Niti aayog

SEMINAR PROJECT- NITI AAYOG 2015

NITI AAYOG

A Project

Submitted for the degree of

B. A L.L.B (Hons.)

In the Faculty of Law

To

(Jamia Millia Islamia University, Delhi )

NOVEMBER-2015

Under the Supervision of By:

Dr.Prof. ASAD MALIK Sachin Sharma

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CONTENTS

Table of ContentsACKNWOLEDGEMENT 3

CHAPTER 2 4

INTRODUCTION 4

Statement of problem 5

Hypothesis of study 8

Objective of study 8

Research methodology……………………………………………………………………………………………………………………………………8

Scope of Study…………………………………………………………………………………………………………………………….9

Chapter 3…………………………………………………………………………………………10Need of planning bodyFurther control over states

Chapter 4…………………………………………………………………………………………16Dawn of Niti AayogDemise of planning commissionNiti aayog Role and remitCooperative federalism

Chapter 5…………………………………………………………………………………………21Structure of niti aayogStructure and composition

Chapter 6………………………………………………………………………………………26

Difference between planning commission and niti aayog Chapter 7…………………………………………………………………………………………39

Road Ahead 200 Days of Niti Aayog

Conclusion………………………………………………………………………………………41Bibliography………………………………………………………………………………….43

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ACKNOWLEDGEMENT

I take this opportunity to express my sincere gratitude towards my respected

sirand esteemed guide Dr. Prof ASAD MALIK, Professor of faculty of law,

Jamia Millia Islamia, Delhi. It would have never been possible for me to take

this project to completion without his ideas and support. I consider myself

extremely fortunate to have had a chance to work under his guidance. I am

grateful to our Dean Dr. Prof. Manjula Batra for providing with the best

facilities in the institute for completion of this work. For help rendered by non-

teaching staff especially, Mr. Mudassar are sincerely acknowledged.

I sincerely acknowledge the help rendered to me by all my colleagues and

friends Vikramank, Amit, Rahul Pandita, Utkarsh, Nikhil, Sachin Gupta,

Mujeeb, Vikas during the course of my work.

I would like to thank my Father, mother, sister and brother for taking me to this

stage of Life. It was the blessing of them that gave me courage to face the

challenges and made my path easier.

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CHAPTER II

INTRODUCTION

NITI Aayog or National Institution for Transforming India Aayog is a policy think-tank of Union Government of India that replaces Planning Commission of India and aims to involve the states in economic policy-making in India. It will be providing strategic and technical advice to the central and the state governments. Prime Minister of India heads the Aayog as its chairperson.

Government of India has replaced the old planning commission started in 1952 with a new institution called NITI Aayog on 1 January 2015. It works under the chairmanship of Prime Minister. NITI Aayog (National Institution for Transforming India) will seek to provide a critical directional and strategic input into the development process. It focuses on co-operative federalism.

NITI Aayog seeks to facilitate and empower the critical requirement of good governance, which is people-centric, participative, collaborative, transparent and policy-driven. It will provide critical directional and strategic input to the development process, focusing on deliverables and outcomes. This, along with being as incubator and disseminator of fresh thought and ideas for development, is the core mission of NITI Aayog.

National Institution for Transforming India Aayog ,(Policy Commission) is a Government of India policy think-tank established by Prime Minister Narendra Modi after his having dissolved the Planning Commission. Pronounced nithi, meaning

"policy" in Sanskrit, the acronym stands for National Institution for Transforming India.

The stated aim of NITI Aayog's creation is to foster involvement and participation in the economic policy-making process by state governments of India, a "bottom-up" approach in contrast to the Planning Commission's tradition of "top-down" decision-making. The Prime Minister heads the Aayog as its chairperson. Thus, while the

Planning Commission had no representation for state and Union Territories, the NITI Aayog has.

The Union Government of India announced formation of NITI Aayog on 1 January 2015, and the first meeting of NITI Aayog was held on 8 February 2015. "NITI Blogs",

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https://en.wikipedia.org/wiki/Union_Territories

https://en.wikipedia.org/wiki/Prime_Minister_of_India

https://en.wikipedia.org/wiki/State_governments_of_India

https://en.wikipedia.org/wiki/Sanskrit

https://en.wikipedia.org/wiki/Planning_Commission_of_India

https://en.wikipedia.org/wiki/Narendra_Modi

https://en.wikipedia.org/wiki/Narendra_Modi

https://en.wikipedia.org/wiki/Government_of_India

http://www.clearias.com/planning-commission-niti-aayog-indian-planning/


which provide public access to articles, field reports and work in progress as well as the published opinions of NITI officials, are available to the public on the Aayog website.

STATEMENT OF PROBLEM

The transition from the Planning Commission to the Niti Aayog reflects the completion of the transition from a state professing anti-imperialism to a neo-liberal state.Niti Aayog will oversee a greater centralisation of powers in the central government, and with the abolition of the National Development Council and its replacement by regional councils, the limited say the states had on policies and the flow of funds stands further eroded. In short, the constraints on state governments will be tightened rather than loosened in theNiti Aayog era.

Prabhat Patnaik is Professor Emeritus, Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University, New Delhi.

The idea of “national planning” had been in the air long before independence. Indeed, the Planning Commission established in the Nehru era was the descendant of the National Planning Committee that Subhas Chandra Bose had set up at the suggestion of Meghnad Saha when he was the president of the Congress, with economist K T Shah at its head.

One of K T Shah’s outstanding intellectual contributions had been an estimate, together with K J Khambatta, of the annual “drain” of surplus from “British India” to the home country (a figure later used by Paul Baran in his classic work,The Political Economy of Growth), which gives an inkling of Shah’s world-view. The idea of planning, in short, was closely linked to overcoming colonial exploitation and to redeeming the pledge of the anti-colonial struggle to the people of India (expressed inter alia through the Karachi Congress Resolution of 1931).

Legacy of Anti-Colonial Struggle

It is a travesty, therefore, to see the Planning Commission as a relic of the “Soviet era”, a sort of ideological baggage borrowed from the Soviet Union that has outlasted the Soviet Union. Only a person unaware of and unconnected with the anti-colonial struggle can make such a claim. Though the Soviet achievements of the time may have inspired the particular course that “planning” took after its inception, the process itself was embedded in the formation of the post-colonial state; it was a necessary legacy of the anti-colonial struggle. It is not surprising that such “planning” came into vogue not

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just in India but in a whole range of countries that were newly liberated from colonialism.

The Planning Commission was meant to oversee a break of the economy from the inherited pattern of colonial division of labour, which had entailed the export of a range of raw materials, including agricultural materials in raw or processed form (cotton and jute textiles), and the import of a range of manufactured goods from the metropolis. Since the cultivable land-mass was limited and could not be augmented because the state pursued a policy of “sound finance”, which excluded any significant investment in land-augmenting practices (such as irrigation or yield-raising “research and development” in publicly-funded institutions), pushing out more exports of the existing kind necessarily meant jeopardizing food security, a fact evident from the massive (over 25%) decline in per capita food grain availability in “British India” in the last half-century of colonial rule.

Not only were the country’s natural resources to be brought back under national control (which was the economic essence of decolonization, and necessary for mobilizing all available means for the nation’s development, without any “drain” on account of the dominance of foreign capital), and the production pattern altered from what had been dictated by the colonial division of labour, but the benefits of all these measures were to accrue to the people at large by ensuring that wealth and income inequalities were kept in check. The point here is not whether planning actually achieved these objectives (it obviously did not); the point is that this was the perception which informed planning and it was in keeping with the promise of the anti-colonial struggle.

