Planning Commission was replaced by a new institution – NITI AAYYOG on January 1, 2015 with emphasis on ‘Bottom –Up’ approach to envisage the vision of Maximum Governance, Minimum Government, echoing the spirit of ‘Cooperative Federalism’.
Reasons for Creation of NITI Aayog
- The 65 year-old Planning Commission had become a redundant organization. It was relevant in a command economy structure, but not any longer.
- India is a diversified country and its states are in various phases of economic development along with their own strengths and weaknesses.
- In this context, a ‘one size fits all’ approach to economic planning is obsolete. It cannot make India competitive in today’s global economy.
Objectives of NITI Aayog :
- To foster cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognizing that strong States make a strong nation.
- To develop mechanisms to formulate credible plans at the village level and aggregate these progressively at higher levels of government.
- To ensure, on areas that are specifically referred to it, that the interests of national security are incorporated in economic strategy and policy.
- To pay special attention to the sections of our society that may be at risk of not benefitting adequately from economic progress.
- To provide advice and encourage partnerships between key stakeholders and national and international like-minded Think Tanks, as well as educational and policy research institutions.
- To create a knowledge, innovation and entrepreneurial support system through a collaborative community of national and international experts, practitioners and other partners.
- To offer a platform for resolution of inter-sectoral and inter-departmental issues in order to accelerate the implementation of the development agenda.
- To maintain a state-of-the-art Resource Centre, be a repository of research on good governance and best practices in sustainable and equitable development as well as help their dissemination to stake-holders.
- 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.
- 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 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:
- 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. Part-time members will be on a rotational basis.
- Ex-Officio Members: maximum of 4 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.
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.
Digital Payments Movement
- The Government has prepared an action plan on advocacy, awareness and co-ordination of their handholding efforts among general public, micro-enterprises and other stakeholders for which NITI Aayog had organised presentations or interactions for training and capacity building of various Ministries/Departments of Government of India, representatives of State/UTs, Trade and Industry Bodies as well as all other concerned stakeholders.
- A committee of Chief Ministers was constituted by NITI Aayog on Digital Payment on 30th November 2016, Chandrababu Naidu, the Chief Minister of Andhra Pradesh as the convener to promote transparency, financial inclusion and a healthy financial ecosystem nationwide which submitted its interim report to Prime Minister in January 2017.
- The state/UTs will be incentivised with Rs. 50 crore as a Central assistance for the promotion of digital transactions which is to be used in districts for undertaking Information, Education and Communication activities to bring 5 crore Jan Dhan accounts to a digital platform.
- To promote the use of digital payments through BHIM App, the Government has started the Cashback and referral bonus schemes which were launched by the Prime Minister on 14th April 2017.
- The incentive schemes such as Lucky Grahak Yojana and the Digi Dhan Vyapar Yojana were also launched by NITI Aayog to promote digital payments across all sections of society in which over 16 lakh consumers and merchants have won Rs. 256 crore under these two schemes.
- From December 25, 2016, till April 14, 2017, the Digi Dhan Melas were also been organised for 100 days in 100 cities.
- In a view to strengthening the country’s innovation and entrepreneurship ecosystem, the Government has set up Atal Innovation Mission (AIM) under NITI Aayog that spur innovation in schools, colleges, and entrepreneurs in general. Following major schemes were rolled out in 2016-17 under Atal Innovation Scheme (AIM):
- Atal Tinkering Labs (ATLs): The Atal Innovation Scheme (AIM) is working to establish 500 ATLs in schools across India, where students can design and make small prototypes based on the rapid prototyping technologies to solve challenges they see around them.
- Atal Incubation Centres (AICs): The AICs will help start-ups to expand quicker and enable innovation-entrepreneurship, in core sectors of the economy such as manufacturing, energy, transport, education, agriculture, water and sanitation, etc for which Atal Innovation Mission (AIM) will provide financial support of Rs.10 crore and capacity building for setting up of such AICs.
- Indices Measuring States’ Performance in Health, Education and Water Management
- In a view to the Prime Minister’s focus on outcomes, NITI Aayog has developed indices measuring State’s performance in Health, Education and Water Management.
- The indices will measure incremental annual performances in critical social sectors like health, education and water with a view to nudge the states into challenging with each other for better outcomes.
- The indices will also help states to share the best practices and innovation in order to achieve gain from each other which is an example of competitive and cooperative federalism.
