that
planning took after its inception, the process itself was embedded in the
formation of the post-colonial state; it was a necessary legacy of the anticolonial struggle. It is not surprising that such planning came into vogue not
just in India but in a whole range of countries that were newly liberated from
colonialism.
The Planning Commission was meant to oversee a break of the economy from
the inherited pattern of colonial division of labour, which had entailed the
export of a range of raw materials, including agricultural materials in raw or
processed form (cotton and jute textiles), and the import of a range of
manufactured goods from the metropolis. Since the cultivable land-mass was
limited and could not be augmented because the state pursued a policy of
sound finance, which excluded any significant investment in land-augmenting
practices (such as irrigation or yield-raising research and development in
publicly-funded institutions), pushing out more exports of the existing kind
necessarily meant jeopardizing food security, a fact evident from the massive
(over 25%) decline in per capita food grain availability in British India in the
last half-century of colonial rule.
Not only were the countrys natural resources to be brought back under national
control (which was the economic essence of decolonization, and necessary for
mobilizing all available means for the nations development, without any
drain on account of the dominance of foreign capital), and the production
pattern altered from what had been dictated by the colonial division of labour,
but the benefits of all these measures were to accrue to the people at large by
ensuring that wealth and income inequalities were kept in check. The point here
is not whether planning actually achieved these objectives (it obviously did
not); the point is that this was the perception which informed planning and it
was in keeping with the promise of the anti-colonial struggle.
Extinction the Result of Neo-liberalism

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The fact that neo-liberalism entails a break with this perception, the fact that the
neo-liberal state is qualitatively different from the postcolonial dirigiste state
(even when both promote capitalism in different ways), underlies the extinction
of the old Planning Commission. Its extinction is not linked per se to the
collapse of the Soviet Union (though it is obviously not unrelated to the change
in the international scenario following this collapse); it is linked directly to the
abandonment by the Indian state of any anti-colonial, or more generally any
anti-imperialist, agenda, and to its embrace of international capital with which
the domestic corporate-financial oligarchy is closely integrated.
It is not just the policy direction of the neo-liberal state that precludes a
planning body of the type that the Nehruvian era had envisioned; the
very structure of a neo-liberal state, where the Ministry of Finance is elevated to
a domineering status above all other official organs and is in turn peopled by
employees of the World Bank, the IMF (International Monetary Fund) and other
institutions of finance capital, who are thereby basically put in charge of the
economy, has little room for any such autonomous Planning Commission.
The Manmohan Singh government, committed to neo-liberalism but wary of
being accused of deviating from its Nehruvian ancestry, sought an amusing way
out of this impasse: it retained a Planning Commission, but neo-liberalised its
key personnel. Narendra Modi has gone one step further and has dismantled it
altogether, making India join, quite openly, the ranks of several other third
world countries, where, basically, global financial bureaucrats get entrusted with
the task of running the economy. The transition from the Planning Commission
to theNiti (National Institution for Transforming India) Aayog thus reflects a
transition from a state professing anti-imperialism to a neo-liberal state.
Niti Aayog and Centralisation of Power
All this, though important, is too well known to merit much discussion. What
does need discussion, since it has received little recognition as yet, is the
tremendous centralisation of economic power that the transition toNiti Aayog
entails. The old Planning Commission had two serious failings. The first, an
obvious one, was that in an economy in which the means of production were
largely privately owned, there were no effective mechanisms for the
realisation of the plans formulated by it. And it was not even the case that
plans could be realised only in the public sector but not in the private sector;
the non-realisation of plans in the private sector also entailed in a resourceconstrained system (whose being resource-constrained was in fact the sign of a
good plan, since it meant the absence of any slack) the non-realisation of
plans in the public sector.
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Various instruments were tried, such as a licensing policy, to make the private
sector conform to the overall plan. But these, as is well known from a host of
official committees, were ineffective, which also resulted in a significant trend
towards centralisation of capital, and hence an increase in wealth and income
inequalities. This fact had so alarmed Jawaharlal Nehru that he had set up in the
late 1950s the Mahalanobis Committee on inequalities. In short, planning in
India was hamstrung from the beginning, by being at best what Amiya Bagchi
has called partial planning.1
There was however a second flaw of the plan process. The Planning
Commission, though it was meant to effect national economic planning, was
a central government entity with no representation from the states. It thus went
against the spirit of federalism, and gave expression to that strand of thinking
within the Constituent Assembly which saw the central government as the
continuation of the British imperium. While neo-liberal economists have gone
to town over the constricting of private initiative that planning in India
involved (though the private sector itself had asked in its 1944 Bombay Plan for
substantial public investment, to be financed not by taxing capitalists but
through deficit financing and to be handed over to capitalists after the teething
troubles were over), not much is ever heard about the constricting of state
government initiatives under Indian planning, notwithstanding Ashok Mitras
strenuous efforts. And the crucial point here is this: the constraints on state
governments will be tightened rather than loosened in the Niti Aayog era.

HYPOTHESES
The current research and study is based on the following hypotheses:1.
2.
3.
4.

To understand the concept and rationale behind NITI AAYOG.

What sets it apart from Planning commission and why the former was replaced?
Will it be effective mechanism or is it just an old commission in a new garb?
The road ahead and the areas that should be focused.

OBJECTIVES OF THE STUDY

In this research work, the Researcher endeavours to impart the knowledge and give the
insight to the masses on the following broad objectives:1. To decoding the effect of Niti aayog.
2. To recommend areas that should be paid attention to.
3. To understand the need for bringing in the change to make it clear to the common
man.
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RESEARCH METHODOLOGY
The present work has been undertaken with guided intellectual inquisition based
on organized and systematic investigation by employing doctrinal research
methodology.
The methodology followed by the Researcher in the present work has been
undertaken with guided intellectual inquisition based and organized and by
systematic investigation by employing purely doctrinal/non-empirical in nature.
For the purpose of preparing this research work, the Researcher has relied on
various books, statutes, articles, journals, newspaper articles and other such
literature. The Researcher has also relied on various case laws to substantiate or
refute his points as and when they arise.

SCOPE OF STUDY
Any perception of this work would perhaps seem minuscule considering the fact
that this work has produced from a mere student of law, particularly in the light
of the knowledge that so many legal luminaries have deliberated on the matter
since time immemorial.
The study due to incorporation of a number of restrictions like time and
resources, deals keeping in focus all the states and union territories in India.
The study by putting forward its recommendations, most humbly, hopes to
make a small contribution in the field of legal reforms in India. The study also
relates

and

incorporates

International

Instruments/Conventions/foreign

legislations and policies of the United Nation Organisation and different foreign
National laws.