Extinction – the Result of Neo-liberalism

The fact that neo-liberalism entails a break with this perception, the fact that the neo-liberal state is qualitatively different from the postcolonial dirigiste state (even when both promote capitalism in different ways), underlies the extinction of the old Planning Commission. Its extinction is not linked per se to the collapse of the Soviet Union (though it is obviously not unrelated to the change in the international scenario following this collapse); it is linked directly to the abandonment by the Indian state of any anti-colonial, or more generally any anti-imperialist, agenda, and to its embrace of international capital with which the domestic corporate-financial oligarchy is closely integrated.

It is not just the policy direction of the neo-liberal state that precludes a “planning” body of the type that the Nehruvian era had envisioned; the very structure of a neo-liberal state, where the Ministry of Finance is elevated to a domineering status above all other official organs and is in turn peopled by employees of the World Bank, the IMF (International Monetary Fund) and other

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institutions of finance capital, who are thereby basically put in charge of the economy, has little room for any such autonomous Planning Commission.

The Manmohan Singh government, committed to neo-liberalism but wary of being accused of deviating from its Nehruvian ancestry, sought an amusing way out of this impasse: it retained a Planning Commission, but “neo-liberalised” its key personnel. Narendra Modi has gone one step further and has dismantled it altogether, making India join, quite openly, the ranks of several other third world countries, where, basically, global financial bureaucrats get entrusted with the task of running the economy. The transition from the Planning Commission to theNiti (National Institution for Transforming India) Aayog thus reflects a transition from a state professing anti-imperialism to a neo-liberal state.

Niti Aayog and Centralisation of Power

All this, though important, is too well known to merit much discussion. What does need discussion, since it has received little recognition as yet, is the tremendous centralisation of economic power that the transition toNiti Aayog entails. The old Planning Commission had two serious failings. The first, an obvious one, was that in an economy in which the means of production were largely privately owned, there were no effective mechanisms for the “realisation” of the plans formulated by it. And it was not even the case that plans could be “realised” only in the public sector but not in the private sector; the “non-realisation” of plans in the private sector also entailed in a “resource-constrained system” (whose being resource-constrained was in fact the sign of a “good” plan, since it meant the absence of any “slack”) the “non-realisation” of plans in the public sector.

Various instruments were tried, such as a licensing policy, to make the private sector conform to the overall plan. But these, as is well known from a host of official committees, were ineffective, which also resulted in a significant trend towards centralisation of capital, and hence an increase in wealth and income inequalities. This fact had so alarmed Jawaharlal Nehru that he had set up in the late 1950s the Mahalanobis Committee on inequalities. In short, planning in India was hamstrung from the beginning, by being at best what Amiya Bagchi has called “partial planning”.1

There was however a second flaw of the plan process. The Planning Commission, though it was meant to effect “national economic planning”, was a central government entity with no representation from the states. It thus went against the spirit of federalism, and gave expression to that strand of thinking within the Constituent Assembly which saw the central government as the continuation of the British imperium. While neo-liberal economists have gone

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to town over the “constricting of private initiative” that planning in India involved (though the private sector itself had asked in its 1944 Bombay Plan for substantial public investment, to be financed not by taxing capitalists but through deficit financing and to be handed over to capitalists after the teething troubles were over), not much is ever heard about the constricting of state government initiatives under Indian planning, notwithstanding Ashok Mitra’s strenuous efforts. And the crucial point here is this: the constraints on state governments will be tightened rather than loosened in the Niti Aayog era.

HYPOTHESESThe current research and study is based on the following hypotheses:-

1. To understand the concept and rationale behind NITI AAYOG.

2. What sets it apart from Planning commission and why the former was replaced?

3. Will it be effective mechanism or is it just an old commission in a new garb?

4. The road ahead and the areas that should be focused.

OBJECTIVES OF THE STUDY

In this research work, the Researcher endeavours to impart the knowledge and give the

insight to the masses on the following broad objectives:-

1. To decoding the effect of Niti aayog.

2. To recommend areas that should be paid attention to.

3. To understand the need for bringing in the change to make it clear to the common

man.

RESEARCH METHODOLOGY

The present work has been undertaken with guided intellectual inquisition based

on organized and systematic investigation by employing doctrinal research

methodology.

The methodology followed by the Researcher in the present work has been

undertaken with guided intellectual inquisition based and organized and by

systematic investigation by employing purely doctrinal/non-empirical in nature.

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For the purpose of preparing this research work, the Researcher has relied on

various books, statutes, articles, journals, newspaper articles and other such

literature. The Researcher has also relied on various case laws to substantiate or

refute his points as and when they arise.

SCOPE OF STUDY

Any perception of this work would perhaps seem minuscule considering the fact

that this work has produced from a mere student of law, particularly in the light

of the knowledge that so many legal luminaries have deliberated on the matter

since time immemorial.

The study due to incorporation of a number of restrictions like time and

resources, deals keeping in focus all the states and union territories in India.

The study by putting forward its recommendations, most humbly, hopes to

make a small contribution in the field of legal reforms in India. The study also

relates and incorporates International Instruments/Conventions/foreign

legislations and policies of the United Nation Organisation and different foreign

National laws.

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Chapter III

NEED OF PLANNING BODY

Perspective planning : It refers to long term planning for a period of 15, 20,

25yrs, however objective of perspective planning can be achieved by breaking

the period in 5-7 yr plans.

Comprehensive or imperative planning: It is used by socialist countries and each and every aspect of planning is controlled by state. Indicative planning is flexible. It is peculiar to mixed economy and both the public and private sector co exist. Indicative planning was first used by France in 1947-50.

Planning can also be divided into centralized and decentralized categories. In centralized planning there is one central authority which formulates the plan, targets and priorities for every sector of economy. In decentralized planning execution of the plan is from grass roots, i.e. district, block, village etc.

Theory of Karl Marx: Karl Marx was the first to lay down the theoretical basis of socialism. According to him private ownership of means of production must be abolished to end exploitation from the world. Soviet Union was the first to adopt planning on this basis.

In India, First of all the idea of planned economy crystallized in 1930s when our national leaders came under the influence of socialist philosophy.M. Visvesvarayya who was a civil engineer and Dewan of Mysore published his book “Planned economy in India”. In this book he presented a constructive draft of the development of India in 10 years. He actually laid a plan to shift labor from agriculture to industries and double up National income in 10 years.

1938 was the year that witnessed the first attempt to develop a national plan for India when national planning Committee was set up. This committee was set up by Subhash Chandra Bose and chaired by Jawaharlal Nehru. However the reports of the committee could not be prepared and only for the first time in 1948 -49 some papers came out.

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In 1944 Eight Industrialists of Bombay including Mr. JRD Tata, GD Birla, Purshottamdas Thakurdas , Lala Shriram, kasturbhai lalbhai, AD Shroff , Ardeshir Dalal, & John Mathai working together prepared “A Brief Memorandum Outlining a Plan of Economic Development for India” which was popularly known as Bombay Plan. This plan envisaged doubling the per capita income in 15 years and tripling the national income during this period. However Pundit ji did not officially accept the plan, yet many of the ideas of the plan were inculcated in other plans which came later.

In August 1944, The British India government set up “Planning and Development Department” under the charge of Ardeshir Dalal. But this department was abolished in 1946.

In October 1946, a planning advisory board was set up by Interim Government to review the plans and future projects and make recommendations upon them.

