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Mainstream, VOL LIII No 9, February 21, 2015

NITI Aayog: Much Ado about Nothing

Monday 23 February 2015


by Rasananda Panda

It is easy to say that the only thing that is constant is change. But change is never easy. Especially when with the help on an executive order you scrap a sixtyfour-year-old institution that has seen the ups and downs of the Indian economy—called the Planning Commission or Yojana Aayog. It is a different story that the same Aayog was created with a Cabinet note in 1951 to show our commitment towards centralised planning. Thus we get the NITI Aayog—a creation of the present NDA Government under PM Narendra Modi. This institution is otherwise known as the National Institution for Transforming India (Aayog). One wonders why it is called NITI Aayog but let us give the benefit of doubt to the PM towards his way of symbolism.

It is well known that the current PM was at loggerheads with the erstwhile Yojana Aayog when he was the CM of Gujarat—a leading industrialised State of India. He has always criticised the role of the Yojana Aayog for its high-handedness in disbursing grants to the States and further its one-size-fits-all policy for the States. This is evident from his tweet on January 1, 2015 wherein he announced: “Through the NITI Aayog, we bid farewell to one-size -fits all approach towards development. The body celebrates India’s diversity and plurality.” His dissent has also been echoed by the CMs of other States from time to time though largely from the Opposition-ruled States. But with the new structure and role as evident so far, it appears that the creation of the NITI Aayog is more of the old wine in a new bottle with some cosmetic changes.

To start with, the NITI Aayog has done away with the position of Secretary to that of a CEO keeping the spirit of the role possibly same. Interestingly, the present CEO (Sindhushree Khullar) was the last Member Secretary of the Yojana Aayog. Now the body will have two members, namely, economist Bivek Debroy, who came to limelight for praising the Gujarat model of development during the last five-six years and further by getting one of his recently coedited books released by the PM when he took charge in Delhi, and V.K. Saraswat, the former chief of the Defence Research and Development Organisation. In addition there are four ex-officio members (Union Ministers) and three special invitees who are incidentally also Union the Ministers at present. This is also not new as in the erstwhile Yojana Aayog, there used to be domain experts as members apart from economists and select Union Ministers as invitees. Like the earlier one, the current body will be chaired by the PM. There will be a Vice-Chairman as against a Deputy Chairman. The NITI Aayog with a Governing Council comprising the CMs of all States and UTs as its apex policy-making body (National Development Council of the earlier Yojana Aayog) is believed to not only resolve many federal disputes but also create an atmosphere towards consultation among the States and UTs in specific and contagious issues requiring intense inter-State negotiations under the chairmanship of the PM. The garden (lawn) meeting of the PM with the CMs at 7 Race Course Road in December is a pointer in this direction to build confidence among the heads of various popular governments in the State with that at the Centre.

However, according to Mr. Ajay Chibber, the former Director General of the Independent Evaluator’s Office associated with Yojana Aayog, the NITI Aayog is not too different from the Yojana Aayog given the permanent members, designated Ministers and many of the old bureaucrats who have been retained. The appointment of Arvind Panagariya, a free-market economist as the Vice-Chairman, also indicates that such positions are generally given to the people closer to the PM of the day or to the persons who are close to the ruling party of the time, historically. The present NDA Government claims that the NITI Aayog would be more inclusive in its approach even as it acts with greater transparency in the spirit of federalism or, to be more precise, cooperative federalism. The government also hopes that this Aayog will be having the role of a think-tank for development-oriented policy-making for the States and Centre devoid of any particular borrowed ideology.

This year the meeting of the Finance Minister, Arun Jaitley, with the State Finance Ministers last month towards preparing the Union Budget for the year 2015-16 indicates a good symptom of cooperative federalism; but the government’s decision to transfer all fiscal powers to the North Block is not a healthy sign for democracy and our Constitution does not allow for such kind of consolidation of powers. Further, it appears that while the role of the Yojana Aayog was recommendatory to various Ministries, the current government’s failure to reconstitute an alternative body in time brought this issue to the fore. It would have been appropriate if the NITI Aayog would have been consulted in the matter of Budget-making. This also indicates the weakness of the current regime towards having professionals to take active part in the government and policy-making or the lack of it.

Amidst the bouquets and brickbats for the NITI Aayog, PM Modi has definitely killed an epitome of the Nehruvian legacy; but at the same time he risks himself by creating one of his own.

Dr Panda is a Professor of Economics, MICA, Ahmedabad. He can be contacted at e-mail:

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