Sub-Group of Chief Ministers on Rationalisation of Centrally Sponsored Schemes
- The sub-group has provided its recommend on the rationalization of centrally sponsored schemes and a Cabinet note was prepared by NITI Aayog which also has been approved by the Cabinet.
- The sub-group has recommended several decisions which led to the rationalisation of the existing CSSs into 28 umbrella schemes.
Sub-Group of Chief Ministers on Swachh Bharat Abhiyan
- This sub-group on Swachh Bharat Abhiyan was constituted on 9th March 2015 which has submitted its report to the Prime Minister in October 2015.
- The most of the recommendations suggested by this sub-group have been accepted.
Sub-Group of Chief Ministers on Skill Development
- The sub-group on Skill Development was constituted on 9th March 2015, the report of which was submitted to the Prime Minister on 31st December 2015.
- The key recommendations of the sub-group have been approved by the Prime Minister and already are in practice by the Ministry of Skill Development.
- Task Force on Elimination of Poverty in India
- The Task Force on Elimination of Poverty in India was constituted on 16th March, 2015 under the Chairmanship of Dr Arvind Panagariya, Vice Chairman, NITI Aayog, the report which was submitted to the Prime Minister on 11th July 2016.
- The primary focus of the task force was to find out the issues involved in the measurement of poverty and the list of strategies to combat the poverty.
- The task force was unable to develop its consensus in favour of either the Tendulkar or a higher poverty line did not emerge.
- The task force concluded and suggested that there is a requirement of another high-level committee of country’s top experts which can analyse issues and suggest the best measure of poverty.
- The task force also suggested strategies combat poverty and it faster reduction through employment-intensive sustained rapid growth and effective implementation of anti-poverty programs.
- Agricultural development was set up on 16th March 2015 under the Chairmanship of Dr Arvind Panagariya, Vice Chairman, NITI Aayog.
- The Task Force has prepared an occasional paper entitled “Raising Agricultural Productivity and Making Farming Remunerative for Farmers” which is based on their work focusing on 5 critical areas of Indian Agriculture are:
- Raising Productivity
- Remunerative Prices to Farmers
- Land Leasing, Land Records & Land Titles
- Second Green Revolution-Focus on the Eastern States
- Responding to Farmers’ Distress
- The task force after getting all the required inputs from the states/UTs submitted its report on 31st May 2016.
- The task force has recommended significant policy measures to bring in reforms in the agriculture sector for the welfare of the farmers as well as enhancing their income.
Transforming India Lecture Series
- NITI Aayog as the premier think-tank of the Government views knowledge building & transfer as the enabler of real transformation in States and UTs.
- In a view to building knowledge systems for States and the Centre, NITI Aayog has launched the ‘NITI Lectures such as Transforming India’ series, with full assistance from the Prime Minister on 26th August 2016.
- NITI Aayog’s lecture series has the aim of addressing the top policy-making team of the Centre including the members of the Cabinet and several top bureaucrats of the country.
- The key aim of the lecture is to bring cutting edge ideas in development policy to policy makers and public, so as to promote the basis of the transformation of India into a prosperous modern economy in the world.
The latest report 2019-20 mentions the achievements of Niti Aayog:
- Monitoring and Analysing Food and Agricultural Policies (MAFAP) programme in India – It is a collaborative research project between Niti Aayog and the United Nations’ Food and Agriculture Organization (FAO).
- It aims to monitor, analyse and reform food and agricultural policies.
- The first phase of the MAFAP programme ran between 23rd September and 31 December 2019.
- National Agriculture Price Policy and National Food Security Policy for selected agricultural product marketing committees and districts respectively were reported.
- The second phase of the MAFAP programme is scheduled between 1st January 2020 and 31st December 2021.
- The Niti Aayog governing council promoted Zero Budget Natural Farming.
- Additionally, natural farming is being promoted as ‘Bhartiya Prakritik Krishi Paddhati’ programme under Paramparagat Krishi Vikas Yojana (PKVY).
Village Storage Scheme has been conceptualised. Similarly, Union Budget 2021 has proposed Dhaanya Lakshmi Village Storage Scheme, yet to be implemented.
- Like planning commission, it’s also a non-constitutional body which is not responsible to parliament.
- Dismantled planning commission without consulting the states.
- UTs are represented by Lieutenant Governors, not by chief ministers. This is against the principles of federalism.