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Chapter III
NEED OF PLANNING BODY
Perspective planning : It refers to long term planning for a period of 15, 20,
25yrs, however objective of perspective planning can be achieved by breaking
the period in 5-7 yr plans.
Comprehensive or imperative planning: It is used by socialist countries and
each and every aspect of planning is controlled by state. Indicative planning is
flexible. It is peculiar to mixed economy and both the public and private sector
co exist. Indicative planning was first used by France in 1947-50.
Planning can also be divided into centralized and decentralized categories. In
centralized planning there is one central authority which formulates the plan,
targets and priorities for every sector of economy. In decentralized planning
execution of the plan is from grass roots, i.e. district, block, village etc.
Theory of Karl Marx: Karl Marx was the first to lay down the theoretical basis
of socialism. According to him private ownership of means of production must
be abolished to end exploitation from the world. Soviet Union was the first to
adopt planning on this basis.
In India, First of all the idea of planned economy crystallized in 1930s when our
national leaders came under the influence of socialist philosophy.M.
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Visvesvarayya who was a civil engineer and Dewan of Mysore published his
book Planned economy in India. In this book he presented a constructive draft
of the development of India in 10 years. He actually laid a plan to shift labor
from agriculture to industries and double up National income in 10 years.
1938 was the year that witnessed the first attempt to develop a national plan for
India when national planning Committee was set up. This committee was set up
by Subhash Chandra Bose and chaired by Jawaharlal Nehru. However the
reports of the committee could not be prepared and only for the first time in
1948 -49 some papers came out.
In 1944 Eight Industrialists of Bombay including Mr. JRD Tata, GD Birla,
Purshottamdas Thakurdas , Lala Shriram, kasturbhai lalbhai, AD Shroff ,
Ardeshir Dalal, & John Mathai working together prepared A Brief
Memorandum Outlining a Plan of Economic Development for India which was
popularly known as Bombay Plan. This plan envisaged doubling the per capita
income in 15 years and tripling the national income during this period. However
Pundit ji did not officially accept the plan, yet many of the ideas of the plan
were inculcated in other plans which came later.
In August 1944, The British India government set up Planning and
Development Department under the charge of Ardeshir Dalal. But this
department was abolished in 1946.
In October 1946, a planning advisory board was set up by Interim Government
to review the plans and future projects and make recommendations upon them.
A Peoples Plan also came out during that era which was based upon Marxist
socialism and drafted by M N Roy on behalf of the Indian federation of Lahore.
It called for nationalization of all agricultural production and distribution
besides development of consumer goods industries by the state only. Another
plan called as Gandhian Plan was put forward by Shriman Narayan Aggarwal in
1944 who was principal of Wardha Commercial College. It was a modest kind
of plan.
In 1950 Sarvodaya Plan came out which was drafted by Jaiprakash Narayan
inspired by Gandhian plan as well as Sarvodaya Idea of vinoba bhave. Along
with agriculture it emphasized on small and cotton industries as well. It also

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suggested the freedom from foreign technology and stressed upon land reforms
and decentralized participatory planning.
In 1947, after our country got independent, Economic Programme Committee
(EPC) was formed by All India Congress Committee and Pandit Ji was its
chairman. The aim of this committee was the make a plan which could balance
private and public partnership and urban and rural economies.The EPC
recommended in 1948 forming of permanent planning commission.
In March 1950 in pursuance of declared objectives of the Government to
promote a rapid rise in the standard of living of the people by efficient
exploitation of the resources of the country, increasing production and offering
opportunities to all for employment in the service of the community, the
Planning Commission was set up by a Resolution of the Government of India.
The Planning Commission was charged with the responsibility of making
assessment of all resources of the country, augmenting deficient resources,
formulating plans for the most effective and balanced utilization of resources
and determining priorities. Jawaharlal Nehru was the first Chairman of the
Planning Commission.
The first Five-year Plan was launched in 1951 and two subsequent five-year
plans were formulated till 1965, when there was a break because of the IndoPakistan Conflict. Two successive years of drought, devaluation of the currency,
a general rise in prices and erosion of resources disrupted the planning process
and after three Annual Plans between 1966 and 1969, the fourth Five-year plan
was started in 1969.
The Eighth Plan could not take off in 1990 due to the fast changing political
situation at the Centre and the years 1990-91 and 1991-92 were treated as
Annual Plans. The Eighth Plan was finally launched in 1992 after the initiation
of structural adjustment policies.
For the first eight Plans the emphasis was on a growing public sector with
massive investments in basic and heavy industries, but since the launch of the
Ninth Plan in 1997, the emphasis on the public sector has become less
pronounced and the current thinking on planning in the country, in general, is
that it should increasingly be of an indicative nature.

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Democratic Socialism: Pandit Nehru was greatly influenced by the
achievements of Soviet Planning; however he also viewed democratic qualities
of capitalism as indispensable for complete economic and social growth. He
wished to take advantage of both and thus came out his vision of Democratic
Socialism for new India. The idea was to not only check the growth of
monopolistic tendencies of the private sector but also provide freedom to the
private sector to play for main objective of social gain rather than economic
gain.
The Prime Minister of India is the ex-officio Chairman of the planning
commission and there is a deputy chairman who coordinates between the work
of the commission and government.
Originally there was a provision of 3 union ministers to be appointed as Exofficio members of the planning commission however from 2004 this number
was increased to 6.
The commission plays an integrative role in the development of a holistic
approach to the policy formulation in critical areas of human and economic
development.
How a plan is formed: First step is to prepare an approach paper. After it is
ready it goes to National Development Council. After it is approved by NDC,
Planning commission makes Draft Plan. The plan is placed in the parliament
and when parliament passes it, the plan becomes effective. Link : Chairmen of
Planning Commission of India
National Development Council: NDC was set up in August 1952 by a cabinet
secretariat resolution. It is a extra constitutional body which consists of Prime
Minster, Chief ministers of states, members of planning commission and since
1967 the members of the Union Cabinet and administrators of Union Territories.
NDC Considers the Proposals formulated for plans at all important stages and
accepts them. Consider the social and economic policy and its effect on national
development and ensure fullest development of rural and backward areas of the
nation.
NDC had not much importance in Nehru Era but got importance after 1990.
Similarly decentralization also got importance after 73rd and 74th
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Constitutional Amendments which made decentralization a constitutional
imperative.
To be sure, only the outline of theNiti Aayog is available till now, but the
indications are already quite clear. There are, as is well known, three main
channels through which funds get devolved from the centre to the states:
through the Finance Commission, through the Planning Commission and
through discretionary transfers. Barring the Finance Commission which is a
constitutional body, the other two channels basically express the discretion of
the central government; and even in the case of the Finance Commission, since
the centre appoints its members and ultimately fixes its terms of reference, the
central writ is all powerful, a fact that had caused Amaresh Bagchi to submit a
dissenting note to the Eleventh Finance Commission when it laid down
conditionalities (in keeping with the neo-liberal predilections of the centre)
for making available to states even such resources as were constitutionally their
due.
Likewise the proliferation of centrally-sponsored schemes handed down to
the states where they have to contribute a certain share, which is itself arbitrarily
fixed by the centre, has further taken away the freedom of state governments to
make their own state plans.

