When Prime Minister Narendra Modi announced the establishment of the new body to replace the time-tested Planning Commission, many eyebrows were raised. It signaled the departure totally from the Nehruvian System of Planning which was being followed since 1951. It is true that from the Sixth Plan onwards our planners had replaced Nehruvian socialism as the ideal for planning, but the system envisaged by our first Prime Minister had not been given up.
The new initiative is altogether a new set up though its ramifications are yet to be known since it is still in the infancy of its implementation. From the 1st of January 2015, the Niti Ayog has replaced the Planning Commission. NITI stands for the National Institution for Transforming India. The Prime Minister continues to be the head with a new designation of Chairperson.
The deputy chairman who is the de facto head is now being called Vice Chairperson and an equally important post would be that of the CEO of the Niti Ayog. Four cabinet ministers would be nominated by the PM and there shall be two full time members to evolve policy. But, the highest decision making body shall be the General Council which shall consist of along with the members specified the Chief Ministers of all States and the Lt.Governors of the union territories.
It is this council shall henceforth take all final decisions regarding the allocation of plan funds to the states.
India being a federal state the devolution of funds to the states consists of plan and non plan funds. While the non plan funds come as part of the National Budget, the non plan funds are allocated by the Planning Commission on the basis of certain predetermined norms. These norms had always been a bone of contention between the states and the Planning Commission and with the states expressing their unhappiness over the arbitrary manner in which the planning commission allocated plan funds to the states.
When he was Chief Minister of Gujarat before becoming the Prime Minister, Narendra Modi used to express his strong objection to the manner in which the Planning Commission allocated funds to the states. So, the moment he took over the PM post he went about giving the Planning Commission a new look and a new direction.
Today each state is given the authority to prepare plans according to its requirements and the Niti Ayog would immediately approve it.
Since each CM is part of the decision making body it is now more easy for it to get the allocation for the benefit of the state. The 12th Plan is to continue till 2017 as per the original schedule.