The National Institution for Transforming India, known as NITI Aayog, was formed on January 1, 2015. It came out because of a resolution of the Union Cabinet. It is considered the "Think Tank" of the Government of India that directs all the strategic and long-term policies. Due to its reform agenda, the Government of India constituted the NITI Aayog, which replaced the Planning Commission, established in 1950. It acts as the classic platform of the government to unite all the states to boost national interest and foster cooperative federalism. NITI Aayog has two clubs at its core, which can be identified as The Team India Hub, which ensures that all the states are in a continuous rhythm with the Central Government, and the Knowledge and Innovation Hub, which works on building NITI's think-tank capabilities. The Prime Minister is the Chairperson, Shri Suman Bery is the Vice Chairperson, and B.V.R. Subrahmanyam is the Chief Executive Officer.
Functions of NITI Aayog
NITI Aayog has several vital functions to perform.
- It needs to create a shared national plan by including all levels of government and focusing on key development areas.
- It fosters cooperative federalism to ensure joint decision-making.
- It develops realistic and reliable plans to achieve national goals.
- It ensures that the government focuses on what's best for the country.
- It regularly checks the economy and makes policies that uplift growth.
- It designs strategic, long-term policies and changes the direction based on the feedback received.
- It also provides advice and promotes partnerships with national and international think tanks.
- It creates an entrepreneurial support system to become a center for budding entrepreneurs for their startups.
It helps several departments resolve inter-sectoral and inter-departmental issues.
Transition from Planning Commission to NITI Aayog
Have you ever felt confusion about the difference between the Planning Commission and the NITI Aayog? Let's break down the difference in simpler words. The Planning Commission was established in 1950 and dissolved in 2014, whereas NITI Aayog was established in 2015. The Planning Commission was free to act as an advisory body and allocate funds to ministries and states. Still, NITI Aayog cannot allocate funds and is only an advisory body or think-tank. The Planning Commission was more centralized and reported to the National Development Council (NDC), while NITI Aayog is more democratic as it consults states while making policies.
The Case for NITI Aayog
There was a rising contrast between the Planning Commission and the Indian development strategy, which limited the economic environment over the years. The first known contradiction was about the planning framework and the role of the market. After the first year of independence, according to the planning framework, it was urgent to allocate the low levels of savings to invest in India's much-needed, economically backward infrastructure and prioritise sectors to overcome severe infrastructure deficits and the lack of competitiveness in the economy. However, after the 1991 economic policy changes, which introduced the concept of Liberalisation, Privatisation, and Globalisation, the framework failed to adapt to the dynamic transitions. The political governance changed from single-party rule to coalition government, and regional parties as members of the central coalition brought to the fore the contradiction between centralized planning in a federal framework.
The Planning Commission was charged with several allegations of how it transfers to states to meet their non-plan revenue deficits, violating the rules and regulations set by the Finance Commissions. NITI Aayog was expected to bring about greater trust and accountability in the system. It developed a Development Monitoring and Evaluation Office that collects data on the performance of various ministries on a real-time basis. The collected data is utilized at the highest policymaking levels to establish accountability and improve performance.
NITI Aayog is perceived as a manifesto to promote fiscal federalism among the states through structured support initiatives. What is budgetary federalism? It is the financial relations and distribution of resources between the central government and state governments, aimed at ensuring equitable resource allocation and addressing regional disparities. It can maintain inter-governmental coordination in several aspects, such as energy, education, and poverty alleviation. It also reflects the national interest in nationwide externalities or for redistribution requires coordinated action to ensure a minimum standard throughout the country.
NITI Aayog also possesses basic research capabilities and should mandatorily access and outsource research on relevant subjects globally. It has established over 10,000 Atal Tinkering Labs and 72 Atal Incubation Centers nationwide.
The Case Against NITI Aayog
Niti Aayog has been restricted to exclusively writing reports on the Indian economy, forming draft laws for the Union government, assessing central schemes, and holding conferences with state government officials. Since the NITI Aayog doesn't get the right to allocate funds just like the Planning Commission, which used to distribute ₹5 lakh crore annually for various states and acted as the bridge between central and state ministries, its scope and transmission have been expanded, and its stature reduced. Gradual replacement of the Planning Commission with the NITI Aayog also transformed the activities performed, such as promoting regionally balanced growth in India, to a think-tank, which reduced the need for Government policy reach.