In the very first speech that the newly elected Prime Minister Narendra Modi’s gave at Red Fort on Independence Day, contained an important policy announcement to discontinue with the Planning Commission and to replace the Apex policy making body by a suitable organization. Now four months later as the first policy announcement in the New Year the formation of the new organization (Think-tank) NITI Aayog (NITI) was announced as the Institution which will replace Planning Commission. While some critics hold the view that the change is merely an old wine in a new bottle, there are some substantial changes to the structure and the nature of organization, which actually can bring a marked change in the way it was functioning.

Earlier the Planning Commission was criticized as being too bureaucratic and not inclusive enough in the resource distribution and planning for a federal structure. Considering the perennial criticism that it was a super constitutional body which even eclipsed the role and powers of constitutional bodies like Finance commission, the NITI would be an advisory body only. NITI is an acronym for National Institution for Transforming India.


Planning was perceived in the 1950s as the most appropriate tool for ushering in faster economic growth. The strategy for achieving this was discussed at great length, particularly at the time of the formulation of the Second Five Year Plan. This was consistent with the thinking at that time that the state must have control over the ‘commanding heights.’ However, in the post-liberalization period, the concept of planning itself has undergone a change. While we moved to an era of Indicative Planning, the planning commission was allowed to continue even though it was not consistent with it. (Note: Indicative planning is contrasted with directive or Mandatory Planning, wherein a state/central body sets quotas and mandatory output requirements)

Mandatory Planning has no relevance today, however, an organization is still required to look at the basic issues confronting the economy, and preparing a broad framework on how these can be tackled. If there is an acceptable framework on what the critical issues are and how they should be addressed, it will provide a suitable basis for policy formulation. While the state may play a diminishing role, it still plays a critical role in the economy. In the infrastructure sector, it still has a dominant role. If the Centre and States agree on a broad framework through discussions, it would facilitate the adoption of better policies.


The NITI Aayog comprises the following:

  1. Prime Minister of India as the Chairperson
  2. Governing Council comprising the Chief Ministers of all the States and Lieutenant Governors of Union Territories
  3. Regional Councils will be formed to address specific issues and contingencies impacting more than one state or a region. These will be formed for a specified tenure. The Regional Councils will be convened by the Prime Minister and will comprise of the Chief Ministers of States and Lt. Governors of Union Territories in the region. These will be chaired by the Chairperson of the NITI Aayog or his nominee
  4. Experts, specialists and practitioners with relevant domain knowledge as special invitees nominated by the Prime Minister
  5. Full-time organizational framework (in addition to Prime Minister as the Chairperson) comprising
    1. Vice-Chairperson: Arvind Panagariya
    2. Members: Two (2) Full-time
    3. Part-time members: Maximum of two from leading universities research organizations and other relevant institutions in an ex-officio capacity. Part-time members will be on a rotational basis
    4. Ex Officio members: Maximum of four members of the Union Council of Ministers to be nominated by the Prime Minister
    5. Chief Executive Officer: To be appointed by the Prime Minister for a fixed tenure, in the rank of Secretary to the Government of India
    6. Secretariat as deemed necessary



Members of NITI Aayog and Planning Commission


The various members of NITI Aayog are:

  2. Vice Chairperson:ARVIND PANAGARIYA
  5. Full-time Members:BIBEK DEBROY & V. K. SARASWAT
  6. Governing Council: AllCHIEF MINISTERS and LIEUTENANT GOVERNORS of Union Territories


The National Institution for Transforming India (NITI) will be more of a think tank or forum, distinctly different from the bureaucratic, socialist leaning, Soviet-styled Commission.

NITI would not have financial powers; instead the power to allocate funds would be vested in the finance ministry, while Planning Commission enjoyed the powers to allocate funds to ministries and state governments

NITI will include leaders of India’s 29 states and seven union territories and they would play a more significant role than they did in the Planning Commission. As earlier the States’ role was limited to the National Development Council and annual interaction during Plan meetings.

Another key difference would be the status of Deputy Chairman of Planning Commission and the Vice Chairman of NITI. While the former enjoyed the privileges and powers of Cabinet Minister and even some senior politicians and cabinet ministers reported to him, the new position of vice chairman would not enjoy any such benefits. Such benefits were against the spirit of constitution as the position was neither enshrined by it and nor the person was an elected official.