- Fund allocation to welfare schemes may get affected. For example, there is a 20 % reduction in gender budgeting.
- To prove its mettle in policy formulation, the NITI Aayog needs to prioritize from the long list of 13 objectives with clear understanding of the difference in policy, planning and strategy.
- To build the trust, faith and confidence more than the planning commission, NITI Aayog needs freedom of various kinds with budgetary provisions not in terms of plan and non-plan expenditures but revenue and capital expenditure as the higher rate of increase in capital expenditure can remove infrastructural deficits at all levels of operation in the economy.
- It does not possess mandate to impose policies.
- It does not have powers to allocate funds, which are vested in Finance Minister
- A deeply unequal society cannot be transformed into a modern economy by the NITI Aayog, that ensures the welfare of all the citizens, irrespective of their social identity.
- NITI Aayog has no role in influencing private or public investment.
- NITI Aayog does not seem to influence policy-making with long-term consequences. For example, demonetization and Goods and Services Tax.
- If NITI Aayog is a think-tank, it should be maintaining a respectable intellectual distance from the government. Instead, what we see is uncritical praise of the Government-sponsored schemes and programs.
- NITI Aayog has not been able to answer some specific questions, like why 90% of the workers are still working in an unorganized sector? and more informalisation is taking place in an organized sector.
- Women’s labor force participation rate is also decreasing when our neighbors like Bangladesh are registering an increase in women’s labor participation.
- Though things are working in the NITI Aayog, but not with the pace that is required, which should not be the case.
- To make it relevant, Niti Aayog has been bestowed with too many powers but bestowing too many powers in a single body is not a good idea for governance.
- The work of NITI Aayog includes to keep listening to the demands of the states and fulfill their needs which NITI Aayog has not been able to do till now.
- The intention behind setting up NITI Aayog was to encourage participation in the economic policy and public involvement, it has done neither.
- The prime minister himself is of the view that the NITI Aayog has not been able to do enough in promoting initiatives like Swachh Bharat Mission, Make in India, and smart city projects in the states.
- It does not have the power to analyze the performance of various government schemes.
Changes required in NITI Aayog
- The need of the hour is that NITI Aayog has to evolve into a much stronger organization as compared to what it is now. NITI Aayog should be engaged with the allocation of “transformational” capital in a formulaic manner, complete with incentive-compatible conditionalities. As now when the Planning Commission has been dissolved, there is a vacuum especially as the NITI Aayog is primarily a think tank with no resources to dispense, which renders it toothless to undertake a “transformational” intervention.
- The implications that should be enforced in a complex country like India which has become an industrial economy late is that the planning must continue as a central function of the state to bring the economy to long-run equilibrium.
- However, it can be contended that the Planning Commission was not able to fulfill its function adequately. The reason why NITI Aayog came into force by replacing the Planning Commission, there was a necessity to grow into a much stronger organization.
- The NITI Aayog should come up with new reforms, learn from the neighboring countries, for example learn from the experience of the now industrialized Chinese state. It ensured after its market-oriented economic reforms began at the State apparatus (China created special economic zones to push manufacturing and export-oriented industries. The general rules of business were eased in these zones, marked out in areas with better infrastructure and access to cheap labor for investors. Indian special economic zones that came up decades later lacked such push and better incentives to attract foreign investors in numbers and size to give China a competition. China made a shift by promoting green energy like solar power and reducing its dependence on coal massively. China has emerged as the second-largest solar energy producer. India may emulate Chinese example to reduce its dependence on coal and oil, most of which it imports).
- The State Planning Commission should become more powerful by focussing on growth and poverty reduction. China with its proper implementation of strategies became the “factory of the world” that was backed by an industrial policy that is driven by the Reforms Commission and the National Development.
- Similarly, in all Southeast Asian and East Asian countries, industrial policy has always been planned and has been executed as part of the five-year or longer-term plans.
- While Southeast Asian and East Asian countries still have and had five-year plans, the thing that was also integral to their planning was the productive use of labor, the most abundant factor of these countries, through an export-oriented manufacturing strategy. Such strategies have been lacking in India’s planning.
NITI Aayog should focus on the implementation rather than only focusing upon the recommendations of the policies. It should also be focussing upon the reforms and informing the government as to where it will have to face the consequences for non-implementation of its policies and where it is falling short. The establishment of NITI Aayog gave positive results but there is a need to change and focus on areas that have been discussed in this article.