Kamaraj IAS Academy | NITI AAYOG 2.0
  • January 28, 2019, 11:46 am

In news:


Former Finance Commission chairman and current chairman of the National Institute of Public Finance and Policy, Vijay Kelkar in a paper titled 'Towards India's New Fiscal Federalism', said 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 the structural issues including removal of regional imbalances in the economy.The paper  has pitched for setting up of a 'new Niti Aayog' and giving it responsibility for allocating capital and revenue grants to the states.The eminent economist, however, added that he is not suggesting for a moment that the new Niti Aayog should take the form of the old Planning Commission.




National Institution for Transforming India, is a policy think tank of the Government of India, established in 2015 with the aim to achieve Sustainable Development Goals and to enhance cooperative federalism by fostering the involvement of State Governments of India in the economic policy-making process using a bottom-up approach. Its initiatives include "15 year road map", "7-year vision, strategy and action plan"




Giving the power of allocating capital and revenue grants or as in general, the fund allocation powers , gives NITI aayog the shade of the infamous erstwhile planning commission. Added to that , the objective of Bottom up or decentralised planning would look like diluted objectives, if this fund allocation role is given to NITI.


Previous recommendations from sarkaria commission and others have insisted to bring in a permanent Finance commission under Article 280 of Indian constitution which already  has a constitutional role designated.The constitution clearly lays down procedure for the bottom up planning to plug the gap of regional imbalance and growth issues through 73rd and 74th constitutional amendment , District planning committees , State finance commision and the central finance commision. So it is a grey question whether there is a need for giving allocation powers to the NITI aayog rather than strengthening the existing constitutional mechanism.


The eminent economist, however, added that he is not suggesting for a moment that the new Niti Aayog should take the form of the old Planning Commission and added that; replacing the Planning Commission, which was promoting regionally balanced growth in India, by the Niti Aayog, a think tank, has reduced the government's policy reach. This raises a question about why not strengthen the existing mechanism of bottom up planning. The new powers shall only make it violate the principle of subsidiarity which states ,what could be best done at a lower level should be done at that level and not at a higher level which is the whole point of cooperative federalism.


To make the Niti Aayog 2.0 more effective, Kelkar said it must be part of 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 policy making,” the paper said.This role seems to promote cooperative federalism as it involves the participation of NITI in Cabinet decision making body.But again , adding the vice president to the decision making body makes it look more like convincing rather than real participatory decision making from the federal side.

According to Kelkar’s calculation, the NITI Aayog 2.0 would annually need resources of around 1.5 to 2 percent of the GDP to provide suitable grants to the states to mitigate development imbalances.

When NITI Aayog was first formed in 2015, it was tasked with preparing roadmaps for transformation of the country. Later, it was asked to take forward the idea of cooperative federalism, for which it reached out to state governments to resolve issues that were stuck at various Central ministries. But the initiative died after the exit of the first NITI vice chairman Arvind Panagariya.So there is a dire need that the government and intellectuals should make sure that positive evolution shall takes place and make sure the real objectives are not diluted on which the body was formed or replaced.