The National Institution for Transforming India, also called NITI Aayog, was formed via a resolution of the Union Cabinet on January 1, 2015. NITI Aayog is the premier policy ‘Think Tank’ of the Government of India, providing both directional and policy inputs.
While designing strategic and long term policies and programmes for the Government of India, NITI Aayog also provides relevant technical advice to the Centre and States.
The Government of India, in keeping with its reform agenda, constituted the NITI Aayog to replace the Planning Commission instituted in 1950. This was done in order to better serve the needs and aspirations of the people of India. An important evolutionary change from the past, NITI Aayog acts as the quintessential platform of the Government of India to bring States to act together in national interest, and thereby fosters Cooperative Federalism.
The Planning Commission followed a top- down method approach to developing India. This meant that someone in the top decided what was suitable for people and provided monetary resources to the state governments based on that. Hence, the states which had lesser monetary resources compared the center had to depend upon the Planning Commission for funds.
There were two main problems with this setup:
- State Governments had equal responsibility for the development of India, but they did not have the funds.
- The Planning Commission was an unelected body that was dictating the road map of development to an elected state executive.
This was an undemocratic approach because a non – constitutional and unelected body had acquired powers to decide how India was going to develop. Even in the Central government, various departments had to chase the Planning Commission for departmental allocations. In addition to this, there was no mechanism to assess the performance of schemes suggested/ pushed by the Planning Commission.
The new organisation, i.e NITI Aayog did not involve itself in planning and resource allocation. It functions as an in house think tank and consultant to various governments and helps them to design better schemes and development programs.
It does not wield any decision making powers. Unlike the Planning Commission it has adopted a bottom up approach rather than a top down approach.
The Planning Commission was created in 1950 through a mere Cabinet resolution. It came into being through a mere executive order and then it just continued to grow, taking over jobs assigned to other institutions like the Finance Commission.
For example, allocation of funds to the States was the job of the Finance Commission, sanctified by the Constitution, but the Planning Commission appropriated this task to itself.
Because of a different historical context, it even got into micromanagement of devolution of funds, how schemes should be run and even to the extent of how the states should spend those funds.
The States were made to follow the “one size fits all” theory of the Planning Commission for the implementation of the schemes. The States wanted more flexibility; they wanted freedom to design their own schemes, the way they should be implemented and the way funds meant for various schemes should be spent. The Planning Commission did try to inject some flexibility, but that did not have much impact. The Government realised that the Planning Commission was initially envisaged only as a think tank, but over a period of time it appropriated to itself the work of other institutions and started the tight-fisted approach of allocating funds between the Centre and the States and among different Central Ministries.
This was a task which should have been done by the Finance Commission and the Finance Ministry, for which they are mandated, but the Planning Commission appropriated this job to itself.
The NITI Aayog comprises the following:
- The Prime Minister of India as the Chairperson.
- A Governing Council comprising the Chief Ministers of all the States and the Lt. Governors of Union Territories
- Experts, specialists and practitioners with relevant domain knowledge as special invitees nominated by the Prime Minister
- The full-time organizational framework will comprise of, in addition to the Prime Minister as the Chairperson:
- Vice-Chairperson: To be appointed by the Prime Minister.
- Members: Full-time.
- Ex Officio members:
- Maximum of 4 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.