Comparison Of the Old Planning Commission and the New NITI Aayog


  • It will emerge as a ‘think-tank’ that will provide Governments at the central and state levels with relevant strategic and technical advice across the spectrum of key elements of policy.
    • It will also seek to put an end to slow and tardy implementation of policy, by fostering better Inter-Ministry coordination and better Centre-State coordination. It will help evolve a shared vision of national development priorities, and foster cooperative federalism, recognizing that strong states make a strong Nation.
    • It will develop mechanisms to formulate credible plans to the village level and aggregate these progressively at higher levels of government. It will ensure special attention to the sections of society that may be at risk of not benefitting adequately from economic progress.
    • It will create a knowledge, innovation and entrepreneurial support system through a collaborative community of national and international experts, practitioners and partners. It will offer a platform for resolution of inter-sectoral and inter-departmental issues in order to accelerate the implementation of the development agenda.


In order to provide an administration paradigm in which the Government is an ‘enabler’ rather than a ‘provider of first and last resort’, the new body would ensure:

  • progress from ‘food security’ to focus on a mix of agricultural production, as well as actual returns that the farmers get from their produce;
    • that India is an active player in the debates and deliberations on the global commons;
    • that the economically vibrant middle-class remains engaged, and its potential is fully realized;
    • to leverage India`s pool of entrepreneurial, scientific and intellectual human capital;
    • to incorporate the significant geo-economic and geo-political strength of the Non-Resident Indian Community;
    • to use urbanization as an opportunity to create a wholesome and secure habitat through the use of modern technology; and
    • to use technology to reduce opacity and potential for misadventures in governance.


The government’s move to replace the Planning Commission with a new institution called ‘NITI Aayog’ was criticised by opposition parties of India. The Congress sought to know whether the reform introduced by the BJP-led government was premised on any meaningful programme or if the move was simply born out of political opposition to the party that ran the Planning Commission for over 60 years. The vast majority of the country see this as continuation of the negativism and policy paralysis approach of the Congress. “The real issue is do you (the government) have a substantive meaningful programme to reform the Planning Commission?” Congress spokesperson Abhishek Manu Singhvi said. “If you (the BJP government) simply want to abolish it (the commission), because it is something which (Jawaharlal) Nehru created for this country and you don’t like Nehru or simply because it was run by the Congress for 60 years and you don’t like the Congress, that is pitiable,” he said. Many believe that the recasting of the Planning Commission was necessitated by the arrogance that besotted it during the Congress / UPA regime.

The Communist Party of India-Marxist said a mere change in the name would not yield the desired results. “Mere changing this nomenclature, and this sort of gimmickry is not going to serve the purpose. Let us wait and see what the government is eventually planning,” CPI-M leader Sitaram Yechury said. These statements have been branded by several as motivated because the Communist Party of India-Marxist and their red brethren have an history of anti-nationalism, having collaborated with the British during the Quit India movement and supported China during the Indo-China war. Under the NDA and in particular PM Modi’s decisive leadership, India is set to overtake the growth rate of China by 2016 and this may not be palatable to the Red comrades in India who might be secretly rooting for China’s continuing dominance.

The Planning Commission used to plan policy. I don’t know what is the government trying to do by merely changing the nomenclature from Planning Commission to Neeti Ayog,” said Congress spokesman Manish Tewari.

However, Commerce and Industry Minister Nirmala Sitharaman of BJP accused the critics of being “ignorant of facts”.

“With the new set of changes, the state governments no longer need to have a begging attitude and instead take independent steps for development,” said Sitharaman. With this the NDA government is fulfilling one more of its key promises of robust federalism.

“The idea to create an institution where states’ leaders will be part and parcel of the collective thinking with the Centre and other stakeholders in formulating a vision for the development of the country is right on as compared with the previous structure, where a handful of people formulated the vision and then presented it to the National Development Council (NDC). This was not entirely absorbed and adopted by the latter,” said former Planning Commission member Arun Maira.

On the outset, there seems to be a substantial difference between the two bodies and the NITI is likely to function as per constitution to achieve Cooperative Federalism instead of the super-constitutional and anti-federal nature of earlier body. Also, the nature of planning will be more Bottoms-up instead of former Top-down approach with a focus on implementation and execution as the policy paralysis that gripped governance in India in recent years was more of an implementation crisis due to poor leadership and dual centers of power.

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