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Credit Seminar

SPEAKER: SHEELA KHARKWAL

2

NITI AAYOG: AN OLD WINE IN NEW BOTTLE?NITI AAYOG: AN OLD

WINE IN NEW BOTTLE?

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• Introduction

•Timeline of Planning in India and A brief overview of the Five Year

Plans

•Planning Commission: Criticism/Anti-Arguments

•NITI Aayog and its Organizational set-up

•Structural comparison between planning commission and NITI Aayog

•Objectives and functions of NITI Aayog

•Functional comparison between planning commission and NITI Aayog

•A look on NITI Aayog through “Economic Prism”

•Niti Aayog: Criticism/Anti-Arguments and Challenges ahead

•Conclusion

contents

Introduction

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“Constant development is the law of life, and a man who always

tries to maintain his dogmas in order to appear consistent drives

himself into a false position”. -Mahatma Gandhi

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Timeline of Planning in India

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A Brief Overview of Five Year Plans

Planning Commission’s responsibilities:

Periodic assessment of all the resources.

Augmenting deficient resources.

Formulating plans for efficient, judicious and balanced utilization of resources.

Appraisal and evaluation of programmes.

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So far 11 FYP’s have been completed. 12th FYP is under implementation since Apr 1, 2012 and will continue till March 31, 2017.

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I II III IV V VI VII VIII IX X

2.1

4.5

5.6 5.7

4.4

5.2 55.6

6.5

8

3.6

4.3

2.83.3

4.8

5.76

6.8

5.4

7.6

GROWTH RATE (% of GDP)Target achieved

Source: Planning Commission of India

Economy

Demography

Globalisation

Privatisation

Technology

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Planning Commission: Criticism/Anti-Arguments

>9% GDP, during 2005-07 THANKS American boom prior to sub-prime crisis

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Planning Commission

Almost all nations of

world experienced

high growth.

Inflation

Inflation rose nonstop during the 11th FYP.

Infla

planning commission brags reducing

poverty line on Tendulkar’s parameters.

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27 crore People below poverty Line

37 crorepeople BPL.

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PC: Extra-Constitutional and Non-Statutory body

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ConstitutionPlanning Commission

PC: one size fits all and

we know best

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States unenthusiastic of central schemes :NO direct funding to states

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Funds from centre

NGO’s and DRDA’s

States

PC Office manned by Generalist IAS/IES with short tenure

panel members filled with academicians and nonperforming NGO’s.

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Need of subject specialists with International exposure like Mr. Raghuram Rajan

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PC: An agent of the ruling party or

coalition at the centre.

Other states

From the

center

Government needs to become an “enabler” rather than a “dictator”.

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• NITI stands for National Institution for Transforming India.

• NITI = Policy

Aayog = Commission

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Structure of NITI

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Governing council

Regional councils

Full time members

Part time members

Ex-officio members councils

Special invities

Chairperson

(Prime Minister)

Vice Chairperson

(Nominated by PM)

Chief executive officer

(Nominated by PM)

(Max 2, from

relevant

institutions)

(Max 4,

from union

ministries)

(Nominated

by PM)

Compostion of NITI Aayog

Structural comparison between NITI Aayog and PC

Position Planning Commission NITI Aayog

Born 1950, March 15th 2015, January 1st

Chairman Prime minister Prime minister

Vice

ChairmanCabinet Minister rank Again Cabinet Minister rank

CEO

(secretary

in PC)

Member-Secretary (IAS)A secretary level bureaucrat with

fixed tenure.

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PositionPlanning

CommissionNITI Aayog

Ex-officio

members

Finance Minister

Planning

minister

PM can nominate four-Union ministers. At

present:

1. Home 3. Finance

2. Railway 4.Agriculture

Full time

members

8 full time members,

who enjoyed “Minister

of State” rank.

Less members

At present only 2.

Rank: Same

Special Invitees

Union ministers for

1. Transport 2.HRD 3.Social Justice

+PM can invite other experts as and when

needed.8/27/2016

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PositionPlanning

CommissionNITI Aayog

part-time membersTech experts from research

institutes. Rotational posts.

Governing Council

Chairman: Prime minister

Chief ministers of all states

Lieutenant governors of all

Union territories.

Ad hoc Regional

Councils

Will have CMs of states that fall

in the region.

To deal specific issue concerning

a group of states for example

irrigation, naxal-problem,

infrastructure etc.

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Mandate of NITI

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To foster cooperative federalism

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Objectives and functions

To serve as a Think tank, adirectional and policy dynamo for thegovernment.

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Ideas“How” more imp

than “what”

Bottom up approach: in plan formulation

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To solve issues and impediments of state in time bound manner at the level of state itself.

