NITI Aayog

Role and Evolution of NITI Aayog in the Post-Planning Commission Era | UPSC Exam preparation

To prepare for INDIAN POLITY for any competitive exam, aspirants have to know about Niti Aayog. It gives an idea of all the important topics for the IAS Exam and the polity syllabus (GS-II.). This is an essential portion of the polity. As IAS aspirants, you should be thorough with the Niti Aayog. In this article, you can read all about the Niti Aayog for the Polity and Governance segments of the UPSC syllabus.

The Planning Commission which has a legacy of 65 years has been replaced by the Niti Aayog on January 1, 2015, with emphasis on the ‘Bottom – Up’ approach to envisage the vision of “Maximum Governance, Minimum Government”, echoing the spirit of Cooperative Federalism. NITI Aayog envisaged as a think tank and advisory body of the government.

Evolution from Planning Commission to NITI Aayog in India’s Economic Development Paradigm

• The Planning Commission was initially set up in 1950 as an agency to direct investment activity in a country.
• Planning Commission of India had two key duties to perform –

1. 1. To implement five-year plan and
   2. To provide the finances to the state.

• The disenchantment with the Planning Commission could be traced on two important fronts:

1. 1. The perception that it was not able to capture the new realities of macroeconomic management at the national level
   2. It had not been conducive to sound fiscal relations between the Union and the States.

• This did not fit well with the imperative for an inclusive and equitable path of economic development in India.
• The Planning Commission which has a legacy of 65 years has been replaced by the Niti Aayog on January 1, 2015, with emphasis on the ‘Bottom – Up’ approach to envisage the vision of “Maximum Governance, Minimum Government”, echoing the spirit of Cooperative Federalism. NITI Aayog envisaged as a think tank and advisory body of the government.
• It aims to construct a strong state that will help to create a dynamic and strong nation. This helps India to emerge as a major economy in the world.
• NITI Aayog’s creation has two hubs –

1. 1. Team India: It leads the participation of Indian states with the central government.
   2. The Knowledge and Innovation Hub: It builds the institution’s think tank capabilities.

Objectives of NITI Aayog for Inclusive Development

• 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, in areas that are specifically referred to, 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 the 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.
• NITI Aayog is a nodal for assessing SDG India Index.

NITI Aayog’s Guiding Vision for Inclusive and Sustainable Development

• In carrying out the above functions, NITI Aayog will be guided by an overall vision of development which is –
• Antodaya: Prioritize service and uplift of the poor, marginalized and downtrodden, as enunciated in Pandit Dindayal Upadhyay’s idea of ‘Antodaya’. Development is incomplete and meaningless if it does not reach the farthest individual.
• Inclusion: Empower vulnerable and marginalized sections, redressing identity-based inequalities of all kinds of gender, region, religion, caste or class.
• Village: Integrate our villages into the development process.
• Demographic dividend: Harness our greatest asset, the people of India: by focussing on their development, through education and skilling, and their empowerment, through productive livelihood opportunities.
• People’s Participation: Transform the developmental process into a people-driven one, making an awakened and participative citizenry(including the NRI community) the driver of good governance.
• Governance: Nurture an open, transparent, accountable, pro-active and purposeful style of governance, transitioning focus from
• Sustainability: Maintain sustainability at the core of our planning and development process, building on our ancient tradition of respect for the environment.

Comparative Analysis of Planning Commission and NITI Aayog 

NITI Aayog Composition

• Chairperson: PRIME MINISTER
• Vice-Chairperson: To be appointed by Prime-Minister
• Governing Council: Chief Ministers of all states and Lt. Governors of Union Territories.
• Regional Council: To address specific regional issues, Comprising CHIEF MINISTER and Lt. Governors Chaired by the Prime Minister or his nominee.
• Ad-hoc Membership: Two members in ex-officio capacity from leading Research institutions on a rotational
• Ex-Officio membership: Maximum four from the Union council of ministers to be nominated by the Prime
• Chief Executive Officer: Appointed by the Prime-minister for a fixed tenure, in the rank of Secretary to Government of India.
• Special Invitees: Experts, Specialists with domain knowledge nominated by the Prime-minister.