A People’s Plan also came out during that era which was based upon Marxist socialism and drafted by M N Roy on behalf of the Indian federation of Lahore. It called for nationalization of all agricultural production and distribution besides development of consumer goods industries by the state only. Another plan called as Gandhian Plan was put forward by Shriman Narayan Aggarwal in 1944 who was principal of Wardha Commercial College. It was a modest kind of plan.

In 1950 Sarvodaya Plan came out which was drafted by Jaiprakash Narayan inspired by Gandhian plan as well as Sarvodaya Idea of vinoba bhave. Along with agriculture it emphasized on small and cotton industries as well. It also suggested the freedom from foreign technology and stressed upon land reforms and decentralized participatory planning.

In 1947, after our country got independent, Economic Programme Committee (EPC) was formed by All India Congress Committee and Pandit Ji was its chairman. The aim of this committee was the make a plan which could balance private and public partnership and urban and rural economies.The EPC recommended in 1948 forming of permanent planning commission.

In March 1950 in pursuance of declared objectives of the Government to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering

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opportunities to all for employment in the service of the community, the Planning Commission was set up by a Resolution of the Government of India.

The Planning Commission was charged with the responsibility of making assessment of all resources of the country, augmenting deficient resources, formulating plans for the most effective and balanced utilization of resources and determining priorities. Jawaharlal Nehru was the first Chairman of the Planning Commission.

The first Five-year Plan was launched in 1951 and two subsequent five-year plans were formulated till 1965, when there was a break because of the Indo-Pakistan Conflict. Two successive years of drought, devaluation of the currency, a general rise in prices and erosion of resources disrupted the planning process and after three Annual Plans between 1966 and 1969, the fourth Five-year plan was started in 1969.

The Eighth Plan could not take off in 1990 due to the fast changing political situation at the Centre and the years 1990-91 and 1991-92 were treated as Annual Plans. The Eighth Plan was finally launched in 1992 after the initiation of structural adjustment policies.

For the first eight Plans the emphasis was on a growing public sector with massive investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the emphasis on the public sector has become less pronounced and the current thinking on planning in the country, in general, is that it should increasingly be of an indicative nature.

Democratic Socialism: Pandit Nehru was greatly influenced by the achievements of Soviet Planning; however he also viewed democratic qualities of capitalism as indispensable for complete economic and social growth. He wished to take advantage of both and thus came out his vision of “Democratic Socialism” for new India. The idea was to not only check the growth of monopolistic tendencies of the private sector but also provide freedom to the private sector to play for main objective of social gain rather than economic gain.

The Prime Minister of India is the ex-officio Chairman of the planning commission and there is a deputy chairman who coordinates between the work of the commission and government.

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Originally there was a provision of 3 union ministers to be appointed as Ex-officio members of the planning commission however from 2004 this number was increased to 6.

The commission plays an integrative role in the development of a holistic approach to the policy formulation in critical areas of human and economic development.

How a plan is formed: First step is to prepare an approach paper. After it is ready it goes to National Development Council. After it is approved by NDC, Planning commission makes Draft Plan. The plan is placed in the parliament and when parliament passes it, the plan becomes effective. Link : Chairmen of Planning Commission of India

National Development Council: NDC was set up in August 1952 by a cabinet secretariat resolution. It is a extra constitutional body which consists of Prime Minster, Chief ministers of states, members of planning commission and since 1967 the members of the Union Cabinet and administrators of Union Territories.

NDC Considers the Proposals formulated for plans at all important stages and accepts them. Consider the social and economic policy and its effect on national development and ensure fullest development of rural and backward areas of the nation.

NDC had not much importance in Nehru Era but got importance after 1990. Similarly decentralization also got importance after 73rd and 74th Constitutional Amendments which made decentralization a constitutional imperative.

To be sure, only the outline of theNiti Aayog is available till now, but the indications are already quite clear. There are, as is well known, three main channels through which funds get devolved from the centre to the states: through the Finance Commission, through the Planning Commission and through discretionary transfers. Barring the Finance Commission which is a constitutional body, the other two channels basically express the discretion of the central government; and even in the case of the Finance Commission, since the centre appoints its members and ultimately fixes its terms of reference, the central writ is all powerful, a fact that had caused Amaresh Bagchi to submit a dissenting note to the Eleventh Finance Commission when it laid down “conditionalities” (in keeping with the neo-liberal predilections of the centre)

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for making available to states even such resources as were constitutionally their due.

Likewise the proliferation of “centrally-sponsored schemes” handed down to the states where they have to contribute a certain share, which is itself arbitrarily fixed by the centre, has further taken away the freedom of state governments to make their own state plans.

Further Control over States

Even so, however, the three bodies, the Finance Commission, the Planning Commission, and the Ministry of Finance, can be ranked in that order in terms of the looseness of the restrictions they impose on the transfers effected through them from the centre to the states. The disappearance of the Planning Commission, which would mean that what used to be plan transfers would now be doled out through the finance ministry, would entail both a possible reduction in the total magnitude of transfers, and a definite increase in the centre’s control over states’ plans.

There is a second reason for believing this to be so, and that has to do with the abolition of the National Development Council (NDC), where the state chief ministers were represented. This, though not a constitutional body, had a commanding presence, where the states, deriving strength from one another, made a definite impact. Since its decisions, which included the ultimate approval of plans, were taken through a consensus, the centre was often forced to yield on certain matters (though this did not prevent it from flouting the unanimous views of chief ministers on some occasions, such as the funding of the Sarva Shiksha Abhiyan). The elimination of the NDC is a major blow to the power of the states. While the governing council where chief ministers are to be represented is likely to be a purely formal body concerned with the “governance” of the Niti Aayog, rather than with basic development issues, the meetings of the regional councils are likely to be occasions where the states supplicate to the centre for this or that favour. The regional consultations that are supposed to replace NDC meetings are more likely to be occasions where the states supplicate to the centre for this or that favour, rather than serious challenges to central schemes and programmes.

I should make one point clear here. It may be argued that the Niti Aayog will entail neither a reduction in the amount of resources available to the states, nor any increase in the centre’s control over state plans, since it will be open to

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the states to tie up with capitalists, both domestic and foreign, to work out investment projects of any description and any amount. But that is precisely what I mean by an increase in central control over state plans. The centre’s forcing states to go in for public-private partnerships (which the Manmohan Singh government had tried to do unsuccessfully), the centre’s forcing states to vie with one another to attract private capital to their territories, the centre’s imposition of the neo-liberal model on all states by ensuring that resources available to each state, which the concerned state government can spend on a plan of its own choice rather than on a plan in keeping with what the centre considers “development”, are minuscule: all this is precisely what I mean by the centralization of economic powers. The Niti Aayog era will mean that states will not be allowed to go their own ways, not even to the extent that the Planning Commission era had allowed. Centralization will be the mechanism for imposing neo-liberalism on the country at large.

This may appear odd at first sight. The dominant capitalist powers imposing neo-liberalism on the world have in the past been accused of breaking up large countries, Yugoslavia being a prime example. Should not India, by analogy, be the sort of country that they would be interested in breaking up rather than centralizing? The answer is “no”, because in India neo-liberalism has made greater inroads into the central government than into the state governments. Its sweep over the country as a whole therefore requires centralisation. The fiscal crisis of state governments engineered deliberately by the centre through its Shylock-like usurious interest rate loans in the 1990s was an effort in this direction. TheNiti Aayog will continue that effort.

NITI Aayog is a group of people with authority entrusted by the government to formulate/regulate policies in social and economic issues with experts in it.

