Issues plaguing the AYOG and measures to resolve these issues

  • 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.