CHAPTER 7

NITI Aayog: A Think Tank

There were wide-ranging discussions on the role and remit of the new institution to replace the Planning Commission ever since Shri Narendra Modi, the prime minister in his 2014 Independence Day address declared that the Planning Commission would be replaced by a new institution. In line with the government of India’s approach of less government and a move away from centralized planning, the NITI (National Institution for Transforming India) Aayog with a new structure and focus on policy formally replaced the 64-year-old Planning Commission, in January 2015, the brainchild of Pandit Jawaharlal Nehru that was seen as a vestige of the socialist era.

Nevertheless, while the working of the earlier plan body showed up shortcomings from time to time, it did sterling work from the ground up. It mapped the resources available in the country and pointed to the need of developing the physical and the social infrastructure in an extremely poor society by sending resources in directions in which they were needed (Dab 2016).

The replacement of the Planning Commission with a new institution, more relevant and responsive to the present economic needs and climate in the country, had long been demanded and expected. This was not the first time a government had been dismissive of the commission. Rajiv Gandhi had called the commission “a bunch of jokers.” But he stopped short of dismantling it. Former Planning Commission deputy chairmen like K.C. Pant and even Manmohan Singh made some attempts to explore changes. In 2009, Dr. Singh alluded to the Planning Commission having outlived its utility and asked the members to consider changes to make it more relevant. In 2010, Arun Maira, a member of the Planning Commission, recommended changes in its structure, role, functions, and resources. Maira reveals that in 2012, a Parliamentary Standing Committee also gave a report that said that it was time for an independent evaluation of the functioning of the Planning Commission. From a highly centralized planning system, the Indian economy was gradually moving toward indicative planning, where the commission’s role was changing gradually.

Rationale for NITI Aayog: In Sanskrit, NITI can mean morality, behavior, guidance, politics, management, and a dozen other things. But, in the present context, it means policy. On August 13, 2014, the union cabinet approved the repeal of the cabinet resolution dated March 15, 1950, by which the Planning Commission was set up. In countries such as the United States think tanks that function independently of the government have a major role in policymaking. In India, too, there is a great deal of economic activity that happens outside the government setup, and there is a need to design policies for such public sector entities as well.

The government plans to adopt a new approach to development. India needs an administration paradigm in which the government is an enabler rather than a provider of first and last resort. The institutions of governance and policy have to adapt to new challenges and must be built on the founding principles of the constitution. There is a need to separate the planning process from the strategy of governance. Transforming India will involve changes of two types—consequences of market forces and those that would be planned. The intent is made amply clear: old-style central planning is out, new-style reforms agenda is in.

The maturing of the institutions and polity also entails a diminished role for centralized planning, which itself needs to be redefined. A state-of-the-art resource center for good governance practices is also proposed. NITI Aayog bids farewell to a one-size-fits-all approach toward development. It emphasizes India’s diversity and plurality. The Aayog would foster a spirit of “cooperative federalism” with the sole principle of developing a pro-people, proactive, and participative development agenda stressing on empowerment and equality. NITI Aayog would be the “policy commission” for India to achieve its economic potential. The name NITI Aayog has both institution and commission in it. While Aayog stands for commission, one of the “Is” in NITI is for institution. The penchant for catchy abbreviations seems to have overlooked the oddity. Now, either it is a commission or an institution. Both terms can be interchangeable, but in that case, one of them would be redundant.1

According to the cabinet resolution, the rationale for setting up the Aayog were as follows:

1. I.The centralized planning concept cannot work in the changed circumstances as the commission is losing its relevance. Times have changed and issues have changed and Nehru himself would have been the first to say that the commission needs a relook had he been alive. When private investment far exceeds public investment resulting in considerable change in center–state relations. In a market economy, the planning process needs a different orientation and outlook. This is, of course, another way of saying that it is the market that will determine priorities and the allocation of resources to various sectors, and not any planning authority.
2. II.The commission has become an agent of the ruling political party or coalition at the center.
3. III.The Planning Commission 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.
4. IV.In the changed scenario, the states want more say in a federal setup. It is impossible for the nation to develop unless the states develop. The process of policy planning also has to change from “top to bottom” to “bottom to top.” The new body will adopt a “bottom up” approach, where decisions will be taken at the local level and then endorsed at the central level. The new body is envisaged to follow the norm of “cooperative federalism,” giving room to states to tailor schemes to suit their unique needs rather than be dictated to by the center. This is meant to be a recognition of the country’s diversity.
5. V.States would have a key role in the new body with an effective mechanism to address interstate disputes. NITI Aayog aims 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. It promises to promote the spirit of federalism in both planning and the center’s disbursal of funds to the states.
6. VI.The role of the Planning Commission after liberalization had nothing to do with keeping the commanding heights of the economy with the public sector. The public sector itself needs reforms. Alagh (2014) feels that the Planning Commission could be replaced by a more focused body concentrating on issues like energy, water, and demographics. These issues have long-term perspectives. The NITI Aayog will be better placed to be an adviser. And it should not try to micromanage government social sector schemes.
7. VII.In the license era, the Bureau of Industrial Costs and Prices was a repository of industry-specific information. Such an information base is sorely needed today. NITI Aayog can work in tandem with the Competition Commission, the Reserve Bank, and 3P India (a body that aims to put public–private partnerships back on track) on this front.2

The body, rightly informed by the principle of the government being an enabler rather than provider of first and last resort, has other messes to sort out. NITI Aayog must live up to its name of handing out an even deal to all. The niyati (fate/karma) of the NITI Aayog hinges vitally on how some of these concerns are addressed in the years ahead.

Functions: Being the incubator of ideas for effective governance would be the core mission of NITI Aayog. According to the resolution issued by the government, there are 13 objectives of the new body with a focus on providing the “national agenda.”3 NITI Aayog has a very amorphous agenda. These objectives may be grouped under four major heads:

1. I.Fostering cooperative federalism by providing structured support to states on a continuous basis
2. II.Formulating a strategic vision and long-term policies and program framework for both the macroeconomy and different sectors
3. III.Acting as a knowledge and innovation hub and providing research inputs by undertaking and accessing globally available research
4. IV.Providing a platform for interdepartmental coordination

Basically, the objectives of the new institution sound very much like those of the Planning Commission as the monitoring and evaluation roles have been retained. According to Pronab Sen (a former principal adviser in the Planning Commission and chairman of the National Statistical Commission), “The only change, perhaps, is that the new body has not been given the powers to allocate funds, but that also needs further clarity. The mandate to look into the interest of national security is new.”4 Nowhere is this more relevant than in the area of energy security where India has failed to evolve a coherent policy over the years. Similarly, networking with other national and international think tanks and with experts and practitioners, as has been envisaged, will add heft to the advice that the NITI Aayog will provide.

The NITI Aayog has been charged with developing a 15-year vision, a 7-year Strategy, and a 3-year implementation framework. NITI Aayog needs to articulate a broader overarching vision and provide the touchstone for gauging their relative importance. Ideally, the vision should be amenable to quantification to a substantial extent so that the technocracy is able to work out the targets, the trade-offs, the time dimensionality, and the strategies that need to be followed. It is not necessary that the vision statement itself must be quantitative in nature—the quantitative dimensions can be worked out through a process of interaction between the planners and the leadership. There have been two pronouncements by Shri Narendra Modi, the prime minister, that have the potential for providing such an overarching vision. The first is the slogan “Sabka saath, sabka vikas” (with all, development for all). This is similar to the “garibi hatao” (eliminate poverty) vision in that it is not in itself quantitative but can easily be fleshed out in concrete quantitative terms. The second is the target of doubling farmers’ incomes in 10 years (Sen 2017). On getting elected with a sound mandate in 2019, the prime minister said that the government would continue to focus on the poor, but also the minorities, who had been “deceived” so far, who had been made to live in fear and treated as a mere vote bank. It was time to end the trust deficit with them, he declared, and added “Sabka vishwas” (trust of all) to his slogan of “Sabka saath, sabka vikaas.” This is an admirable message.5

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. NITI Aayog will facilitate grassroots planning; how exactly this will be carried forward needs to be seen. How this operates in practice will bear close watching.