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Chapter IV

DAWN OF NITI AAYOG

The architecture, engineering and management aspects of the new institution, NITI Aayog, will have to be crafted carefully, if it is to serve as an institution to impart dynamism to the developmental process in a harmonious manner. Its effectiveness will depend on how it charts out a course for itself. An important question is whether the Aayog will have influence when it does not have the power to give grants and does not have the powers to make plan allocations to different ministries and departments.

M Govinda Rao (He was a Member of the Fourteenth Finance Commission; he was earlier Director of the National Institute of Public Finance and Policy.)

1. Demise of the Planning Commission

There have been wide-ranging discussions on the role and remit of the new institution to replace the Planning Commission ever since the prime minister in his 2014 Independence Day address declared that the Planning Commission would be replaced by a new institution. In the cabinet resolution passed on 7 January, the government has come out with the broad contours of the new institution, National Institution for Transforming India (NITI). The remit and functioning of NITI Aayog will become clearer as it evolves over time. This note analyses the possible role it can take and the challenges it is likely to face in carrying out remit assigned to it.

Not many will shed tears on the abolition of the Planning Commission. In fact, the previous prime minister himself had called for redefining its role to suit changing realities. The planning exercise that was followed had hardly any relevance for the market economy. It did very little to plan and implement even public sector investments for infrastructure and its role in promoting public-private partnership was mostly seen as obstructive. The whole exercise of giving approvals to state plans smacked of dispensing patronage. The proliferation of various centrally-sponsored schemes (CSS) with “one size fits all” design and conditionality contributed to severe distortions in public spending. Often, the Planning Commission came up with discretionary transfers to states to meet non-plan revenue deficits negating the norms set by the Finance Commissions. The presence of a member of the Planning Commission

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as a part-time member of the Finance Commission did very little to correct this anomaly.

There were two contradictions between the Indian development strategy and the institutional framework constraining economic environment over the years. The first is the contradiction between the planning framework and the role of the market. The initial years after Independence required a planning frame to allocate the low levels of savings to invest in much needed infrastructure and priority sectors to overcome severe infrastructure deficits and the lack of competitiveness of the economy. However, the framework failed to adapt to the transition after the liberalising reforms were initiated. With fiscal constraints becoming more and more binding and political economy factors crowding out infrastructure spending with subsidies and transfers, the planning exercise lost much of its relevance.

The second contradiction was between the centralised command over resource allocation and the developmental role of the states in a federal polity. The end of single party rule and the emergence of coalition governments and regional parties as members of the central coalition brought to the fore the contradiction between centralised planning in a federal framework. The response of the central government was to further centralise even by intruding into the legislative domains of the states by various means including the proliferation of CSS. The consequence of the above was that the two important sources of economic dynamism, the private sector and the states, had to function in a constrained environment.

The architecture, engineering and management aspects of the new institution, NITI Aayog, will have to be crafted carefully, if it has to serve as an institution to impart dynamism to the developmental process in a harmonious manner. First, economic liberalisation has created a vibrant private sector and the new institution should assist in policymaking to enable private entrepreneurs to unleash their animal spirits and not to constrain them. Second, horizontal and vertical competition in a multilevel fiscal system can be an important source of economic dynamism so long as a certain measure of “competitive equality” and “cost-benefit appropriability” are ensured and predatory competition is prevented. “Laboratory federalism” can be a source of innovations, imitations and learning and facilitating this is important. Third, coordination costs are higher when there are coalition governments and the parties in power in the states are different from that of the centre. There is an urgent need for an institution to promote healthy intergovernmental competition while preventing the “race to the bottom”. All these underline the need for an institution to promote “Coasean bargains” in the spirit of cooperative federalism and ensure resolution of issues when such bargains fail.

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2. NITI Aayog: Role and Remit

The cabinet resolution lists 13 different tasks to it which may be grouped under four major heads, namely:

(i) fostering cooperative federalism by providing structured support to states on a continuous basis;

(ii) Formulation of a strategic vision and long-term policies and programme framework both for the macro economy and for different sectors.

(iii) Acting as a knowledge and innovation hub and providing research inputs by undertaking and accessing globally available research; and

(iv) Providing a platform for interdepartmental coordination. Each of these functions is discussed here in some detail.

Cooperative Federalism: Platform for Interface between the Centre and States: (i) The most important responsibility of NITI Aayog relates to promoting “…cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis”. The Seventh Schedule to the Constitution demarcates the legislative domains and functional responsibilities of the union and states in terms of union, state and concurrent subjects. However, there is considerable overlap in the functions requiring coordination between the union and the states and among the states inter se. carrying out stable and sustainable developmental agenda requires fostering the spirit of cooperation and cementing the federal structure.

The areas of coordination needed are many and some of them may be listed here. First, there is considerable overlap in carrying out legislative and executive functions in concurrent subjects. Recent years have shown the need for cooperation in areas such as energy and environment, education and poverty alleviation where the need for coordinated action and speedy decisions are critical for pursuing the developmental agenda. Second the union government may have to intervene in the national interest even if they are in the State List or Concurrent List. There may be some public services in the State List, which, for reasons of nationwide externalities or for redistribution require coordinated action to ensure minimum standards throughout the country. The examples include healthcare, urban development and poverty alleviation. In these cases, the state governments are the partners in achieving a common goal. Third, In the case of union subjects too, the states may be involved in implementation as agencies due to their proximity to the people. In addition, NITI can facilitate exchange of information and experiences and promote healthy intergovernmental competition through monitoring and regulation.

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The most important issue which the NITI Aayog will have to deal with is the rationalisation of CSS as there is considerable resentment by the states on them. In 2011, there were over 147 schemes which have since been consolidated into 66, but a close examination shows that these have been retained as sub-schemes even in the new arrangement. The “one-size fits all” design of the schemes do not take account of varying local conditions and institutions, The large counterpart/matching fund requirements distort priorities of the states, conditionalities in availing the grants make them restrictive and the final distribution of transfers is very different from the original design. Finally, when the schemes are discontinued, they leave large committed liabilities on the states.

There is certainly a case for having specific purpose transfers for ensuring minimum standards of services which are considered to be of national importance. Given the collaborative nature of such schemes, they should be designed and implemented in the spirit of cooperative federalism. The schemes should be holistic with scope for flexibility in implementation depending on the varying local conditions and they should be limited in number (not more than 10). They should have considerable scope for flexibility in implementation. The new institution could provide a platform for designing the schemes, implementation systems, monitoring and evaluating them in a collaborative framework.

In order to enable NITI Aayog to play a constructive role in fostering cooperation, it is necessary to place the Inter-State Council, properly empowered under Article 263 of the Constitution, in the Aayog. This institution should be the nodal agency for negotiation, discussion, bargaining and resolution of all major issues. It should have the required expertise on intergovernmental relations, fiscal federalism and constitutional law.

Strategic Planning: (ii) One of the major tasks assigned to Niti Aayog is strategic planning at both macro and sectoral levels. Perspective planning helps to make projections on the macro variables and keep the policy perspective in view. The strategy and policies required to improve the standard of living of the projected population and improve human development to empower the people to productively engage them in economic activities over a long-term horizon are important. These should be constantly revisited to ensure their relevance.