Further Control over States

Even so, however, the three bodies, the Finance Commission, the Planning
Commission, and the Ministry of Finance, can be ranked in that order in terms
of the looseness of the restrictions they impose on the transfers effected through
them from the centre to the states. The disappearance of the Planning
Commission, which would mean that what used to be plan transfers would now
be doled out through the finance ministry, would entail both a possible
reduction in the total magnitude of transfers, and a definite increase in the
centres control over states plans.
There is a second reason for believing this to be so, and that has to do with the
abolition of the National Development Council (NDC), where the state chief
ministers were represented. This, though not a constitutional body, had a
commanding presence, where the states, deriving strength from one another,
made a definite impact. Since its decisions, which included the ultimate
approval of plans, were taken through a consensus, the centre was often forced
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to yield on certain matters (though this did not prevent it from flouting the
unanimous views of chief ministers on some occasions, such as the funding of
the Sarva Shiksha Abhiyan). The elimination of the NDC is a major blow to the
power of the states. While the governing council where chief ministers are to be
represented is likely to be a purely formal body concerned with the
governance of the Niti Aayog, rather than with basic development issues, the
meetings of the regional councils are likely to be occasions where the states
supplicate to the centre for this or that favour. The regional consultations that
are supposed to replace NDC meetings are more likely to be occasions where
the states supplicate to the centre for this or that favour, rather than serious
challenges to central schemes and programmes.
I should make one point clear here. It may be argued that the Niti Aayog will
entail neither a reduction in the amount of resources available to the states,
nor any increase in the centres control over state plans, since it will be open to
the states to tie up with capitalists, both domestic and foreign, to work out
investment projects of any description and any amount. But that is precisely
what I mean by an increase in central control over state plans. The
centres forcing states to go in for public-private partnerships (which the
Manmohan Singh government had tried to do unsuccessfully), the
centres forcing states to vie with one another to attract private capital to their
territories, the centres imposition of the neo-liberal model on all states by
ensuring that resources available to each state, which the concerned state
government can spend on a plan of its own choice rather than on a plan in
keeping with what the centre considers development, are minuscule: all this is
precisely what I mean by the centralization of economic powers. The Niti
Aayog era will mean that states will not be allowed to go their own ways, not
even to the extent that the Planning Commission era had allowed. Centralization
will be the mechanism for imposing neo-liberalism on the country at large.
This may appear odd at first sight. The dominant capitalist powers imposing
neo-liberalism on the world have in the past been accused of breaking up
large countries, Yugoslavia being a prime example. Should not India, by
analogy, be the sort of country that they would be interested in breaking
up rather than centralizing? The answer is no, because in India neo-liberalism
has made greater inroads into the central government than into the state
governments. Its sweep over the country as a whole therefore requires
centralisation. The fiscal crisis of state governments engineered deliberately by
the centre through its Shylock-like usurious interest rate loans in the 1990s was
an effort in this direction. TheNiti Aayog will continue that effort.
NITI Aayog is a group of people with authority entrusted by the government to
formulate/regulate policies in social and economic issues with experts in it.
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Chapter IV
DAWN OF NITI AAYOG
The architecture, engineering and management aspects of the new institution,
NITI Aayog, will have to be crafted carefully, if it is to serve as an institution to
impart dynamism to the developmental process in a harmonious manner. Its
effectiveness will depend on how it charts out a course for itself. An important
question is whether the Aayog will have influence when it does not have the
power to give grants and does not have the powers to make plan allocations to
different ministries and departments.
M Govinda Rao (He was a Member of the Fourteenth Finance Commission; he
was earlier Director of the National Institute of Public Finance and Policy.)
1. Demise of the Planning Commission
There have been wide-ranging discussions on the role and remit of the new
institution to replace the Planning Commission ever since the prime minister in
his 2014 Independence Day address declared that the Planning Commission
would be replaced by a new institution. In the cabinet resolution passed on 7
January, the government has come out with the broad contours of the new
institution, National Institution for Transforming India (NITI). The remit and
functioning of NITI Aayog will become clearer as it evolves over time. This
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note analyses the possible role it can take and the challenges it is likely to face
in carrying out remit assigned to it.
Not many will shed tears on the abolition of the Planning Commission. In fact,
the previous prime minister himself had called for redefining its role to suit
changing realities. The planning exercise that was followed had hardly any
relevance for the market economy. It did very little to plan and implement even
public sector investments for infrastructure and its role in promoting publicprivate partnership was mostly seen as obstructive. The whole exercise of
giving approvals to state plans smacked of dispensing patronage. The
proliferation of various centrally-sponsored schemes (CSS) with one size fits
all design and conditionality contributed to severe distortions in public
spending. Often, the Planning Commission came up with discretionary transfers
to states to meet non-plan revenue deficits negating the norms set by the
Finance Commissions. The presence of a member of the Planning Commission
as a part-time member of the Finance Commission did very little to correct this
anomaly.
There were two contradictions between the Indian development strategy and the
institutional framework constraining economic environment over the years. The
first is the contradiction between the planning framework and the role of the
market. The initial years after Independence required a planning frame to
allocate the low levels of savings to invest in much needed infrastructure and
priority sectors to overcome severe infrastructure deficits and the lack of
competitiveness of the economy. However, the framework failed to adapt to the
transition after the liberalising reforms were initiated. With fiscal constraints
becoming more and more binding and political economy factors crowding out
infrastructure spending with subsidies and transfers, the planning exercise lost
much of its relevance.
The second contradiction was between the centralised command over resource
allocation and the developmental role of the states in a federal polity. The end of
single party rule and the emergence of coalition governments and regional
parties as members of the central coalition brought to the fore the contradiction
between centralised planning in a federal framework. The response of the
central government was to further centralise even by intruding into the
legislative domains of the states by various means including the proliferation of
CSS. The consequence of the above was that the two important sources of
economic dynamism, the private sector and the states, had to function in a
constrained environment.
The architecture, engineering and management aspects of the new institution,
NITI Aayog, will have to be crafted carefully, if it has to serve as an institution
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to impart dynamism to the developmental process in a harmonious manner.
First, economic liberalisation has created a vibrant private sector and the new
institution should assist in policymaking to enable private entrepreneurs to
unleash their animal spirits and not to constrain them. Second, horizontal and
vertical competition in a multilevel fiscal system can be an important source of
economic dynamism so long as a certain measure of competitive equality and
cost-benefit appropriability are ensured and predatory competition is
prevented. Laboratory federalism can be a source of innovations, imitations
and learning and facilitating this is important. Third, coordination costs are
higher when there are coalition governments and the parties in power in the
states are different from that of the centre. There is an urgent need for an
institution to promote healthy intergovernmental competition while preventing
the race to the bottom. All these underline the need for an institution to
promote Coasean bargains in the spirit of cooperative federalism and ensure
resolution of issues when such bargains fail.
2. NITI Aayog: Role and Remit
The cabinet resolution lists 13 different tasks to it which may be grouped under
four major heads, namely:
(i)

fostering cooperative federalism by providing structured support to

states on a continuous basis;

(ii)

Formulation of a strategic vision and long-term policies and

programme framework both for the macro economy and for different
sectors.