Organizational setup6: This was where the role of the vice-chairperson—who would carry cabinet minister rank—was crucial. The vice-chairperson of NITI Aayog would have access to the prime minister, its chairperson, and might thus have a realistic possibility of helping to shape the agenda. The NITI Aayog would have a three-tier structure for a specified tenure headed by the prime minister, with a governing council comprising chief ministers and Lt. governors of union territories (UTs), regional councils to deal with issues related to more than one state, and a full-time organizational framework. With a role for states, it was likely to be a more representative body than the Planning Commission. The new body would have a vice-chairperson to be appointed by the prime minister, in addition to four to five full-time members and two part-time members. Four union ministers would serve as ex-officio members. There would also be a chief executive officer (CEO) with a fixed tenure and in the rank of secretary to the government of India. Besides, there would be specific regional councils, while experts and specialists from various fields would be specially invited by the prime minister. The two part-time members would be from leading universities and research organizations. Regional councils would address specific issues and contingencies impacting more than one state or a region.

“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 bureaucratization 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 the Indian federal polity to transform India” (Rao 2015a).

Challenges ahead: Given the complexity of the country—its federal structure, multiparty political system, the growing challenge of minority management, and the issue of poverty before caste, religion, region, and domicile considerations—it will be rather too early to predict the Aayog’s ability to profile a central policy framework that will create an effective roadmap to guide the political executives of the government. The government had said that the hallmarks of its governance model would be “people-centric, policy driven, time-bound delivery, minimum government, maximum governance.” Will NITI Aayog be able to create such a nonpartisan model? (Banerjee 2015). A lot will depend on what use the prime minister who heads the organization will put it to. It would be interesting to see what the new body does and how it relates to other parts like the role of the Finance Commission.

Drawing on six decades of India’s experience with planning, the main lesson for the NITI Aayog is that it must devote careful thought to the planning process as to the strategic plan itself. It must recognize that it is not engaged in a technical exercise, but one that involves a deep understanding of people and organizational behavior. The government and the prime minister too must realize that they have to play a significant role in articulating an economic vision, as opposed to endorsing suggestions put up by the bureaucracy. Some of the features of this planning process can be summarized as under (Sen 2017):

1. I.The prime minister should articulate the broad vision for the country, and not merely endorse a suggestion put up by the bureaucracy.
2. II.The NITI Aayog should work out the components of this vision in terms of the objectives and targets, and obtain full support of the prime minister. It may also be desirable to place these before the governing council of the NITI Aayog for its endorsement.
3. III.The broad strategy for attaining the expanded vision should be worked out within the NITI Aayog, keeping in mind the interrelationships and synergies that may exist among the various objectives. This strategic plan should confine itself to strategy and not extend itself to detailed design, which should be left to the lower tiers. This involves laying out the objectives, the targets, the time path, and the resources. All else is detail, which is best done by others.
4. IV.In framing the implementation or action plan, the NITI Aayog should clearly specify which interventions should be designed and controlled by the central ministries and which should be left to the state governments with only financial support from the center.
5. V.In the course of formulating the strategic plan, there will inevitably be serious differences of opinion between the NITI Aayog and the ministries/state governments. These differences need to be resolved before the strategic plan is finalized. The resolution can only be done by the CEO.
6. VI.Last, but not least, the NITI Aayog should consciously guard against developing hubris, which inevitably leads to micro-prescriptions—the bane of the erstwhile Planning Commission.