Governance Excellence with NITI Aayog’s 7 Guiding Principles

• Pro-people: it fulfils the aspirations of society as well as individuals
• Pro-activity: in anticipation of and response to citizen needs
• Participation: involvement of the citizenry
• Empowering: Empowering, especially women in all aspects
• Inclusion of all: inclusion of all people irrespective of caste, creed, and gender
• Equality: Providing equal opportunity to all especially for youth
• Transparency: Making the government visible and responsive

NITI Aayog: Transforming Governance through Cooperative Federalism, Innovation, and Accountability

• Cooperative federalism – Due to its composition, NITI Aayog gives a better representation of states which facilitates direct interactions with the ministries & helps to address issues in a relatively shorter time.
• Competitive Federalism – Various reports of NITI Aayog like Healthy states Progressive India etc. which give performance-based rankings of States across various verticals to foster a spirit of competitive federalism.
• Greater Accountability – NITI Aayog has established a Development Monitoring and Evaluation Office which collects data on the performance of various Ministries on a real-time basis.
• Think tank of innovative ideas: NITI Aayog is visualised as a funnel through which new and innovative ideas come from all possible sources industry, academia, civil society or foreign specialists and flow into the government system for implementation.
• By collecting fresh ideas and sharing them with the Central and State governments, it allows states to progress with these new ideas.
• Hence it helps in improving governance and implementing innovative measures for better delivery of public services.
• Convergence for resolution: Being a common point for similar issues faced by different sectors, states etc., it acts as a convergence point and platform to discuss these issues.

Concerns and Constraints in NITI Aayog’s Advisory Role

• Biases towards govt & private sector – As a think tank, NITI Aayog should maintain a respectable intellectual distance from the government of the day.
• Financial constraint- NITI Aayog has no powers in granting discretionary funds to states, which renders it toothless to undertake a transformational intervention.
• Only recommendatory body- It acts as an advisory body only that advises the government on various issues without ensuring the enforceability of its ideas.
• Lack of decentralization power- One of the envisaged goals of the NITI Aayog was to develop mechanisms to formulate credible plans at the village level and aggregate these progressively at the higher level
• Missed opportunities for transformative change- The body has missed some opportunities to make a qualitative difference.
• Inadequate support to the states.

Challenges and Critiques of NITI Aayog in India’s Development Landscape

• NITI Aayog cannot transform a deeply unequal society into a modern economy that ensures the welfare of all its citizens, irrespective of their social identity.
• It has no role in influencing public or private investment.
• It does not seem to have an influence on policy making with long-term consequences. For instance, demonetisation and the Goods and Services Tax.
• If it is a think-tank, it has to maintain a respectable intellectual distance from the Govt. of the day.
• Instead, we see uncritical praise of the Govt-sponsored schemes/programmes.
• It is not able to answer specific questions like, why 90% are working in the unorganised sector? and moreover, as on date, more and more in-formalisation is taking place in the organised sector.
• The Labour force participation rate of women is also declining, when neighbours like Bangladesh are registering an increase.

NITI Aayog: Recommendations for Fiscal Role, Accountability, Funding, and Stakeholder Involvement

• Balancing with finance commission: NITI Aayog should be given a funding role so that it can help deal with the development experience between states.
• Another possibility is to convert the Finance Commission into a permanent body that can oversee fiscal transfer mechanisms rather than just give a tax-sharing formula every five years.
• Increasing accountability: Bureaucracy will need to change from generalist to specialist, and its accountability will have to be based on outcomes achieved, not inputs or funds spent. NITI Aayog should spell out how these reforms will be implemented.
• Allocation of more funds: Towards the task of cooperative federalism, NITI Aayog 2.0 should receive significant resources (say 1% to 2% of the GDP) to promote accelerated growth in States that are lagging, and overcome their historically conditioned infrastructure deficit, thus reducing the developmental imbalance.
• More stakeholder involvement: It should invite research inputs and recommendations of expert members on identified areas. It should synthesize recommendations based on the empirical weight of the research. This will cut time, cost and effort and will increase timely policy inputs for the government.

What are the Key Achievements of NITI Aayog in Fostering Inclusive Development? 

