On the last day of 2014, curtains came down on the last relic of the Nehruvian socialist economy with the Union government replacing the Planning Commission (Yojna Ayog) with another body, the National Institution for Transforming India Aayog (NITI) . While the Planning Commission was primarily responsible for deciding on plan spending of the Centre and allocation to state governments, the new body will primarily act as a think tank that would provide a “national agenda framework for the Prime Minister and the chief ministers” after evolving “a shared vision of national development priorities, sectors and strategies with the active involvement of states”.
The move comes nearly four months after Narendra Modi’s Independence Day speech, where he had announced the plan panel would give way to a new body in sync with contemporary challenges, shunning the “one size fits all” approach. It also marks the first major step towards cooperative federalism that envisages making state governments a more active partner of India’s growth story, besides ridding the nation of a body that had become irrelevant in the liberalisation era. During the last decade, the commission had emerged as a sort of parallel cabinet with the prime minister as its head and its power in allocating central funds to states and sanctioning capital spending of the central government was deeply resented by states and various Union departments.
Though the prime minister remains the chairperson of the new body, which will have a vice-chairperson with the rank of a Cabinet minister as was the case in the Planning Commission, there is a big difference. Its governing council will comprise chief ministers of all states and lieutenant governors of Union territories. This will give states more say in framing development policies and their implementation. The fixed-tenure regional councils will be able to address specific issues, affecting more than one state or region, much better than a centralised body. The new set-up will bring about a seminal change in developmental policy making by decentralising the process.