Figure 7.1 Composition of NITI Aayog

Source: MINT, January 2, 2015. Niti Aayog https://www.livemint.com/Politics/3MRK8onj7Ab3nkc9ejoOsN/Planning-Commission-renamed-as-Neeti-Ayog.html (accessed February 6, 2020)

The overall efficacy of the NITI Aayog will depend crucially on the quality of experts it can round up to be its members, and also the headroom and space the prime minister gives it to allow it to operate effectively. The new recruits will hopefully bring fresh thinking to economic policy. The problem is the new generation has parachuted to the top. It does not have the nuanced feel of Indian realities needed to design policy. It will have to learn fast. The Aayog’s structure will also be relevant. Any enhanced participation from state chief ministers may help the government achieve the prime minister’s stated goal of cooperative federalism, but for that to happen, the new governing council has to be more active with regular consultations. Financial decentralization to the lowest tiers of the government for improved efficiency in public goods delivery is essential. In this context, the allocative role that continues to be relevant for a federal entity cannot be entirely divorced from the political process. By Divorcing the allocative role from the Aayog’s policy advisory functions will make the Aayog a toothless entity.

Four years of NITI Aayog: The NITI Aayog is the premier policy think tank for the government of India. It has been providing both directional and policy inputs, designing strategic and long-term policies and programs, and has been helping with relevant technical advice to both the center and states since its establishments in 2015. Over the last 4 years, NITI Aayog has played a significant role in shaping many signature policy initiatives, such as the following:

1. I.Measuring performance and ranking states on outcomes in critical sectors
2. II.Sustainable action for transforming human capital (SATH)
3. III.Ek Bharat Shrestha Bharat
4. IV.Development support services to states (DSSS) for development of infrastructure
5. V.Public–private partnership in health
6. VI.Resolution of pending issues of states with central ministries
7. VII.State Human Development Report
8. VIII.Transforming of 115 identified aspirational districts
9. IX.Promoting inclusive growth—giving fillip to the government’s goal of “Sabka saath, sabka vikas”
10. X.Enabling evidence-based policymaking and enhancing productive efficiency with long-term vision
11. XI.Cross-sectoral interventions
12. XII.Institutionalizing project monitoring to improve implementation and efficacy of government schemes
13. XIII.Partnering with national and international organizations and promoting stakeholder consultation in policymaking
14. XIV.Knowledge and innovation hub
15. XV.Promoting entrepreneurial ecosystem
16. XVI.Catalyzing reforms in agriculture
17. XVII.Promoting adoption of frontier technology
18. XVIII.International engagements

The prime minister’s call for “Sankalp se siddhi” (attainment through resolve) is a clarion call for a radical transformation for a New India by 2022 to 2023, roars the NITI Aayog’s “Strategy for New India @75” (2018) document in its introduction. After close to 4 years of the NITI Aayog, by far, this is the most noticeable document from the body. It has a vision for the country, and aligns with the vision of the executive head of state. And, as it claims, the agency consulted over 1,300 experts, both from government and nongovernment agencies, to prepare the blueprint for a new paradigm of development to be achieved in the next 4 to 5 years. The prime minister’s articulation of the “new” vision has uncanny similarity to Jawaharlal Nehru’s “tryst with destiny” call.

A close review of the NITI Aayog’s vision document (Strategy for New India @75) offers valuable insights and suggestions on the real issues that India must face for inclusive growth. It would be good if experts come to talk about the NITI Aayog and chief ministers came to its seat that is, the Yojana Bhavan (New Delhi based headquarter of NITI Aayog). There should also be 3-year action plans and a perspective. The real issue for India is growth across gender, caste, and religious lines, for markets cannot function otherwise. Also, it has to grow fast. The vision document states this but the detail is unfortunately only promised (Alagh 2018).

The tall call for a new deal for India falls flat when one looks into the details of the strategy document. Its drivers for change are employment, economic growth, doubling of farmers’ income, and housing for all, besides a boost for the service sector. As one reads the details, one gets the feeling that there is nothing new the Strategy for New India @75 is talking about. For each of these drivers, India is at present facing an upheaval task of bringing in radical changes. There is no doubt about that. But the strategy is not exactly new. It says in generic terms that India needs to increase agriculture growth, raise employment, and reform agricultural markets. These are the same codes that in the 1950s policymakers and the political leadership identified as drivers of growth. And now too they remain the same. But for a country that has not been able to readjust these drivers to make them propel growth, another call for doing the same is more of an acceptance of failure, than a new vision (Mahapatra 2018).