The cabinet resolution also speaks about planning at the grass-roots level which implies that the exercise of medium-term planning could be continued, but in a different manner. It could be indicative planning to provide satisfactory levels of social and physical infrastructure for meeting the growing needs of the economy, with the roles of public and private sectors clearly defined. Grass-

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roots planning entails building up of the plan right from the village level based on the resource envelop, with each higher level aggregating the plans and adding the investment requirements for the category. In other words, the planning should be built right from the village, block and district levels and these should be harmonized with planning at the state level. Similarly, national planning should be the consolidation of state-level plans along with the planning infrastructure and service requirements for the country as a whole worked out at the union level. NITI can provide a framework for preparing the plans to the states and the latter, in turn, to the lower levels of government. It should also have a unit to advice and guide if any state is in need of such assistance.

(iii) Innovation and Knowledge Hub: Closely aligned to strategic planning is the role of NITI Aayog as a think tank facilitating partnerships between the stakeholders. Formulation of strategic vision and policies and programmes aligned to it as well as initiating and monitoring them requires state of the art research, technology upgradation and capacity building. As a major think tank of the government working on various developmental policies, it should not only have basic research capabilities but also should access and outsource research on relevant subjects globally. It should have a strong data bank consolidating data and information on economic, demographic, geographic and social variables relevant for research and policy. Among other functions, the institution should also provide a platform for experience sharing among the states.

(iv) Coordination: The fourth important task of the Aayog is to ensure inter-governmental and interdepartmental coordination. The disastrous consequences of lack of coordination between the infrastructure, including environmental, ministries on economic growth were clearly evident in the last years of the previous government.

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CHAPTER V STRUCTURE OF NITI AAYOG

The NITI Aayog comprises the following:

Prime Minister of India as the Chairperson. Governing Council comprising the Chief Ministers of all the States and

Lieutenant Governors of Union Territories. Regional Councils will be formed to address specific issues and

contingencies impacting more than one state or a region. These will be formed for a specified tenure. The Regional Councils will be convened by the Prime Minister and will comprise of the Chief Ministers of States and Lt. Governors of Union Territories in the region. These will be chaired by the Chairperson of the NITI Aayog or his nominee.

Experts, specialists and practitioners with relevant domain knowledge as special invitees nominated by the Prime Minister.

Full-time organizational framework (in addition to Prime Minister as the Chairperson) comprising.

Vice-Chairperson: Arvind Panagariya Members: Two (2) Full-time Part-time members: Maximum of two 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 four 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

STRUCTURE AND COMPOSITION

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.

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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.

Regional Councils

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:

1. Vice-Chairperson: to be appointed by the Prime Minister.2. Members: full-time: specialists with international exposure.3. 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.

4. Ex-Officio Members: maximum of 4 members of the Union Council of Ministers to be nominated by the Prime Minister.

5. Chief Executive Officer: to be appointed by the Prime Minister for a fixed tenure, in the rank of Secretary to the Government of India.

6. Secretariat: as deemed necessary.

NITI Aayog specialized Wings

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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.

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Then Why NITI Ayog ?

One of the key functions for NitiAayog could be to build the necessary trust and serve as a dynamic bridge between government and the private sector and also the respective States. The way, I see is that (nowhere an expert on the subject) Niti Aayog will be a bridge between the PMO and various State Governments. All directions will emanate from the PMO (after consultation with various Central Ministries), which Niti Aayog will decipher and accordingly plan communicate to the respective States per their potential and requirements. All states (including the Private Sector from the respective States) will constantly approach Niti Aayog for guidance, development economics planning, economic aid (including aid and benefits to the economically poor of the respective states, etc) and their own agenda. The Think Tank Niti Aayog will have the most challenging and interesting task to analyze the requirements of the respective States, political implications, pecking order, locational advantages/disadvantages, culture, managing expectation and then decide the “plan of action”. It is good that NitiAayog will not handle cash, grants and disbursements (that would have been a minefield) as it is left for the Ministry of Finance at the center. It is best that they have been able to rope in Prof. Arvind Panagariya, an able professional and global Economist to contribute to take India forward Ramesh Kumar Nanjundaiya Bangalore.

Planning Commission: Criticism/Anti-Arguments

1. Achieved >9% GDP growth-rate during 2005-07, thanks to American boom prior to sub-prime crisis. But almost all nations of world experienced high growth. So 9% GDP did not come from Montek’s magic wand.

2. Post sub-prime crisis, failed to evoke the “animal spirit” in Indian economy. GDP-fell, inflation rose during 2008-13 nonstop.

3. Reduced poverty by doctoring the BPL-line. Tendulkar line says 27 crore BPL, if we use Ranga line then 37 crore BPL. Planning commission brags reducing poverty line on Tendulkar’s parameters.

4. Toothless body, can’t hold State/union/ministries/departments accountable for failing to achieve targets.

5. Hopes that CAG and Public accounts Committee will take care accountability part. But PAC too is pretty much toothless.

6. Failed to implement land reforms. Faulty policies for MSME, industrialization, Factory-labour law problems.

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7. Office manned by Generalist IAS/IES with short tenure; panel members filled with academicians and jholachhap NGOs. Need subject specialists with international exposure like Rajanbhai.

8. Designed CSS with One size fits all approach and a few extra crores to NE/J&K/Hill-states and LWE. But for long, it did not use pilot projects / sample testing / interaction with states.

9. Hence, IAY, ICDS etc. programs failed to show tangible result despite pumping crores.

10.They tried to bypass state Governments via NGO-funding, DRDA. Hence States unenthusiastic about implementing Central-schemes named after you know who.

11.Only in 2013- reforms done like reducing number of Centrally sponsored schemes (CSS), 10% flexifund to states, direct transfer of money to state consolidated fun etc. But it’s too little too late.

12.Shortcomings in planning commission => new bodies sprung up like PM’s economic advisory council, PM’s project monitoring group and so on=> more brains=> more lack of coordination.

13.Hence Modi felt that PC is beyond fixing- just like Gotham city and Delhi city.

14.For so many years, Government worked as the “provider of first and last resort”. But, today Indian industry and service sector has reached on global scale, a neo-middle class has emerged.

15.Times have changed, from being a underdeveloped country in 1950s – India has become a major economic force.

16.Hence our needs have changed- from mere food security to profitable agriculture. In this playground, Government needs to become an “enabler” rather than a “player”.

And thus Niti Aayog was born.

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CHAPTER VI

Difference between Niti Aayog and planning commission

Position

Planning Commission

NITI Aayog

BORN

1950, March 15th

Made redundant in 2014, August after Modi became PM.

2015, January 1st

ChairmanPrime minister

same

Vice Chairman

Last Dy.Chairman was Montek Singh Ahluwalia (Cabinet minister rank).

Free market economist Arvind Panagriya

CEO

Member-Secretary (IAS)

Sindhushree

A secretary level bureaucrat with fixed tenure. Same Ms. Sindhushree Khullar is the first CEO.

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Khullar (IAS)

Ex-officio members

Finance Minister

Planning minister

PM can nominate four-Union ministers. Modi has nominated following:

1. Home2. Finance3. Railway4. Agriculture

Full time members

4-7 full time members, who enjoy “Minister of State” rank.

Bibek Debroy (Free market economist) Dr. V.K. Saraswat (technocrat, missile scientist.)

Special Invitees

Union ministers for

1. Transport2. HRD3. Social Justice

+PM can invite other experts as and when needed.

part-time members

Tech experts from research institutes. Currently none declared. Rotational posts.

Governing Council

Chairman: Prime minister Chief ministers of all states Lieutenant governors of all Union territories.

ad hoc Regional

Will have CMs of states that fall in the region.

