Think Learn & Perform (TLP)

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Day 30 – Q 4.Do you think the absence of a central planning body like the erstwhile Planning Commission is hurting India? Has the NITI Ayog been effective in its realising its objectives? Examine.

4. Do you think the absence of a central planning body like the erstwhile Planning Commission is hurting India? Has the NITI Ayog been effective in its realising its objectives? Examine.  

क्या आपको लगता है कि पूर्व के योजना आयोग की तरह एक केंद्रीय योजना निकाय की अनुपस्थिति भारत को नुकसान पहुंचा रही है? क्या NITI अयोग अपने उद्देश्यों को साकार करने में प्रभावी रहा है? जांच करें।


The NITI Aayog, established in 2015, is one of Indian democracy’s youngest institutions. It has been entrusted with the mandate of re-imagining the development agenda by dismantling old-style central planning. The NITI Aayog’s precursor, the Planning Commission was established in March 1950 by a Government of India resolution with Prime Minister as Chairperson. It’s initial mandate was to establish heavy industries through public investment as a means for achieving rapid industrialization which later included wide ranging powers. 


  • Planning Commission of India, established right after Independence was responsible for formulating Development Plans for the States and the whole Country. Each State had its own State Planning Board, who would draft their Annual Plans for the next five years on a tentative Basis , consolidate these as a Draft Five Year Plan. 
  • The Planning commission, with its mandate of centralized planning emerged as a critical instrument for centralizing India’s fiscal system.
  • Its Plan funds and CSS played an important (though imperfect) role in responding to governance deficits by designing and financing (through plan funds) schemes linked to core public services.
  • Moreover, the Planning Commission played a critical coordination function. CSS, linked to Plan funds, were administered by line-departments but the Commission played a critical policy coordination function linking schemes to state plans and determining resource availability.
  • Further, the five-year plans and plan allocations, enabled states to broadly predict the quantum of plan funds they were likely to receive, ensuring somewhat predictable expenditure over a five year cycle. 
  • In the absence of the planning commission, this role has been taken over the Finance Ministry and line departments. As a result, the last five years have arguably witnessed an even greater centralization of schemes.

An internal evaluation in Government revealed that Planning Commission was witnessing policy fatigue necessitating structural changes in central planning process. 

The planning exercise that was followed hardly had any relevance for the market economy. It did very little to plan and implement public sector investments and its role in public–private partnerships was restrictive. The proliferation of Centrally Sponsored Schemes contributed to severe distortions in public spending.  

The defective process of planning which came into force since the beginning of the planning in India, is also responsible for the failure of our economic planning. The setting up of the Niti Aayog and the implementation of the recommendations of the 14th finance commission recommendations to enhance fiscal devolution to states marked an important juncture in fiscal federal relations in India.

TLP Phase 1 – Day 30 Synopsis

TLP Phase 1 – Day 30 Synopsis

  1. An overarching theme of the NITI Aayog was the change in focus from central planning to cooperative federalism. Through the NITI Aayog India will move away from the one size fits all approach and forge a better match between schemes and needs of States.
  2. The Governing Council of NITI Aayog met very often, 3 sub-groups of Chief Ministers were worked on centrally sponsored schemes (CSS), skill development and Swachh Bharat.
  3. The NITI Aayog made serious efforts for Transforming India’s developmental agenda. It sought proposals from all Central Ministries for Accelerated Growth and Inclusion Strategy, Employment Generation, Energy Conservation and Efficiency, Good Governance and Swach Bharat.
  4. The NITI Aayog has done an enormous amount of work in a period of 3 years. It started designing strategic policies, fostering cooperative federalism, provided knowledge and innovation support and undertook evaluation/ monitoring of major investments
  5. Based on their recommendations, the new CSS sharing system was notified and a transparent formula based allocation of resources was reached. The Swachh Bharat cess was levied on all services. 
  6. To promote skill development initiatives, the involvement of States in the Pradhan Mantri Kaushal Vikas Yojana was ensured. 
  7. The Atal Innovation Mission was launched to seed innovations to teach young minds new skills.

Recently, Vijay Kelkar, chairman of the 13th Finance Commission, called for a NITI Aayog 2.0 where he has argued that a restructured NITI Aayog should be given a funding role so that it can help deal with the development experience between states. 


NITI Aayog seeks to facilitate and empower the critical requirement of good governance – which is people-centric, participative, collaborative, transparent and policy-driven. In this regard it will be too early to assess its performance in comparison to more than six decades of Planning Commission work which had different approach towards planned development.

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