NITI Aayog has been mired in controversies as well, including the decision to release the back series GDP data. Experts questioned the NITI Aayog’s role in the new data that showed that growth during the United Progressive Alliance (UPA) government was lower than earlier estimated.

NITI Aayog’s governing council meetings: So far, five meetings of the governing council have been held under the chairmanship of the prime minister.7

1. I.February 8, 2015: laid down the key mandates of NITI Aayog, such as fostering cooperative federalism and addressing national issues through active participation of the states
2. II.July 15, 2015: reviewed the progress made by the three subgroups of chief ministers and the two task forces
3. III.April 23, 2017: pitched for conducting simultaneous elections of the Lok Sabha and the state assemblies and shifting to a January–December fiscal year
4. IV.June 17, 2018: deliberated upon measures taken to double farmers’ income and the progress of the government’s flagship schemes
5. V.June 15, 2019: stressing the need to collectively address poverty, unemployment, rain-water harvesting, drought, pollution, pockets of underdevelopment, aspirational districts, transforming agriculture, security related issues with specific focus on left-wing extremists (LWE) districts, and all such factors that constrain India’s progress; emphasized the goal to realize the potential of the country, to make a New India by 2022 and a U.S.$5 trillion economy by 2024.

Owing mainly to political differences, Mamata Banerjee (West Bengal chief minister) did not attend the fifth meeting of the governing council of NITI Aayog, on June 15, 2019, saying it is “fruitless” as the body has no financial powers to support state plans and the Aayog is not effective. She also suggested that focus should be shifted to the Inter-State Council (ISC) to deepen cooperative federalism and strengthen the federal polity. Earlier too, Banerjee had skipped meetings of the policy think tank, expressing displeasure over the dissolution of the Planning Commission and creation of a new structure.8 It seems she has problem with the NITI Aayog; other chief ministers don’t have such problem.

An evaluation of working of the NITI Aayog: The NITI Aayog has had an uneven start. It is too early to write it off as a failure. It is useful to remember that it took 6 years before the Planning Commission came into its own with the landmark Second Five-Year Plan in 1956. There is a strong case, however, to rethink the role of the NITI Aayog. The priority is to redefine its tasks against the emerging backdrop of the new fiscal federalism rather than as an investment planning agency.

The NITI Aayog is long on generalities and short on specifics. More than the structure of the new body, the fact that it will function as an enabler for good governance and a performance monitor of various governmental programs and schemes might hold the key to the success of the new body. The end of the Planning Commission and the beginning of NITI Aayog marks a big departure. Care must be taken to ensure the independence of the new body. It should also remain apolitical to win the trust of chief ministers. With the prime minister’s weight behind it, it should be able to attract the highest talent in the country. How far the government accepts its recommendations also depends on the prime minister. A government’s errors affect millions of people for no fault of their own, and hence, must be avoided as far as possible. Churning the issues among thoughtful people is a way of identifying such errors, as also a way of achieving objectives more quickly and economically. The main challenge would be to articulate the vision of the NITI Aayog and in a manner that it becomes relevant to changing times.

What sounds good does not always work out that way. It is not clear what precisely the new mechanism will work on the ground. Related to this aspect, the question is raised whether the prime minister is taking on too much himself. Efficient delegation of authority is a hallmark of inspirational leadership. Niyat and niti (intention and policy) are inextricably intertwined, and the Aayog’s functioning is expected to strengthen this in the larger interest of the economic development of India. The working of a new institution can be judged only after it has functioned for a sufficiently long time. The ideas that are claimed to guide the NITI Aayog are sound, but it has to implement them well, and disprove criticism that it is a gimmick.