(iii)

Acting as a knowledge and innovation hub and providing research

inputs by undertaking and accessing globally available research; and

(iv)

Providing a platform for interdepartmental coordination. Each of these

functions is discussed here in some detail.

Cooperative Federalism: Platform for Interface between the Centre and

States:(i) The most important responsibility of NITI Aayog relates to
promoting cooperative federalism through structured support initiatives and
mechanisms with the States on a continuous basis. The Seventh Schedule to
the Constitution demarcates the legislative domains and functional
responsibilities of the union and states in terms of union, state and concurrent
subjects. However, there is considerable overlap in the functions requiring
coordination between the union and the states and among the states inter se.

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carrying out stable and sustainable developmental agenda requires fostering the
spirit of cooperation and cementing the federal structure.
The areas of coordination needed are many and some of them may be listed
here. First, there is considerable overlap in carrying out legislative and
executive functions in concurrent subjects. Recent years have shown the need
for cooperation in areas such as energy and environment, education and poverty
alleviation where the need for coordinated action and speedy decisions are
critical for pursuing the developmental agenda. Second the union government
may have to intervene in the national interest even if they are in the State List or
Concurrent List. There may be some public services in the State List, which, for
reasons of nationwide externalities or for redistribution require coordinated
action to ensure minimum standards throughout the country. The examples
include healthcare, urban development and poverty alleviation. In these cases,
the state governments are the partners in achieving a common goal. Third, In the
case of union subjects too, the states may be involved in implementation as
agencies due to their proximity to the people. In addition, NITI can facilitate
exchange of information and experiences and promote healthy
intergovernmental competition through monitoring and regulation.
The most important issue which the NITI Aayog will have to deal with is the
rationalisation of CSS as there is considerable resentment by the states on them.
In 2011, there were over 147 schemes which have since been consolidated into
66, but a close examination shows that these have been retained as sub-schemes
even in the new arrangement. The one-size fits all design of the schemes do
not take account of varying local conditions and institutions, The large
counterpart/matching fund requirements distort priorities of the states,
conditionalities in availing the grants make them restrictive and the final
distribution of transfers is very different from the original design. Finally, when
the schemes are discontinued, they leave large committed liabilities on the
states.
There is certainly a case for having specific purpose transfers for ensuring
minimum standards of services which are considered to be of national
importance. Given the collaborative nature of such schemes, they should be
designed and implemented in the spirit of cooperative federalism. The schemes
should be holistic with scope for flexibility in implementation depending on the
varying local conditions and they should be limited in number (not more than
10). They should have considerable scope for flexibility in implementation. The
new institution could provide a platform for designing the schemes,
implementation systems, monitoring and evaluating them in a collaborative
framework.
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In order to enable NITI Aayog to play a constructive role in fostering
cooperation, it is necessary to place the Inter-State Council, properly
empowered under Article 263 of the Constitution, in the Aayog. This institution
should be the nodal agency for negotiation, discussion, bargaining and
resolution of all major issues. It should have the required expertise on
intergovernmental relations, fiscal federalism and constitutional law.
Strategic Planning:(ii) One of the major tasks assigned to Niti Aayog is
strategic planning at both macro and sectoral levels. Perspective planning helps
to make projections on the macro variables and keep the policy perspective in
view. The strategy and policies required to improve the standard of living of the
projected population and improve human development to empower the people
to productively engage them in economic activities over a long-term horizon are
important. These should be constantly revisited to ensure their relevance.
The cabinet resolution also speaks about planning at the grass-roots level which
implies that the exercise of medium-term planning could be continued, but in a
different manner. It could be indicative planning to provide satisfactory levels of
social and physical infrastructure for meeting the growing needs of the
economy, with the roles of public and private sectors clearly defined. Grassroots planning entails building up of the plan right from the village level based
on the resource envelop, with each higher level aggregating the plans and
adding the investment requirements for the category. In other words, the
planning should be built right from the village, block and district levels and
these should be harmonized with planning at the state level. Similarly, national
planning should be the consolidation of state-level plans along with the
planning infrastructure and service requirements for the country as a whole
worked out at the union level. NITI can provide a framework for preparing the
plans to the states and the latter, in turn, to the lower levels of government. It
should also have a unit to advice and guide if any state is in need of such
assistance.
(iii) Innovation and Knowledge Hub: Closely aligned to strategic planning is
the role of NITI Aayog as a think tank facilitating partnerships between the
stakeholders. Formulation of strategic vision and policies and programmes
aligned to it as well as initiating and monitoring them requires state of the art
research, technology upgradation and capacity building. As a major think tank
of the government working on various developmental policies, it should not
only have basic research capabilities but also should access and outsource
research on relevant subjects globally. It should have a strong data bank
consolidating data and information on economic, demographic, geographic and
social variables relevant for research and policy. Among other functions, the
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institution should also provide a platform for experience sharing among the
states.
(iv)Coordination: The fourth important task of the Aayog is to ensure intergovernmental and interdepartmental coordination. The disastrous consequences
of lack of coordination between the infrastructure, including environmental,
ministries on economic growth were clearly evident in the last years of the
previous government.

CHAPTER V
STRUCTURE OF NITI AAYOG
The NITI Aayog comprises the following:

Prime Minister of India as the Chairperson.

Governing Council comprising the Chief Ministers of all the States and
Lieutenant Governors of Union Territories.

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.

Experts, specialists and practitioners with relevant domain knowledge as

special invitees nominated by the Prime Minister.
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SEMINAR PROJECT- NITI AAYOG

Full-time organizational framework (in addition to Prime Minister as the

Chairperson) comprising.
Vice-Chairperson: Arvind Panagariya
Members: Two (2) Full-time
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
Ex Officio members: Maximum of four members of the Union Council
of Ministers to be nominated by the Prime Minister
Chief Executive Officer: To be appointed by the Prime Minister for a
fixed tenure, in the rank of Secretary to the Government of India
Secretariat as deemed necessary
STRUCTURE AND COMPOSITION

Chairperson: Prime Minister of India

Governing Council: Comprising the Chief Ministers of all States and Lt.
Governors of Union Territories.

Regional Councils: Will be formed to address specific issues and

contingencies impacting more than one state or region.
Strategy and Planning in the NITI Aayog will be anchored from State-level.
Regional Councils will be convened by the Prime Minister for identified
priority domains, put under the joint leadership of related sub-groups of States
(grouped around commonalities which could be geographic, economic, social or
otherwise) and Central Ministries.
Regional Councils

Have specified tenures, with the mandate to evolve a strategy and oversee
implementation.

Be jointly headed by one of the groups Chief Ministers (on a rotational

basis or otherwise) and a corresponding Central Minister.

Include the sectoral Central Ministers and Secretaries concerned, as well

as State Ministers and Secretaries. It will be linked to corresponding domain
experts and academic institutions.

Have a dedicated support cell in the NITI Aayog Secretariat.

States would thus be empowered to drive the national agenda. As a

consequence, deliberation would be more grass-roots informed, and

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recommendations would have more ownership, given their joint
formulation.

