By Krishna Koundinya

Edited by Anjini Chandra

The easiest part of changing the board outside Yojana Bhawan in New Delhi is done. Now, coming to the hard part of actually translating a vision into reality, the newly constituted body called NITI Aayog (National Institute for Transforming India), all set to replace the Planning Commission, has its work cut out. We have to examine the differences between the two bodies; are they really different? And if so, how? What signs do we see that can make us believe that the NITI Aayog will be different and will achieve results in situations where the Yojana Aayog (Planning Commission) couldn’t?

The circumstances in which both the bodies were constituted are poles apart. The Planning Commission was ideated during the freedom struggle and it saw the light of the day when the nation was still nascent. The domestic economy was weak, industry was non-existent, thanks to our colonial masters, and whatever infrastructure was present was to help the continued looting of our nation. The state was still in its nation building process where chances of secession were high, and precious foreign exchange reserves were low. Hence, the Nehru-Mahalanobis model went for an import substitution strategy. Nehru was influenced by Stalin’s communism, and modelled India’s socialism taking various aspects, using the Planning Commission as his chief instrument.

The NITI Aayog, on the other hand, is constituted in a dynamic and emerging India, where the private sector is the main driver of the economy. The service sector has a lion’s share in the GDP of the nation, our foreign exchange war chest is considerably good, diplomatic relations are being fostered all over the world, and the nation is making its presence felt in the world arena.

Given these conditions, the market forces need only to be guided, and not interfered with, which is clear in the NITI Aayog’s vision.

Coming to the constitution of both the bodies, the NITI Aayog’s Governing Council has the Chief Ministers of States and the Lieutenant Governors of Union Territories, while the Planning Commission did not. It only reported to the National Development Council, in which the Chief Ministers and Lieutenant Governors were present. This is a welcome sign because it gives more power to the states, and is in tune with NITI Aayog’s vision of “Cooperate Federalism”.

When we turn to the nature of working of both the bodies, we see that the Planning Commission used to formulate policies and ‘impose’ them on states. The ‘tied up’ funds were a huge chunk committed to certain causes, and were to be used only for specific purposes, in the manner decided by the Planning Commission. The NITI Aayog, on the other hand, is a softer and more flexible body, as it does not have the power to impose its views on states anymore; it is only a think tank which gives advice. An interesting point to note is that the NITI has the power to affect the National Security Policy, unlike the Planning Commission.

Comparing the nature of financial allocation, the Planning Commission worked in an authoritarian style, using a top to bottom approach, where it had the power to decide the allocation of funds to various programmes: Chief Ministers used to use this to get their funds. The NITI Aayog, on the other hand, has no such power to allocate funds. Chief Ministers, being part of it, only have a say in its working and are not passive receivers of funds. As the socio-economic fabric of our country has undergone drastic changes in the last six decades, the style of the Planning Commission is no longer apt. It is only going to be an enabler, rather than a “provider of a first and last resort”. This is another point for Aayog.

Ambiguousness and Confusion

While the NITI is set to act on a “Bharatiya” model of governance, it has not been made clear as to how it is a different and unique concept. Will it foster federalism in a nation whose constitution is basically a federal constitution? If so, then it also has to answer as to why it is still touted to be Modi’s economic bureau, based on its membership constitution. Full time members are less, there aren’t as many experts as the Planning Commission could boast of, and we cannot expect ministers to be completely free to fall in line for its agenda. Till now, no proper agenda, timeline, or road map have been provided as to show how the NITI Aayog proposes to achieve its objectives. There have also been reports, which tell us that there is a lot of confusion in its working, due to a lack of clarity on its exact functioning.

In conclusion, the NITI Aayog promises to be different and not anachronistic like its predecessor, but there are still areas in which it has to be clear, focussed and not come off as just lip service.

Krishna Koundiniya is an entrepreneur, Co-Founder of an e-Commerce start up. He holds MBA from IMT–Ghaziabad, B Tech gold medallist, state level boxer, cricketer, amateur musician & graphologist (AP Judiciary). He worked with Deloitte, Infosys, Vizag Steel specializing in IT, Finance. He assisted CFO, GMs in financial valuations and planning. He co-founded a robotics platform for R&D and successfully implemented home automation projects, car tracking and vibration test rigs using smart phone,,

Posted by The Indian Economist | For the Curious Mind