Kelkar (2019), chairman of the 13th Finance Commission, called for a NITI Aayog 2.0 in his Sukhamoy Chakravarty Memorial Lecture on India’s new fiscal federalism. He pitched for the setting up of a “new NITI Aayog” and giving it responsibility for allocating capital and revenue grants to the states. It is desirable that a functionally distinct entity, such as the new NITI Aayog, be put to use to do the job at hand related to structural issues, including removal of regional imbalances in the economy. This doesn’t mean that the new NITI Aayog should take the form of the old Planning Commission. The new NITI Aayog will annually need resources of around 1.5 to 2 percent of the GDP to provide suitable grants to the states for mitigating development imbalances. The restructured NITI Aayog will provide a national perspective on policy, which is much needed since individual ministries tend to take only a sectional view.

He emphasized that in order to make the new NITI Aayog more effective, it is essential to ensure that the institution is at the “High Table” of decision making of the government. “This means the vice-chairman of the new NITI Aayog will need to be a permanent invitee of the Cabinet Committee on Economic Affairs (CCEA). Thus, the new NITI Aayog will make available to the highest level of policymaking the knowledge-based advice and provide the national and long-term perspective on the policy proposals. NITI Aayog should strive to be a think tank with “praxis,” possessing considerable financial muscle, and devote its energies to outline coherent medium- and long-term strategy and corresponding investment resources for transforming India.” (Kelkar 2019). While Kelkar’s view is theoretical in nature, policy experts have suggested that many of these may form a sound foundation for NITI Aayog’s future. Reddy (2019) has suggested that “NITI Aayog must be reinvented with appropriate stature and given the benefit of constitutional legitimacy, possibly linking it to the Inter State Council (ISC).”9

Endnotes

1. 1.FPJ Bureau. January 3, 2015. “A Participative Planning, Now,” Editorial comment, The Free Press Journal. https://www.freepressjournal.in/analysis/a-participative-planning-now/510888, (accessed April 17, 2019).
2. 2.The Hindu Business Line. January 4, 2015. “A Better Plan, This.” https://www.thehindubusinessline.com/opinion/editorial/a-better-plan-this/article6753910.ece.
3. 3.NITI Aayog. n.d. “Functions and Objectives.” http://www.niti.gov.in/content/functions, (accessed April 17, 2019).
4. 4.Verma, R. January 2, 2015. “NITI Aayog Replaces Planning Commission; PM to be Chairperson,” MINT. https://www.livemint.com/Politics/3MRK8onj7Ab3nkc9ejoOsN/Planning-Commission-renamed-as-Neeti-Ayog.html, (accessed April 17, 2019).
5. 5.Hindustan Times. May 27, 2019. “After Sabka Saath, Sabka Vikas, Win Sabka Vishwas’: Modi’s Message of Inclusion,” Editorial Comment. https://www.hindustantimes.com/editorials/after-sabka-saath-sabka-vikas-win-sabka-vishwas-modi-s-message-of-inclusion/story-6i8Lo7ve0ibklPOR7E4jqI.html, (accessed April 17, 2019).
6. 6.Constitution. http://www.niti.gov.in/content/constitution-5, (accessed April 17, 2019).
7. 7.The Economic Times. June 13, 2019. “NITI Aayog’s Governing Council to Meet on June 15.” https://economictimes.indiatimes.com/news/economy/policy/niti-aayogs-governing-council-to-meet-on-june-15/articleshow/69775930.cms?from=mdr, (accessed April 19, 2019).
8. 8.MINT. June 9, 2019. “Mamata Says No to NITI Aayog Meeting, Terms It ‘Fruitless’.” https://www.livemint.com/politics/news/mamata-says-no-to-niti-aayog-meeting-terms-it-fruitless-1559907554696.html, (accessed April 18, 2019).
9. 9.The Hindu Business Line. March 26, 2019. Refocus scope of Finance Commission, reinvent NITI Aayog with greater powers: Y V Reddy, https://www.thehindubusinessline.com/todays-paper/tp-news/article26649104.ece, (accessed April 20, 2019).