So what’s the big difference between the older Planning Commission and the newer NITI Aayog?In the Planning Commission, there was just one central figure that practically controlled every aspect of the commission: the Deputy Chairman. It’s another

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matter whether it was the Deputy Chairman or the actual-powers-that-be (the ominous National Advisory Council in the ruinous UPA days, headed by Sonia Gandhi) who used the Deputy Chairman merely as a puppet to perpetuate their own policies. For instance in the UPA days it was never clear whether the Commission was working to boost the country’s economy or was trying to keep it as backward as possible.

To do away with the central authority and to make the Aayog more useful in terms of policy, direction and implementation, the Deputy Chairman has been replaced by a CEO and a Vice Chairperson (with a caveat that they’ll be appointed by the PM). Asian Development Bank’s Former Chief Economist Arvind Panagariya is being tipped to be the first Vice Chairperson.

Instead of control, the focus will be on being a catalyst and providing a platform for the States and the Centre to come together and discuss matters of economic policies and development plans. The planning will be orchestrated at the village level and an aggregation of these inputs shall be used to formulate national-level plans and policies. Even during the formation of the Aayog, Chief Ministers from all the States were invited to participate; it’s another matter that some Chief Ministers sent their representatives instead and CMs like Mamata Bannerjee simply refused to attend due to the ongoing acrimony with the Centre.

Aside from the CEO and the Vice-Chairman Niti Aayog will have a governing council comprising of Chief Ministers and Lieutenant Governors. They will also be for Union Ministers serving as ex-officio members. There will be full time members and part-time members. People will also be drawn from regional councils and experts and specialists from varied fields will also be a part of NitiAayog, mostly as special invitees nominated by the Prime Minister. The Aayog will also have 2 part-time members from leading universities and research organizations.

While the government feels that it is a totally new approach, different from the Planning Commission that has overseen 12 five-year plans and sundry other plans involving more than Rs. 200 lakh crores in its 65-year-old history, the detractors are saying that nothing much has been changed. For instance, the structure is almost the same with a few changes here and there. Even in the old Planning Commission experts were invited based on various needs. Earlier the Commission was reporting to the National Development Council consisting of

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State Chief Ministers and Lieutenant Governors and this has been replaced by a governing council which, again, comprises of State Chief Ministers and Lieutenant Governors. Even the regional councils are the same, according to Kriti Parikh, a former member of the Planning Commission.

The big difference is, as mentioned above, the States will now have a greater say. Previously it was the Planning Commission that formulated plans and then asked the States to implement them (provided they agreed), this time the States themselves will be able to actively participate in the planning so that there is no communication gap and the plans can be implemented effectively. Prime Minister Narendra Modi, being a big advocate of federalism, believes that decentralisation can play a big role in facilitating a balanced growth and making every individual State an important stakeholder, instead of the Centre acting like a big brother handing over goodies. Regional councils will be formed to address specific issues particular to those areas impacting the local populations. Issues of national security that were ignored so far, will be incorporated at various levels of economic strategy and policy. All the necessary technological upgrades will be implemented and the functioning of the Aayog will be brought at par with any world-class organisation involved in nation building.

Special stress will be put on the benefit of those marginalised sections of the society that have been ignored due to the template-nature of the Planning Commission so far.

Whatever the detractors may say – considering that their interests don’t lie in the big and small changes happening in the way the economy and the government function – there is a paradigm shift in the way the policy formulation and implementation are being worked out. Instead of being the last resort, as rightly put by the official statement, the government should act as an enabler.

Right now there is too much control. This control isn’t going to go away immediately – after all it has been there for the past 65 years and immediately yanking it out may collapse the administrative infrastructure – but it will go away gradually and NitiAayog could be the first, albeit, small change.

When the central authority is minimized, the Aayog will be allowed to function in a more flexible manner, involving 2 types of changes – planned changes and changes influenced by the indigenous as well as global markets. Since the policy decisions will be made from the bottom of the pyramid and then move

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upwards, they will be more realistic and human-centered rather than something being prepared from an ivory tower. Remember how the Planning Commission thought if a family could afford to spend Rs. 22 a day it was above the poverty line? Only individuals totally detached from the realities of the world could come with such numbers. Such bizarre policy decisions can be avoided if decisions are made from the bottom-up.

Difference between NITI Aayog and Planning Commission

Organization:

Planning Commission – Had deputy chairperson, a member secretary, and full-time members. Secretaries or member secretaries appointed by the usual process.

NITI Aayog – New posts of CEO of secretary rank, and Vice-Chairperson. Will also have five full-time members and two part-time members. Four cabinet ministers will serve as ex-officio members. CEO is appointed directly by Prime Minister.

Planning:

Planning commission goes for top-down planning for government with public sector resources.

NITI ayog formulate national development strategy in a market economy integrated with the globalized world.

Relation with states

The planning commission was a central government institution and no representation of state government. There was no structural mechanism for interaction with states.

NITI ayog provides a partnership with state governments to promote co-operative federalism. It provides a platform for structured and regular interaction with states.

Finance

The role of Finance Commission was greatly reduced with the formation of Planning Commission. Allocation of funds were decided by the Planning Commission.

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NITI ayog don’t any role in fund allocation. Finance ministry to decide the share of taxes to states, fund allocation to CSS and Union assistance to the state plan.

Constitution and Reporting

Planning Commission- The commission reported to National Development Council that had State Chief Ministers and Lieutenant governors.

Niti Aayog – Governing Council has State Chief Ministers and Lieutenant Governors.

Difference between NITI Aayog and Planning Commission

Financial clout

NITI Aayog – To be an advisory body, or a think-tank. The powers to allocate fund vested in the finance ministry.

Planning Commission – Enjoyed the powers to allocate funds to ministries and state governments

Full-time members

NITI Aayog – Two full-time members.

Planning Commission – had eight full-time members

States' role

NITI Aayog – Includes the Chief Ministers of all States and the Lieutenant Governors of all Union territories in its Governing Council, devolving more power to the States of the Union.[14]

Planning Commission – States' role was limited to the National Development Council and annual interaction during Plan meetings

Member secretary

NITI Aayog – To be known as the CEO and to be appointed by the prime minister

Planning Commission – Secretaries or member secretaries were appointed through the usual process

Part-time members

NITI Aayog – To have a number of part-time members, depending on the need from time to time

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Planning Commission – Full Planning Commission had no provision for part-time members

Constitution

Niti Aayog – Governing Council has state chief ministers and lieutenant governors.

Planning Commission- The commission reported to National Development Council that had state chief ministers and lieutenant governors.

Organization

Niti Aayog – New posts of CEO, of secretary rank, and Vice-Chairperson. Will also have two full-time members and part-time members as per need. Four cabinet ministers will serve as ex-officio members.

Planning Commission – Had deputy chairperson, a member secretary and full-time members.

Participation

Niti Aayog- Consulting states while making policy and deciding on funds allocation. Final policy would be a result of that.

Planning Commission- Policy was formed by the commission and states were then consulted about allocation of funds.

Allocation

Niti Aayog- No power to allocate funds

Planning Commission- Had power to decide allocation of government funds for various programs at national and state levels.

Nature

Niti Aayog- NITI is a think-tank and does not have the power to impose policies.

Planning Commission- Imposed policies on states and tied allocation of funds with projects it approved.

What’s new with NITI Aayog?

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The centre-to-state one-way flow of policy, that was the hallmark of the Planning Commission era, is now sought to be replaced by a genuine and continuing partnership of states.

NITI Aayog = more a “think tank” than a finance distributing agency.

NITI Aayog will provide Governments at the central and state levels with relevant strategic and technical advice across the spectrum of key elements of the policy.

