Why NITI Ayog replaced Planning Commission?

Hemant Singh

10-FEB-2016 16:26

In accordance with a key announcement made by Prime Minister Narendra Modi on Independence Day, the Union Government established NITI Aayog (National Institution for Transforming India) on Jan. 1, 2015, as replacement for the Planning Commission. This comes after extensive consultation across the spectrum of stakeholders, including state governments, domain experts and relevant institutions.

Planning Commission:

It was established was on March 15, 1950 as an advisory institution to form five plans in the country on the line of USSR (former Soviet Union).

Functions of the Planning Commission:

Estimate the physical, capital and human resources of the country.
To prepare plan for making effective and balanced utilization of human resources.
To determine various stages of planning and to propose the allocation of resources on priority basis.

NITI Aayog

NITI Aayog has been set up "to provide a critical directional and strategic input into the development process". It will act as a "think-tank" and advise the Centre and states on policy matters. The Aayog seeks to end "slow and tardy implementation of policy, by fostering better Inter-Ministry coordination and better Centre-State coordination (co-operative federalism). Prime minister is its ex-officio chairman and vice chairman is Shri Arvind Panagariya while Chief Executive Officer is Shri Amitabh Kant.

Functions of NITI Aayog

To evolve a shared vision of national development priorities sectors and strategies with the active involvement of States in the light of national objectives.
To foster cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognizing that strong States make a strong nation.
To develop mechanisms to formulate credible plans at the village level and aggregate these progressively at higher levels of government.
To ensure, on areas that are specifically referred to it, that the interests of national security are incorporated in economic strategy and policy.
To pay special attention to the sections of our society that may be at risk of not benefitting adequately from economic progress.
To design strategic and long term policy and programme frameworks and initiatives, and monitor their progress and their efficacy. The lessons learnt through monitoring and feedback will be used for making innovative improvements, including necessary mid-course corrections.

NITI Aayog vs Planning Commission

Parameter	NITI Aayog	Planning Commission
Financial clout	To be an advisory body, or a think-tank. The powers to allocate funds might be vested in the finance ministry	Enjoyed the powers to allocate funds to ministries and state governments
Full-time members	The number of full-time members could be fewer than Planning Commission	The last Commission had eight full-time members
States' role	State governments are expected to play a more significant role than they did in the Planning Commission	States' role was limited to the National Development Council and annual interaction during Plan meetings
Member secretary	To be known at the CEO and to be appointed by the prime minister	Secretaries or member secretaries were appointment through the usual process
Part-time members	To have a number of part-time members, depending on the need from time to time	Full Planning Commission had no provision for part-time members

Why NITI Aayog Replaced Planning Commission: Reasons

The new National Institution for Transforming India (NITI) will act more like a think tank or forum, say its supporters, in contrast with the Commission which imposed five-year-plans and allocated resources to hit set economic targets.
NITI will include leaders of India's 29 states and seven union territories. But its full-time staff - a deputy chairman, Chief Executive Officer and experts - will answer directly to the 64-year-old Prime Minister, who will be chairman. It is different from planning commission, which used to report National Development Council.
The major difference in approach to planning, between NITI Aayog and Planning Commission, is that the former will invite greater involvement of the states, while the latter took a top-down approach with a one-size-fits-all plan.
The Planning Commission’s role was formulation of broad policy and its capacity was more advisory. NITI Aayog shall have powers for resource allocation to states, based on their respective needs.
The states had little direct say in policy planning, which was the purview of the Planning Commission. Involvement of the states was indirect through the National Development Council; it will not be repeated in the NITI Aayog.

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
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

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