Special Invitees: experts, specialists and practitioners with relevant

domain knowledge as special invitees nominated by the Prime Minister.
Full-time Organisational Framework:
Will comprise of, in addition to the Prime Minister as the Chairperson:
1.
2.
3.

Vice-Chairperson: to be appointed by the Prime Minister.

Members: full-time: specialists with international exposure.
Part-time Members: maximum of 2, from leading universities, research
organizations and other relevant institutions in an ex-officio capacity. Parttime members will be on a rotational basis.
4.
Ex-Officio Members: maximum of 4 members of the Union Council of
Ministers to be nominated by the Prime Minister.
5.
Chief Executive Officer: to be appointed by the Prime Minister for a
fixed tenure, in the rank of Secretary to the Government of India.
6.
Secretariat: as deemed necessary.
NITI Aayog specialized Wings

Research Wing that will develop in-house sectoral expertise as a

dedicated think tank of top domain experts, specialists and scholars.

Consultancy Wing that will provide a marketplace of whetted panels of

expertise and funding for Central and State Governments to tap into;
matching their requirements with solution providers, public and private,
national and international. By playing matchmaker instead of providing the
entire service itself, NITI Aayog will be able to focus its resources on
priority matters, providing guidance and an overall quality check to the rest.

Team India Wing comprising representatives from every State and

Ministry, will serve as a permanent platform for national collaboration.

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Then Why NITI Ayog ?

One of the key functions for NitiAayog could be to build the necessary trust and
serve as a dynamic bridge between government and the private sector and also
the respective States. The way, I see is that (nowhere an expert on the subject)
Niti Aayog will be a bridge between the PMO and various State Governments.
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All directions will emanate from the PMO (after consultation with various
Central Ministries), which Niti Aayog will decipher and accordingly plan
communicate to the respective States per their potential and requirements. All
states (including the Private Sector from the respective States) will constantly
approach Niti Aayog for guidance, development economics planning, economic
aid (including aid and benefits to the economically poor of the respective states,
etc) and their own agenda. The Think Tank Niti Aayog will have the most
challenging and interesting task to analyze the requirements of the respective
States,
political
implications,
pecking
order,
locational
advantages/disadvantages, culture, managing expectation and then decide the
plan of action. It is good that NitiAayog will not handle cash, grants and
disbursements (that would have been a minefield) as it is left for the Ministry of
Finance at the center. It is best that they have been able to rope in Prof. Arvind
Panagariya, an able professional and global Economist to contribute to take
India forward Ramesh Kumar Nanjundaiya Bangalore.

Planning Commission: Criticism/Anti-Arguments

1.

Achieved >9% GDP growth-rate during 2005-07, thanks to American

boom prior to sub-prime crisis. But almost all nations of world experienced
high growth. So 9% GDP did not come from Monteks magic wand.

2.

Post sub-prime crisis, failed to evoke the animal spirit in Indian

economy. GDP-fell, inflation rose during 2008-13 nonstop.

3.

Reduced poverty by doctoring the BPL-line. Tendulkar line says 27 crore

BPL, if we use Ranga line then 37 crore BPL. Planning commission brags
reducing poverty line on Tendulkars parameters.

4.

Toothless body, cant hold State/union/ministries/departments

accountable for failing to achieve targets.

5.

Hopes that CAG and Public accounts Committee will take care
accountability part. But PAC too is pretty much toothless.

6.

Failed to implement land reforms. Faulty policies for MSME,

industrialization, Factory-labour law problems.

7.

Office manned by Generalist IAS/IES with short tenure; panel members

filled with academicians and jholachhap NGOs. Need subject specialists
with international exposure like Rajanbhai.

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8.

Designed CSS with One size fits all approach and a few extra crores to
NE/J&K/Hill-states and LWE. But for long, it did not use pilot projects /
sample testing / interaction with states.

9.

Hence, IAY, ICDS etc. programs failed to show tangible result despite
pumping crores.

10.

They tried to bypass state Governments via NGO-funding, DRDA. Hence

States unenthusiastic about implementing Central-schemes named after you
know who.

11.

Only in 2013- reforms done like reducing number of Centrally sponsored

schemes (CSS), 10% flexifund to states, direct transfer of money to state
consolidated fun etc. But its too little too late.

12.

Shortcomings in planning commission => new bodies sprung up like

PMs economic advisory council, PMs project monitoring group and so
on=> more brains=> more lack of coordination.

13.

Hence Modi felt that PC is beyond fixing- just like Gotham city and
Delhi city.

14.

For so many years, Government worked as the provider of first and last
resort. But, today Indian industry and service sector has reached on global
scale, a neo-middle class has emerged.

15.

Times have changed, from being a underdeveloped country in 1950s

India has become a major economic force.

16.

Hence our needs have changed- from mere food security to profitable
agriculture. In this playground, Government needs to become an enabler
rather than a player.

And thus Niti Aayog was born.

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CHAPTER VI
Difference between Niti Aayog and planning commission

Position

BORN

Chairman
Vice Chairman

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Planning
Commiss
ion

1950,
March
15th

Made
redunda
nt in
2014,
August
after
Modi
became
PM.

Prime
minister
Last
Dy.Chairma
n was
Montek
Singh

NITI Aayog

2015, January 1st

same

Free market economist Arvind Panagriya

SEMINAR PROJECT- NITI AAYOG

Ahluwalia
(Cabinet
minister
rank).

CEO

Mem
berSecretar
y (IAS)
Sindh
ushree
Khullar
(IAS)

A secretary level bureaucrat with fixed tenure.

Same Ms. Sindhushree Khullar is the first CEO.

PM can nominate four-Union ministers. Modi has nominated follow

Ex-officio
members

Full time
members

Finan
ce
Minister

Plann
ing
minister

4-7 full time

members,
who enjoy
Minister of
State rank.

1.

Home

2.

Finance

3.

Railway

4.

Agriculture

Bibek Debroy (Free market economist)

Dr. V.K. Saraswat (technocrat, missile scientist.)

Union ministers for

Special Invitees

1.

Transport

2.

HRD

3.

Social Justice

+PM can invite other experts as and when needed.

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SEMINAR PROJECT- NITI AAYOG

part-time
members

Governing
Council

ad hoc Regional

Tech experts from research institutes. Currently none declared. Ro

Chairman: Prime minister

Chief ministers of all states

Lieutenant governors of all Union territories.

Will have CMs of states that fall in the region.