With NITI Aayog, there will be multi-directional flow of policy (from Center to States, from States to Center, between ministries etc.)

Better inter-ministry coordination.

The NITI Aayog will develop mechanisms to formulate credible plans to the village level and aggregate these progressively at higher levels of government.

The NITI Aayog will create a knowledge, innovation and entrepreneurial support system through a collaborative community of national and international experts.

Objectives The National institution for Transforming India will act as a catalyst for the

development by a holistic approach.

NITI Aaayog is based on the 7 pillars of effective governance – (1) Pro-People (2) Pro-Activity (3) Participation (4) Empowering (5) Inclusion of all (6) Equality (7) Transparency.

In NITI Aayog, the state governments has an equal role in nation’s development process and NITI Aayog promises the principle of co-operative federalism.

NITI Aayog is planned as a think tank institution which stands not only as a hub for knowledge but also for good governance.

It’s a platform for monitoring and implementation of all government policies by bringing together various ministries at the center and state level.

Priorities include upliftment of the poor, marginalized and downtrodden.

Empower vulnerable and marginalized sections, redressing identity-based inequalities of all kinds – gender, region, religion, caste or class.

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NITI Aayog will aim to accomplish the following objectives and opportunities:

An administration paradigm in which the Government is an “enabler” rather than a “provider of first and last resort.”

Progress from “food security” to focus on a mix of agricultural production, as well as actual returns that farmers get from their produce.

Ensure that India is an active player in the debates and deliberations on the global commons.

Ensure that the economically vibrant middle-class remains engaged, and its potential is fully realized.

Leverage India’s pool of entrepreneurial, scientific and intellectual human capital.

Incorporate the significant geo-economic and geo-political strength of the Non-Resident Indian Community.

Use urbanization as an opportunity to create a wholesome and secure habitat through the use of modern technology.

Use technology to reduce opacity and potential for misadventures in governance.

NITI Aayog: Aims

The NITI Aayog aims to enable India to better face complex challenges, through the following:

Leveraging of India’s demographic dividend, and realization of the potential of youth, men and women, through education, skill development, elimination of gender bias, and employment

Elimination of poverty, and the chance for every Indian to live a life of dignity and self-respect

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Reddressal of inequalities based on gender bias, caste and economic disparities

Integrate villages institutionally into the development process

Policy support to more than 50 million small businesses, which are a major source of employment creation

Safeguarding of our environmental and ecological assets

Niti Aayog: Criticism/Anti-Arguments

1. Bibek Debroy (Fulltime member) himself criticized the vaguely worded press-release on Niti-Aayog formation. Modi should have specifically pointed out its functions and jurisdiction.

2. Modi’s “arbitrary decision” to dismantle the Planning Commission, without taking NDC or states into confidence- this undermines cooperative federalism. (Says Kerala CM).

3. From union territory only Lieutenant Governors invited. CM of Delhi and Puducherry can’t participate in Governing council.

4. Like PC, NITI Aayog too is a non-Constitutional, non-statutory body formed by a cabinet resolution. It is not accountable to parliament, and if line-ministries fail to achieve targets, NITI Aayog cannot punish them.

5. Niti Aayog should have been created through a legal/Constitutional amendment. There should be a perspective plan spanning for 15 to 20 years. Otherwise, what if another party comes into power and dismantles this? Recall Morarji vs Indira.

6. It’ll take minimum 6-8 months for Niti Aayog to set things in motion. In between that time, Development will be halted due to paucity of funds and ideas.

7. Planning commission and NDC decided “special category states” and gave them additional funding to help the poor and backward regions. With advent of Niti Aayog, will those states lose their ‘status’ and extra-funding? Uncertainty prevails.

8. Niti Aayog will conflict with Cabinet Secretariat (for inter-ministerial coordination) and constitutional body Inter State Council (for coordination with states).

9. FinMin officials always try to squeeze budget to keep the fiscal deficit under FRBM targets. Niti Aayog and its free market economists will further reduce welfare schemes to help them.

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10.At present we’ve 60+ centrally sponsored schemes. Modi aims to combine them into just 10 schemes. Thus, poor and marginalized communities will suffer.

11.Planning commission used to monitor of human development in the States, Sub-plans for women, SC and ST. Niti Aayog doesn’t say how they’ll do it.

12.Niti Aayog’s mandate repeatedly says they’ll focus on manufacturing sector. Rajanbhai says “just because China succeeded on manufacturing focus, doesn’t automatically guarantee that same Cinderella story will repeat here.”

13.Modi distributed the planning-Expenditure function to FinMin and subject matters to respective ministries. This will result in loss of perspective and long-term view. Now State governments will have to lobby at both type of ministries to get funds released.

14.Planning Commission’s Nehruvian Economists advocated decentralized planning. Modi’s free market economists and technocrats will pursue centralized planning and e-monitoring. (It is both pro and anti-argument depending on how brainwashed a person is after reading theHindu.)

15.1961: Indian Economic Service (IES) was born on Nehru’s initiative. Modi doesn’t invite them in meetings, free market economists look down upon them with utter disdain. How they’ll be integrated in the new system? No clear answers given in the press-release.

16.There is no need for any Planning commission or Niti Aayog. Good work can be done even without them- through line ministries and inter-state councils.

Anyways, the real work of NITI Aayog is yet to begin. So, most criticism is centred around the theme that “Since press release doesn’t talk about xyz thing- so only bad thing will happen.”. But, only time will tell how NITI Aayog fares in real life.

After scrapping the planning commission, Modi wanted the Finance commission to overesee all three types of “money-allocations” i.e.

1. Share from union taxes2. CSS: Centrally sponsored schemes3. Union’s assistance to state’s plans.

But Modi couldn’t do it easily because:

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1. Constitution amendment necessary, to give finance commission these new powers.

2. But the Chairmen of 13th and 14th Finance commission don’t like this additional homework. NOT ONE bit. Becauseo Finance commission is a non-permanent body constituted every 5th year,

hence it can look at the issues from a fresh perspective. If its turned into a permanent body- then incrementalist approach will creep in i.e. throwing more money in existing schemes rather than fixing from scratch.

o Finance commission members are expert in revenue-sharing. But planning Expenditure requires expert members with development, capital-asset building perspective.

o Gujarat CM even said, Union itself should give the plan-money to states, instead of keeping such ‘backdoor’ mechanism.

Chinese Niti Aayog?

Chinese NDRC India present system

Makes macro-economic policy Finance ministry makes fiscal policy. RBI makes monetary policy.

Approves investment & construction projects

CCI, FIPB and many other bodies @union and state level.

Makes Energy & oil policy Oil ministry, DG Hydrocarbon decide it.

Looks after backward provinces in the Western region.

Separate ministry for NE Development

Real-Boss: State council headed by President of China.

Cabinet Headed by PM.

Experts thought Modi wanted to replace PC with a body like China’s NDRC. (National Development and reform commission).

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But Niti Aayog press release and jurisdiction is so vague, it’s nowhere near Chinese NDRC.