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To recommend a national agenda includingstrategic and technical advice on elementsof policy and economic matters.

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To create a knowledge, innovation and entrepreneurial support.

To design strategic and long term policy andprogramme frameworks and initiatives, and monitortheir progress and their efficacy.

To focus on technology up gradation and capacitybuilding for implementation of programmes andinitiatives.

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To pay special attention to the sections of oursociety that may be at risk of not benefittingadequately from economic progress.

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Functional comparison : Planning Commission Vs NITI

Aayog

Planning commission NITI Aayog

function Design FYP-Five year plans. Design national agenda andcooperative federalism.

Mostly work as a “policy-formulation-hub”.

Money

Matters

Decide two “money” matters:

1. How much money to give to eachstate for centrally sponsoredschemes (CSS)

1. How much money to give for eachstate’s own state-five-year-plans.

The Press release is ‘silent’ on

money/funding. so, most probably

it’ll be left to finance ministry.

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Planning Commission NITI Aayog

States

Role

States/UT were represented in

National Development

Council.

PC framed FYP=>went to

Cabinet=>NDC approved

FYP=>Tabled in parliament.

States/UT represented in Governing

council.

No specific mention about whether they

can approve/reject/amend Niti Aayog’s

proposals!

Approach One size fits all, top-down

socialist planning.

Press release talks about participatory

planning

But how exactly will they do that? No

specific details laid out.

Given the entry of Free marketeconomists and Technocrats, mostprobably it’ll be an ‘indicative planning’

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0

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A look on NITI Aayog

through

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NITI Aayog

resource transfer

Fiscal federalism?

• Economistssceptical about centralized bureau of planning.

• Since 8th FYP role of private sector ed, Need for Indicative type of planning

• Govt. focus Broad issues rather than fixing targets.

• Biggest drawback States Receiving end with begging bowl rather than partners and Tied Funds

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Resource transfer

• At present Govt. is silent in this matter

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• 60% Resource transfer takes place through Finance Commission

•Only 2-3% through Planning Commission

•Additional responsibility can easily be shifted to Finance commssion

Some experts believe Inter-state council will decide money allocation to states, then finance ministry will release the fund.

Planned and Non-plan expenditure

• A Big issue since long

• Report of the panel headed by Dr. C. Rangrajan: Distortions crept in by this Illogical distinction

• Setting up of NITI, changes entire way is an important question??

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• Who decides Special category status of states??

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Niti Aayog: Criticism/Anti-Arguments

NITI Aayog is long on generalities and short on specifics.

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LOCKED!!!!!

NITI Aayog coverage

Opposition views NITI Aayog :a ‘gimmickry’ and ‘an old wine in new bottle.’

NITI Aayog, like Planning Commission, is a non-Constitutional body.

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• Planning commission used tomonitor of human development inthe States, Sub-plans for women, SCand ST.

Niti Aayog doesn’t sayhow they’ll do it???

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ZIPPED

Mr. Modi’s “arbitrary decision” to dismantle the PlanningCommission, without taking NDC or states intoconfidence this undermines cooperative federalism.

(Kerala CM)

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Challenges ahead

• Quality of experts entertained would be the determining factor of the

value of Think tank.

• For achieving the goal of Cooperative federalism, the new governing

council has to be more active. Feasibility of convening meetings

with all chief Ministers and LT’s (Governing council of NITI Aayog) in

one place at regular interval?

• Few questions with reference to the functioning of new structure need tobe answered thoroughly, like who would

Lobby with the finance ministry to protect plan expenditure,

Determine transfers to centrally sponsored scheme, and

Assign special category status of states in the absence of

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At least 100 IAS/IESofficers will now have to beaccommodated in otherministries.

How they’ll be integrated inthe new system?? No clearanswers given in the press-release.

Sudden dismantling ‘unplanned’ economy inwhich the corporate will call the shotsspur privatization.

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Conclusions

• This replacement : second generationreforms

• Decision: bold and long overdue initiative..

• There is no point in quarreling with thename.

• The substance behind the change matters.

• Therefore clarity is needed in manyaspects. Once answers to these emerge, thenthe new body could function smoothly.

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To change the emphasis• from the projects and programs to policy Institutions,

• from expenditure inputs to real outcomes throughbetter governance and,

• from political disputation over Incremental allocationsto new challenges and opportunities in a globalenvironment.

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Expectations

• Structural differences are not much but inclusion ofCM’s and Lt. Governors in the council a break with the past.

• Though there may be some Political influence, but it ismuch too early to declare it as Old Wine In NewBottle.

• A fair chance should be given to prove that the governmentinitiatives will deliver.

• The Aayog’s functioning could make or break the economicdevelopment of India in the future.

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