So whats the big difference between the older Planning

Commission and the newer NITI Aayog?
In the Planning Commission, there was just one central figure that practically
controlled every aspect of the commission: the Deputy Chairman. Its another
matter whether it was the Deputy Chairman or the actual-powers-that-be (the
ominous National Advisory Council in the ruinous UPA days, headed by Sonia
Gandhi) who used the Deputy Chairman merely as a puppet to perpetuate their
own policies. For instance in the UPA days it was never clear whether the
Commission was working to boost the countrys economy or was trying to keep
it as backward as possible.
To do away with the central authority and to make the Aayog more useful in
terms of policy, direction and implementation, the Deputy Chairman has been
replaced by a CEO and a Vice Chairperson (with a caveat that theyll be
appointed by the PM). Asian Development Banks Former Chief Economist
Arvind Panagariya is being tipped to be the first Vice Chairperson.
Instead of control, the focus will be on being a catalyst and providing a platform
for the States and the Centre to come together and discuss matters of economic
policies and development plans. The planning will be orchestrated at the village
level and an aggregation of these inputs shall be used to formulate national-level
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plans and policies. Even during the formation of the Aayog, Chief Ministers
from all the States were invited to participate; its another matter that some
Chief Ministers sent their representatives instead and CMs like Mamata
Bannerjee simply refused to attend due to the ongoing acrimony with the
Centre.
Aside from the CEO and the Vice-Chairman Niti Aayog will have a governing
council comprising of Chief Ministers and Lieutenant Governors. They will also
be for Union Ministers serving as ex-officio members. There will be full time
members and part-time members. People will also be drawn from regional
councils and experts and specialists from varied fields will also be a part of
NitiAayog, mostly as special invitees nominated by the Prime Minister. The
Aayog will also have 2 part-time members from leading universities and
research organizations.
While the government feels that it is a totally new approach, different from the
Planning Commission that has overseen 12 five-year plans and sundry other
plans involving more than Rs. 200 lakh crores in its 65-year-old history, the
detractors are saying that nothing much has been changed. For instance, the
structure is almost the same with a few changes here and there. Even in the old
Planning Commission experts were invited based on various needs. Earlier the
Commission was reporting to the National Development Council consisting of
State Chief Ministers and Lieutenant Governors and this has been replaced by a
governing council which, again, comprises of State Chief Ministers and
Lieutenant Governors. Even the regional councils are the same, according to
Kriti Parikh, a former member of the Planning Commission.
The big difference is, as mentioned above, the States will now have a greater
say. Previously it was the Planning Commission that formulated plans and then
asked the States to implement them (provided they agreed), this time the States
themselves will be able to actively participate in the planning so that there is no
communication gap and the plans can be implemented effectively. Prime
Minister Narendra Modi, being a big advocate of federalism, believes that
decentralisation can play a big role in facilitating a balanced growth and making
every individual State an important stakeholder, instead of the Centre acting like
a big brother handing over goodies. Regional councils will be formed to address
specific issues particular to those areas impacting the local populations. Issues
of national security that were ignored so far, will be incorporated at various
levels of economic strategy and policy. All the necessary technological upgrades
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will be implemented and the functioning of the Aayog will be brought at par
with any world-class organisation involved in nation building.
Special stress will be put on the benefit of those marginalised sections of the
society that have been ignored due to the template-nature of the Planning
Commission so far.
Whatever the detractors may say considering that their interests dont lie in
the big and small changes happening in the way the economy and the
government function there is a paradigm shift in the way the policy
formulation and implementation are being worked out. Instead of being the last
resort, as rightly put by the official statement, the government should act as an
enabler.
Right now there is too much control. This control isnt going to go away
immediately after all it has been there for the past 65 years and immediately
yanking it out may collapse the administrative infrastructure but it will go
away gradually and NitiAayog could be the first, albeit, small change.
When the central authority is minimized, the Aayog will be allowed to function
in a more flexible manner, involving 2 types of changes planned changes and
changes influenced by the indigenous as well as global markets. Since the
policy decisions will be made from the bottom of the pyramid and then move
upwards, they will be more realistic and human-centered rather than something
being prepared from an ivory tower. Remember how the Planning Commission
thought if a family could afford to spend Rs. 22 a day it was above the poverty
line? Only individuals totally detached from the realities of the world could
come with such numbers. Such bizarre policy decisions can be avoided if
decisions are made from the bottom-up.
Difference between NITI Aayog and Planning Commission
Organization:

Planning Commission Had deputy chairperson, a member secretary, and

full-time members. Secretaries or member secretaries appointed by the
usual process.

NITI Aayog New posts of CEO of secretary rank, and ViceChairperson. Will also have five full-time members and two part-time
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SEMINAR PROJECT- NITI AAYOG

members. Four cabinet ministers will serve as ex-officio members. CEO is
appointed directly by Prime Minister.
Planning:

Planning commission goes for top-down planning for government with

public sector resources.

NITI ayog formulate national development strategy in a market economy

integrated with the globalized world.
Relation with states

The planning commission was a central government institution and no

representation of state government. There was no structural mechanism for
interaction with states.

NITI ayog provides a partnership with state governments to promote cooperative federalism. It provides a platform for structured and regular
interaction with states.
Finance

The role of Finance Commission was greatly reduced with the formation
of Planning Commission. Allocation of funds were decided by the Planning
Commission.

NITI ayog dont any role in fund allocation. Finance ministry to decide
the share of taxes to states, fund allocation to CSS and Union assistance to
the state plan.
Constitution and Reporting

Planning Commission- The commission reported to National

Development Council that had State Chief Ministers and Lieutenant
governors.

Niti Aayog Governing Council has State Chief Ministers and

Lieutenant Governors.
Difference between NITI Aayog and Planning Commission
Financial clout
NITI Aayog To be an advisory body, or a think-tank. The powers to allocate
fund vested in the finance ministry.
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SEMINAR PROJECT- NITI AAYOG

Planning Commission Enjoyed the powers to allocate funds to ministries and
state governments
Full-time members
NITI Aayog Two full-time members.
Planning Commission had eight full-time members
States' role
NITI Aayog Includes the Chief Ministers of all States and the Lieutenant
Governors of all Union territories in its Governing Council, devolving more
power to the States of the Union.[14]
Planning Commission States' role was limited to the National Development
Council and annual interaction during Plan meetings
Member secretary
NITI Aayog To be known as the CEO and to be appointed by the prime
minister
Planning Commission Secretaries or member secretaries were appointed
through the usual process
Part-time members
NITI Aayog To have a number of part-time members, depending on the need
from time to time
Planning Commission Full Planning Commission had no provision for parttime members
Constitution
Niti Aayog Governing Council has state chief ministers and lieutenant
governors.
Planning Commission- The commission reported to National Development
Council that had state chief ministers and lieutenant governors.
Organization
Niti Aayog New posts of CEO, of secretary rank, and Vice-Chairperson. Will
also have two full-time members and part-time members as per need. Four
cabinet ministers will serve as ex-officio members.
Planning Commission Had deputy chairperson, a member secretary and fulltime members.
Participation
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SEMINAR PROJECT- NITI AAYOG

Niti Aayog- Consulting states while making policy and deciding on funds
allocation. Final policy would be a result of that.
Planning Commission- Policy was formed by the commission and states were
then consulted about allocation of funds.
Allocation
Niti Aayog- No power to allocate funds
Planning Commission- Had power to decide allocation of government funds for
various programs at national and state levels.
Nature
Niti Aayog- NITI is a think-tank and does not have the power to impose
policies.
Planning Commission- Imposed policies on states and tied allocation of funds
with projects it approved.