FUNCTIONS AND MANDATE

1. Think tank for Government policy formulation.2. Find best practices from other countries, partner with other desi-videsi

bodies to help their adoption in India.3. Cooperative Federalism: Involve state governments and even villages in

planning process.4. Sustainable development: + Modi’s Zero defect-zero effect (on

environment) manufacturing mantra.5. Urban Development: to ensure cities can remain habitable and provide

economic venues to everyone.6. Participatory Development: with help of private sector and citizens.7. Inclusive Development or Antyodaya. Ensure SC, ST and Women too

enjoy the fruits of Development. (because Din Dayal said so.)8. Poverty elimination to ensure dignity and self-respect. (because Poet

Tiruvalluvar said so)9. Focus on 5 crore Small enterprises– to generate more employment for

weaker sections.10.Monitoring and feedback. Midway course correction, if needed.11.Make policies to reap demographic dividend and social capital.12.Regional Councils will address specific “issues” for a group of states.

Example: Regional Council for drought, Left-wing extremism, Tribal welfare and so on.

13.Extract maximum benefit from NRI’s geo-economic and Geo-political strength for India’s Development.

14.Use Social media and ICT tools to ensure transparency, accountability and good governance.

15.Help sorting inter-departmental conflicts.16.Lot of bol-bachachan giri and vague ideas about national self-interest,

capacity-building, participating in ‘global-village’ etc.

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Chapter VII

ROAD AHEAD

200 Days of NITI Aayog

NITI completes 200 days on 20th July, 2015, from its inception as a ‘Think Tank’ of the Government,a directional and policy dynamo to taking steps in co-operating with States while encouraging thespirit of cooperative federalism. Some highlights from this initial journey towards transforming India:

1. The Prime Minister Shri Narendra Modi made appointments to the NITI Aayog, with Dr Arvind Panagariya as the Vice Chairman, Shri Bibek Debroy and Dr. V.K. Saraswat as Full-Time Members and Ms. Sindhushree Khullar, IAS was appointed as Aayog's CEO.

2. The Prime Minister chaired the first Governing Council Meeting of the NITI Aayog with CM's of states and Lt. Gov's of the UTs to work with the Centre and forge a model of cooperative federalism. TEAM INDIA- where the Centre and States come together to chart a common course for progress and prosperity.

3. During Feb 2015, the PM held a meeting to review progress in Infrastructure sectors for 2014-15.The sectors covered were related to Physical Connectivity (Airports, Ports and Inland Waterways,Railways and Highways), Digital Connectivity (Telecom) and Energy (Power, Coal, Renewables andGas).

4. In order to prevent cost and time overruns of important infrastructure projects, the Governing Council of NITI Aayog has requested States to create appropriate institutional mechanisms to address issues which cause delay in execution of the project. This is being further monitored by Aayog.

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5. Prime Minister constituted three Sub Groups of Chief Ministers on the following subjects: Re-organization of Centrally Sponsored Schemes, Skill Development, and Swachh Bharat.

6. The Union Budget 2015 announced the setting up of Atal Innovation Mission (AIM), Self-Employment and Talent Utilization (SETU) and Unified National Agriculture Market under the NITI Aayog.

7. In enforcement of the decision taken in the Governing Council Meeting, two Task Forces have been formed in order to tackle the crucial subjects of Agriculture Development and Elimination of Poverty under the leadership of Vice Chairman.

8. NITI Aayog has initiated the process of undertaking the mid–term appraisal of the Twelfth Plan.

9. Initiatives of NITI Aayog: Sustainable Development, Inclusive Growth Policy, Participatory Development by fostering PPP model, Use of ICT tools to ensure transparency and good governance, adopt global best practices in administration.

10. NITI Aayog seeks to put an end to slow and tardy implementation of policy, by enforcing better Inter-Ministry coordination and better Centre-State coordination. It will help evolve a shared vision of national development priorities.

11. The NITI Aayog will create a knowledge, innovation and entrepreneurial support system through a collaborative community of national and international experts, practitioners and partners.

Road Ahead

1. Ensure that the economically vibrant middle-class remains engaged, and its potential is fully realized.

2. Leveraging of India's demographic dividend, and realization of the potential of youth, men and women, through education, skill development, elimination of gender bias, and employment.

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3. Incorporate the significant geo-economic and geo-political strength of the Non-Resident Indian Community.

4. Use urbanization as an opportunity to create a wholesome and secure habitat through the use of modern technology.

5. Use technology to reduce opacity and potential for misadventures in governance.

6. Integrate villages institutionally into the development process.]7. Policy support to more than 50 million small businesses, which are a major source of employment creation.

8. Safeguarding of our environmental and ecological assets.

Conclusions

The cabinet resolution lays down only the broad framework for the Aayog. The effectiveness of the NITI Aayog in transforming India will depend upon the clarity in the functions assigned, the status and power given and the quality of the people who will steer the institution. In fact, the first Aayog will have a tremendous responsibility of carving out a niche for itself, setting the pace and steering the transformation.

Thus, the effectiveness of NITI will depend on how it charts out a course for itself. Despite the claims of a marked departure from the past, the institution has to function in the prevailing milieu and deal with the burden of legacy. The important question is whether the Aayog will have influence when it does not have the power to give grants and when it does not have the powers to make plan allocations to different ministries and departments.

The abolition of the Planning Commission paves the way for restoring the role of the Finance Commission to assess the total requirements of the states in the revenue account without making a distinction between plan and non-plan spending. However, the Finance Commission does not have a comparative advantage in recommending specific purpose transfers unless it is made a permanent body. Of course, the constitutional provision does not require it to be a temporary body – Article 280 simply states that the commission should be appointed every five years or earlier; the appointed commission can continue until the new commission is appointed. However, so long as the Finance Commission continues to be a temporary body, the NITI Aayog will have a role in designing and implementing these programmes.

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The legacy issues do not end merely with the abolition of the Planning Commission. There are parallel institutions in the states and it is important to transform them to meet the new requirements. Similarly, the Constitution requires the establishment of district planning committees and metropolitan planning committees. Their role in the new environment needs to be specified. Although the cabinet resolution states that NITI Aayog will facilitate grass-roots planning, how exactly this will be carried forward needs to be seen.

The success of the institution in achieving interministerial, interdepartmental coordination will depend on the trust and cooperation it receives from them and the harmony with which the Aayog and various ministries work. There could be tensions between the technocrats in the Aayog and various ministers on the one hand, and between the technocrats and bureaucrats on the other. There is also the danger of bureaucratisation of the Aayog. Similarly, success in fostering cooperative federalism will depend on the trust of and cooperation from the states. In particular, the first Aayog will have a tremendous task of shaping the character and charting a course to make it an important institution in Indian federal polity to transform India.

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BIBLIOGRAPHY

1.http://mrunal.org/2015/01/economy-niti-ayog-planning-commission-

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9.legalservicesindia.com

10. http://theindianeconomist.com/an-alternate-perspective-on-niti-aayog-fostering-centralization/

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http://www.studymode.com/essays/Niti-Aayog-69258310.html

http://www.niticentral.com/2015/01/03/niti-aayog-different-planning-commission-294486.html

http://www.niticentral.com/2015/01/03/niti-aayog-different-planning-commission-294486.html

http://www.ndtv.com/cheat-sheet/niti-aayog-replaces-planning-commission-10-points-on-what-you-need-to-know-721421

http://www.ndtv.com/cheat-sheet/niti-aayog-replaces-planning-commission-10-points-on-what-you-need-to-know-721421

http://www.thehindu.com/news/national/planning-commission-to-be-renamed-niti-ayog/article6744546.ece

http://www.thehindu.com/news/national/planning-commission-to-be-renamed-niti-ayog/article6744546.ece

http://www.epw.in/commentary/role-and-functions-niti-aayog.html

http://www.epw.in/commentary/planning-commission-niti-aayog.html

http://niti.gov.in/content/


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Niti aayog

Documents

Transcript of Niti aayog