NITI Aayog’s Indexes and Initiatives

• SDG India Index
• Composite Water Management Index
• Atal Innovation Mission
• SATH programme
• Aspirational District Programme
• School Education Quality Index
• District Hospital Index
• Health Index 2019 – (Healthy states, progressive India)
• Composite Health Index
• Digital Transformation Index
• Agriculture Marketing And Farmer Friendly reform Index
• India Innovation Index
• Women Entrepreneurship Platform
• Good Governance Index (NITI with other agencies)

Aspirational Districts Program for Inclusive Growth in India

• Aspirational Districts are those districts in India that are affected by poor socio-economic indicators.
• These are aspirational in the context, that improvement in these districts can lead to the overall improvement in human development in India.
• The 115 districts were identified from 28 states, at least one from each state.
• At the GoI level, the programme is anchored by NITI Aayog. In addition, individual Ministries have assumed the responsibility to drive the progress of districts.
• The objective of the program is to monitor the real-time progress of aspirational districts.
• ADP is based on 49 indicators from the 5 identified thematic areas, which focuses closely on improving people’s Health & Nutrition, Education, Agriculture & Water Resources, Financial Inclusion & Skill Development, and Basic Infrastructure.
• With States as the main drivers, ADP seeks to focus on the strength of each district, identify low-hanging fruits for immediate improvement, measure progress, and rank districts.
• The broad contours of the programme are-

Impact of Aspirational Districts Program on Inclusive Development and Implementation

• Decentralization of Development: ADP focuses on outcomes that enable local experimentation based on a firm appreciation of ground realities.
• Inclusive approach: The delta ranking of the Aspirational Districts combines the innovative use of data with pragmatic administration, keeping the district at the locus of inclusive development.
• Improved Implementation: Spurred by competition based on outcomes, local governments target their efforts and improve programme implementation and design.

What challenges does NITI Aayog face in implementing the Aspirational Districts Program?

• ADP is affected by the issue pertaining to insufficient budgetary resources.
• ADP is implemented by multiple ministries which leads to a lack of coordination.
• High-quality administrative data is critical to improving programme implementation and design at the local level.
• The Delta ranking itself is largely focused on assessing quantity rather than quality.

WAY FORWARD

• More simplified ranking indexes needed with few but carefully chosen output and outcome measures that can more clearly signal national development targets.
• Financial autonomy to local governments should be provided.
• Independent surveys to be used to validate administrative data, will help improve data quality.
• Building each district’s internal capacity to produce reliable and actionable data, and promoting a culture of data use, can be made a priority for the ADP.

NITI Aayog’s Vision @75

• The government think tank NITI Aayog has unveiled the Strategy for New India @ 75.
• This comprehensive national strategy defines clear objectives for 2022-23.
• The strategy provides for a detailed exposition across forty-one crucial areas.
• Together with the progress already made, the strategy identifies binding constraints and suggests the way forward for achieving the clearly stated objectives.
• The strategy was prepared through wide consultations with all three groups of stakeholders, viz., business persons, academics including scientists, and government officials.

Economic Drivers

This section focuses on the engines of economic performance with chapters on growth and employment, doubling of farmers’ incomes; upgrading the science, technology and innovation ecosystem; and promoting sunrise sectors like fintech and tourism.

 Strategic Measures for Economic Transformation

Infrastructure Imperative for Enhanced Business Competitiveness in India

Deals with the physical foundations of growth which are crucial to enhancing the competitiveness of Indian business. 

INCLUSION

It focuses on investing in the capabilities of all citizens covering three dimensions of health, education and mainstreaming of traditionally marginalized sections of the population.

GOVERNANCE

Streamlining governance structures to achieve better development outcomes.

NITI Aayog 2.0: Revamped Role for Strategic Influence and Resource Allocation

Few suggestions related to composition and functions of the revamped Niti Aayog 2.0:

• It will be responsible for allocating development or transformational capital or revenue grants to the states.
• In order to make the new Niti Aayog more effective, it is essential to ensure that the institution is at the ‘High Table’ of decision making of the government. This means the vice-chairman of the new Niti Aayog will need to be a permanent invitee of the Cabinet Committee on Economic Affairs (CCEA).
• It need not be involved with the approval of the state’s annual expenditure programmes. It should rather strive to be a think-tank with ‘praxis’ possessing considerable financial muscle and devote its energies to outline coherent medium and long term strategy and corresponding investment resources for transforming India.
• New NITI Aayog will annually need the resources of around 1.5 to 2% of the GDP to provide suitable grants to the states for mitigating the development imbalances.

WAY FORWARD

• 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.

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