Whats new with NITI Aayog?

The 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 = more a think tank than a finance distributing agency.

NITI Aayog will provide Governments at the central and state levels with
relevant strategic and technical advice across the spectrum of key elements
of the policy.

With NITI Aayog, there will be multi-directional flow of policy (from

Center to States, from States to Center, between ministries etc.)

Better inter-ministry coordination.

The NITI Aayog will develop mechanisms to formulate credible plans to

the village level and aggregate these progressively at higher levels of
government.

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SEMINAR PROJECT- NITI AAYOG

The NITI Aayog will create a knowledge, innovation and

entrepreneurial support system through a collaborative community of
national and international experts.

Objectives

The National institution for Transforming India will act as a catalyst for
the development by a holistic approach.
NITI Aaayog is based on the 7 pillars of effective governance (1) ProPeople (2) Pro-Activity (3) Participation (4) Empowering (5) Inclusion of
all (6) Equality (7) Transparency.
In NITI Aayog, the state governments has an equal role in nations
development process and NITI Aayog promises the principle of cooperative federalism.
NITI Aayog is planned as a think tank institution which stands not only as
a hub for knowledge but also for good governance.
Its a platform for monitoring and implementation of all government
policies by bringing together various ministries at the center and state level.
Priorities include upliftment of the poor, marginalized and downtrodden.
Empower vulnerable and marginalized sections, redressing identity-based
inequalities of all kinds gender, region, religion, caste or class.

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.

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Leverage Indias 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.

NITI Aayog: Aims

The NITI Aayog aims to enable India to better face complex challenges,
through the following:

Leveraging of Indias 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

Niti Aayog: Criticism/Anti-Arguments

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1.

Bibek Debroy (Fulltime member) himself criticized the vaguely worded

press-release on Niti-Aayog formation. Modi should have specifically
pointed out its functions and jurisdiction.

2.

Modis arbitrary decision to dismantle the Planning Commission,

without taking NDC or states into confidence- this undermines cooperative
federalism. (Says Kerala CM).

3.

From union territory only Lieutenant Governors invited. CM of Delhi and

Puducherry cant participate in Governing council.

4.

Like PC, NITI Aayog too is a non-Constitutional, non-statutory body

formed by a cabinet resolution. It is not accountable to parliament, and if
line-ministries fail to achieve targets, NITI Aayog cannot punish them.

5.

Niti Aayog should have been created through a legal/Constitutional

amendment. There should be a perspective plan spanning for 15 to 20 years.
Otherwise, what if another party comes into power and dismantles this?
Recall Morarji vs Indira.

6.

Itll take minimum 6-8 months for Niti Aayog to set things in motion. In
between that time, Development will be halted due to paucity of funds and
ideas.

7.

Planning commission and NDC decided special category states and

gave them additional funding to help the poor and backward regions. With
advent of Niti Aayog, will those states lose their status and extra-funding?
Uncertainty prevails.

8.

Niti Aayog will conflict with Cabinet Secretariat (for inter-ministerial

coordination) and constitutional body Inter State Council (for coordination
with states).

9.

FinMin officials always try to squeeze budget to keep the fiscal deficit
under FRBM targets. Niti Aayog and its free market economists will further
reduce welfare schemes to help them.

10.

At present weve 60+ centrally sponsored schemes. Modi aims to

combine them into just 10 schemes. Thus, poor and marginalized
communities will suffer.

11.

Planning commission used to monitor of human development in the

States, Sub-plans for women, SC and ST. Niti Aayog doesnt say how theyll
do it.

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12.

Niti Aayogs mandate repeatedly says theyll focus on manufacturing

sector. Rajanbhai says just because China succeeded on manufacturing
focus, doesnt automatically guarantee that same Cinderella story will repeat
here.

13.

Modi distributed the planning-Expenditure function to FinMin and

subject matters to respective ministries. This will result in loss of perspective
and long-term view. Now State governments will have to lobby at both type
of ministries to get funds released.

14.

Planning Commissions Nehruvian Economists advocated decentralized

planning. Modis free market economists and technocrats will pursue
centralized planning and e-monitoring. (It is both pro and anti-argument
depending on how brainwashed a person is after reading theHindu.)

15.

1961: Indian Economic Service (IES) was born on Nehrus initiative.

Modi doesnt invite them in meetings, free market economists look down
upon them with utter disdain. How theyll be integrated in the new system?
No clear answers given in the press-release.

16.

There is no need for any Planning commission or Niti Aayog. Good work
can be done even without them- through line ministries and inter-state
councils.

Anyways, the real work of NITI Aayog is yet to begin. So, most criticism is
centred around the theme that Since press release doesnt talk about xyz thingso only bad thing will happen.. But, only time will tell how NITI Aayog fares
in real life.

After scrapping the planning commission, Modi wanted the Finance

commission to overesee all three types of money-allocations i.e.
1.

Share from union taxes

2.

CSS: Centrally sponsored schemes

3.

Unions assistance to states plans.

But Modi couldnt do it easily because:

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1.

Constitution amendment necessary, to give finance commission these

new powers.

2.

But the Chairmen of 13th and 14th Finance commission dont like this
additional homework. NOT ONE bit. Because
o

Finance commission is a non-permanent body constituted every 5th

year, hence it can look at the issues from a fresh perspective. If its turned
into a permanent body- then incrementalist approach will creep in i.e.
throwing more money in existing schemes rather than fixing from
scratch.

Finance commission members are expert in revenue-sharing. But

planning Expenditure requires expert members with development,
capital-asset building perspective.

Gujarat CM even said, Union itself should give the plan-money to

states, instead of keeping such backdoor mechanism.

Chinese Niti Aayog?

Chinese NDRC

India present system

Makes macro-economic policy

Finance ministry makes fiscal policy.

RBI makes monetary policy.

Approves investment &

construction projects

CCI, FIPB and many other bodies @union and state level.

Makes Energy & oil policy

Oil ministry, DG Hydrocarbon decide it.

Looks after backward provinces

in the Western region.

Separate ministry for NE Development

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Real-Boss: State council headed
by President of China.

Cabinet Headed by PM.

Experts thought Modi wanted to replace PC with a body like Chinas

NDRC. (National Development and reform commission).

But Niti Aayog press release and jurisdiction is so vague, its nowhere
near Chinese NDRC.

FUNCTIONS AND MANDATE

1.

Think tank for Government policy formulation.

2.

Find best practices from other countries, partner with other desi-videsi
bodies to help their adoption in India.

3.

Cooperative Federalism: Involve state governments and even villages in

planning process.

4.

Sustainable development: + Modis Zero defect-zero effect (on

environment) manufacturing mantra.

5.

Urban Development: to ensure cities can remain habitable and provide

economic venues to everyone.

6.

Participatory Development: with help of private sector and citizens.

7.

Inclusive Development or Antyodaya. Ensure SC, ST and Women too

enjoy the fruits of Development. (because Din Dayal said so.)

8.

Poverty elimination to ensure dignity and self-respect. (because Poet

Tiruvalluvar said so)

9.

