Genesis of NITI Aayog

• Established on 1 January 2015, replacing the Planning Commission.
• Aim: Bottom-up planning, Maximum Governance–Minimum Government.
• Intended to institutionalise Cooperative Federalism and move away from centralised command-economy planning.

Why the Planning Commission Was Replaced

• Became obsolete after liberalisation; suited to a command economy.
• One-size-fits-all planning is unsuitable for India’s diverse states.
• States were at different stages of development, requiring flexibility.
• Needed a think-tank approach rather than a resource-allocation bureaucracy.

Objectives of NITI Aayog

• Foster Cooperative Federalism.
• Enable village-level planning aggregation.
• Integrate national security concerns into economic policy.
• Ensure inclusive growth, especially for vulnerable sections.
• Act as a policy think tank, knowledge hub, and innovation ecosystem.
• Promote inter-sectoral coordination.
• Encourage evidence-based governance and best practices.

Organisational Framework

• Chairperson: Prime Minister
• Governing Council: CM of States + LG of UTs
• Regional Councils: Issue-based, time-bound, CM-led
• CEO: Secretary-rank, fixed tenure
• Wings:
  • Research Wing
  • Consultancy Wing
  • Team India Wing

Major Achievements of NITI Aayog

1. Digital Payments Push

• CM-led committee (2016) on digital payments.
• Incentives like BHIM cashback, Lucky Grahak Yojana.
• Digi-Dhan Melas and Jan-Dhan digitisation.

2. Atal Innovation Mission

• Atal Tinkering Labs (ATLs) in schools.
• Atal Incubation Centres (AICs) for start-ups.
• Strengthened innovation ecosystem.

3. Competitive Federalism

• Health Index, Education Index, Water Index.
• Ranking-based nudging of States.
• Sharing best practices.

4. Sub-Groups of Chief Ministers

• Rationalisation of Centrally Sponsored Schemes (CSS reduced to 28).
• Swachh Bharat Abhiyan.
• Skill Development reforms.

5. Task Forces

• Poverty elimination.
• Agricultural reforms (productivity, pricing, land leasing).
• Promotion of Natural Farming and Zero Budget Natural Farming.

Key Issues with NITI Aayog

Structural & Federal Issues

• Non-constitutional, non-statutory, not accountable to Parliament.
• Planning Commission dismantled without adequate state consultation.
• UTs represented by LGs, not elected CMs → weak federalism.

Functional Limitations

• No power to allocate funds (vested with the Finance Ministry).
• Cannot impose policies or enforce compliance.
• Reduced welfare focus (e.g., 20% fall in gender budgeting).

Policy & Credibility Concerns

• Limited role in major policy decisions (GST, Demonetisation).
• Acts more as a government cheerleader than an independent think tank.
• Weak influence on private/public investment.
• Cannot evaluate the performance of government schemes.

Socio-economic Blind Spots

• 90% workforce remains informal.
• Rising informalisation of the organised sector.
• Declining female labour force participation.
• Inequality remains inadequately addressed.

Reforms Required

• Provide formula-based allocation of transformational capital.
• Shift the budgeting focus to capital vs revenue expenditure.
• Strengthen the monitoring and evaluation mandate.
• Ensure greater autonomy and intellectual independence.
• Learn from East Asian developmental states (China, SE Asia):
  • Export-oriented manufacturing
  • Industrial policy-driven planning
  • Strategic use of labour surplus
  • Green energy transition
• Reinforce state-led planning with national coordination.