Focus on 5 crore Small enterprises to generate more employment for

weaker sections.

10.

Monitoring and feedback. Midway course correction, if needed.

11.

Make policies to reap demographic dividend and social capital.

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12.

Regional Councils will address specific issues for a group of states.

Example: Regional Council for drought, Left-wing extremism, Tribal
welfare and so on.

13.

Extract maximum benefit from NRIs geo-economic and Geo-political

strength for Indias Development.

14.

Use Social media and ICT tools to ensure transparency, accountability

and good governance.

15.
16.

Help sorting inter-departmental conflicts.

Lot of bol-bachachan giri and vague ideas about national self-interest,
capacity-building, participating in global-village etc.

Chapter VII
ROAD AHEAD
200 Days of NITI Aayog
NITI completes 200 days on 20th July, 2015, from its inception as a Think
Tank of the Government,a directional and policy dynamo to taking steps in co-

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operating with States while encouraging thespirit of cooperative federalism.
Some highlights from this initial journey towards transforming India:
1. The Prime Minister Shri Narendra Modi made appointments to the NITI
Aayog, with Dr Arvind Panagariya as the Vice Chairman, Shri Bibek Debroy
and Dr. V.K. Saraswat as Full-Time Members and Ms. Sindhushree Khullar,
IAS was appointed as Aayog's CEO.
2. The Prime Minister chaired the first Governing Council Meeting of the NITI
Aayog with CM's of states and Lt. Gov's of the UTs to work with the Centre and
forge a model of cooperative federalism. TEAM INDIA- where the Centre and
States come together to chart a common course for progress and prosperity.
3. During Feb 2015, the PM held a meeting to review progress in Infrastructure
sectors for 2014-15.The sectors covered were related to Physical Connectivity
(Airports, Ports and Inland Waterways,Railways and Highways),
Digital Connectivity (Telecom) and Energy (Power, Coal, Renewables andGas).
4. In order to prevent cost and time overruns of important infrastructure
projects, the Governing Council of NITI Aayog has requested States to create
appropriate institutional mechanisms to address issues which cause delay in
execution of the project. This is being further monitored by Aayog.
5. Prime Minister constituted three Sub Groups of Chief Ministers on the
following subjects: Re-organization of Centrally Sponsored Schemes, Skill
Development, and Swachh Bharat.
6. The Union Budget 2015 announced the setting up of Atal Innovation Mission
(AIM), Self-Employment and Talent Utilization (SETU) and Unified National
Agriculture Market under the NITI Aayog.
7. In enforcement of the decision taken in the Governing Council Meeting, two
Task Forces have been formed in order to tackle the crucial subjects of
Agriculture Development and Elimination of Poverty under the leadership
of Vice Chairman.
8. NITI Aayog has initiated the process of undertaking the midterm appraisal
of the Twelfth Plan.
9. Initiatives of NITI Aayog: Sustainable Development, Inclusive Growth
Policy, Participatory Development by fostering PPP model, Use of ICT tools to
ensure transparency and good governance, adopt global best practices in
administration.

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10. NITI Aayog seeks to put an end to slow and tardy implementation of policy,
by enforcing better Inter-Ministry coordination and better Centre-State
coordination. It will help evolve a shared vision of national development
priorities.
11. The NITI Aayog will create a knowledge, innovation and entrepreneurial
support system through a collaborative community of national and international
experts, practitioners and partners.

Road Ahead
1. Ensure that the economically vibrant middle-class remains engaged, and its
potential is fully realized.
2. 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.
3. Incorporate the significant geo-economic and geo-political strength of the
Non-Resident Indian Community.
4. Use urbanization as an opportunity to create a wholesome and secure
habitat through the use of modern technology.
5. Use technology to reduce opacity and potential for misadventures in
governance.
6. Integrate villages institutionally into the development process.
]
7. Policy support to more than 50 million small businesses, which are a major
source of employment creation.
8. Safeguarding of our environmental and ecological assets.

Conclusions

The cabinet resolution lays down only the broad framework for the Aayog. The
effectiveness of the NITI Aayog in transforming India will depend upon the
clarity in the functions assigned, the status and power given and the quality of
the people who will steer the institution. In fact, the first Aayog will have a
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tremendous responsibility of carving out a niche for itself, setting the pace and
steering the transformation.
Thus, the effectiveness of NITI will depend on how it charts out a course for
itself. Despite the claims of a marked departure from the past, the institution has
to function in the prevailing milieu and deal with the burden of legacy. The
important question is whether the Aayog will have influence when it does not
have the power to give grants and when it does not have the powers to make
plan allocations to different ministries and departments.
The abolition of the Planning Commission paves the way for restoring the role
of the Finance Commission to assess the total requirements of the states in the
revenue account without making a distinction between plan and non-plan
spending. However, the Finance Commission does not have a comparative
advantage in recommending specific purpose transfers unless it is made a
permanent body. Of course, the constitutional provision does not require it to be
a temporary body Article 280 simply states that the commission should be
appointed every five years or earlier; the appointed commission can continue
until the new commission is appointed. However, so long as the Finance
Commission continues to be a temporary body, the NITI Aayog will have a role
in designing and implementing these programmes.
The legacy issues do not end merely with the abolition of the Planning
Commission. There are parallel institutions in the states and it is important to
transform them to meet the new requirements. Similarly, the Constitution
requires the establishment of district planning committees and metropolitan
planning committees. Their role in the new environment needs to be specified.
Although the cabinet resolution states that NITI Aayog will facilitate grass-roots
planning, how exactly this will be carried forward needs to be seen.
The success of the institution in achieving interministerial, interdepartmental
coordination will depend on the trust and cooperation it receives from them and
the harmony with which the Aayog and various ministries work. There could be
tensions between the technocrats in the Aayog and various ministers on the one
hand, and between the technocrats and bureaucrats on the other. There is also
the danger of bureaucratisation of the Aayog. Similarly, success in fostering
cooperative federalism will depend on the trust of and cooperation from the
states. In particular, the first Aayog will have a tremendous task of shaping the
character and charting a course to make it an important institution in Indian
federal polity to transform India.

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BIBLIOGRAPHY
1.http://mrunal.org/2015/01/economy-niti-ayog-planning-commissionevolution-structure-members-function-criticism.html.
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2. http://niti.gov.in/content/
3. http://www.epw.in/commentary/planning-commission-niti-aayog.html
4. http://www.epw.in/commentary/role-and-functions-niti-aayog.html
5. http://www.thehindu.com/news/national/planning-commission-to-berenamed-niti-ayog/article6744546.ece
6. http://www.ndtv.com/cheat-sheet/niti-aayog-replaces-planning-commission10-points-on-what-you-need-to-know-721421
7. http://www.niticentral.com/2015/01/03/niti-aayog-different-planningcommission-294486.html
8. http://www.studymode.com/essays/Niti-Aayog-69258310.html
9.legalservicesindia.com
10. http://theindianeconomist.com/an-alternate-perspective-on-niti-aayogfostering-centralization/

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