BRIEF OF PLANNING COMMISSION

At the time of independence of India, there was a large proportion of impoverished people in
the country. Poverty alleviation and improvement of life standards of people were the major
considerations of the government. Indian economy needed a direction, which was crippled by
foreign subjugation. India was still a geographic expression and a nation in making. Other
than the spirit of the freedom struggle, factors required for binding the people were few. So
the then politicians and think tanks opted for a planned economy and a centralized planning
body to formulate a plan for socio-economic development. Thus, planning commission came
into existence in March 1950 through a cabinet resolution which became a permanent body of
experts.

Historical view of Planning Commission

After India achieved Independence, a formal model of planning was adopted, and
accordingly the Planning Commission, reporting directly to the Prime Minister of India,
was established on 15 March 1950, with Prime Minister Jawaharlal Nehru as the Chairman.
Authority for creation of the Planning Commission was not derived from the Constitution of
India or statute; it is an arm of the Central Government of India.

The Planning Commission was set up by a Resolution of the Government of India in March
1950 in pursuance of declared objectives of the Government to promote a rapid rise in the
standard of living of the people by efficient exploitation of the resources of the country,
increasing production and offering opportunities to all for employment in the service of the
community. The Planning Commission was charged with the responsibility of making
assessment of all resources of the country, augmenting deficient resources, formulating plans
for the most effective and balanced utilisation of resources and determining priorities.
Jawaharlal Nehru was the first Chairman of the Planning Commission.

The first Five-year Plan was launched in 1951 and two subsequent five-year plans were
formulated till 1965, when there was a break because of the Indo-Pakistan Conflict. Two
successive years of drought, devaluation of the currency, a general rise in prices and erosion
of resources disrupted the planning process and after three Annual Plans between 1966 and
1969, the fourth Five-year plan was started in 1969.

The Eighth Plan could not take off in 1990 due to the fast changing political situation at the
Centre and the years 1990-91 and 1991-92 were treated as Annual Plans. The Eighth Plan
was finally launched in 1992 after the initiation of structural adjustment policies.

For the first eight Plans the emphasis was on a growing public sector with massive
investments in basic and heavy industries, but since the launch of the Ninth Plan in 1997, the
emphasis on the public sector has become less pronounced and the current thinking on
planning in the country, in general, is that it should increasingly be of an indicative nature.

Objectives of the government while starting PC were the following:

Promote a rapid rise in the standard of living of the people by efficient

exploitation of the resources of the country.
Increase production.
Offer opportunities to all for employment in the service of the community.
Functions
The 1950 resolution setting up the Planning Commission outlined its functions as to:
Make an assessment of the material, capital and human resources of the country,
including technical personnel, and investigate the possibilities of augmenting such of
these resources as are found to be deficient in relation to the nations requirement;

Formulate a Plan for the most effective and balanced utilisation of country's
resources;

On a determination of priorities, define the stages in which the Plan should be carried
out and propose the allocation of resources for the due completion of each stage;

Indicate the factors which are tending to retard economic development, and determine
the conditions which, in view of the current social and political situation, should be
established for the successful execution of the Plan;

Determine the nature of the machinery which will be necessary for securing the
successful implementation of each stage of the Plan in all its aspects;

Appraise from time to time the progress achieved in the execution of each stage of the
Plan and recommend the adjustments of policy and measures that such appraisal may
show to be necessary; and
Make such interim or ancillary recommendations as appear to it to be appropriate
either for facilitating the discharge of the duties assigned to it, or on a consideration of
prevailing economic conditions, current policies, measures and development
programmes or on an examination of such specific problems as may be referred to it
for advice by Central or State Governments

Evolving Function
From a highly centralised planning system, the Indian economy is gradually moving towards
indicative planning where Planning Commission concerns itself with the building of a long
term strategic vision of the future and decide on priorities of nation. It works out sectoral
targets and provides promotional stimulus to the economy to grow in the desired direction.

Planning Commission plays an integrative role in the development of a holistic approach to

the policy formulation in critical areas of human and economic development. In the social
sector, schemes which require coordination and synthesis like rural health, drinking water,
rural energy needs, literacy and environment protection have yet to be subjected to
coordinated policy formulation. It has led to multiplicity of agencies. An integrated approach
can lead to better results at much lower costs.

The emphasis of the Commission is on maximising the output by using our limited resources
optimally. Instead of looking for mere increase in the plan outlays, the effort is to look for
increases in the efficiency of utilisation of the allocations being made.

With the emergence of severe constraints on available budgetary resources, the resource
allocation system between the States and Ministries of the Central Government is under
strain. This requires the Planning Commission to play a mediatory and facilitating role,
keeping in view the best interest of all concerned. It has to ensure smooth management of the
change and help in creating a culture of high productivity and efficiency in the Government.

The key to efficient utilisation of resources lies in the creation of appropriate self-managed
organisations at all levels. In this area, Planning Commission attempts to play a systems
change role and provide consultancy within the Government for developing better systems. In
order to spread the gains of experience more widely, Planning Commission also plays an
information dissemination role.

Organization

The composition of the Commission underwent considerable changes since its initiation.
With the Prime Minister as the ex officio Chairman, the committee had a nominated Deputy
Chairman, with the rank of a full Cabinet Minister. Cabinet Ministers with certain important
portfolios acted as ex officio members of the Commission, while the full-time members were
experts in various fields like economics, industry, science and general administration.

Ex officio members of the Commission included the Finance Minister, Agriculture Minister,
Home Minister, Health Minister, Chemicals and Fertilisers Minister, Information Technology
Minister, Law Minister, Human Resource Development Minister and Minister of State for
Planning.

The Commission worked through its various divisions, of which there were two kinds:
 General Planning Divisions
Programme Administration Divisions

The majority of the experts in the Commission were economists, making the Commission the
biggest employer of the Indian Economic Service.

Planning Commission: Positives and Achievements

PC laid emphasis on infrastructure developments and capacity building. As a result,

huge investments were made in education, energy, industry, railways and irrigation.
India became self-sufficient in agriculture and made great progress in capital sector
goods and consumer sector goods.
PC introduced many remarkable concepts like nationalisation, green revolution etc
and transformed itself to align with new concepts like liberalisation, privatisation and
inclusion.
Planning commission made great emphasis on social justice, governance, employment
generation, poverty alleviation, health and skill development.
The transformation of India from a poor to an emerging economic power is credited to
the orderly and phased manner in which planning was implemented.

Planning Commission: Negatives and Problems

There were many issues with planning methods followed in India. The drawbacks of the
planning adopted via PC includes:

No structural mechanism for regular engagement with states.

Ineffective forum for the resolution of centre-state and inter-ministerial issues.
Inadequate capacity expertise and domain knowledge; weak networks with think
tanks and lack of access to expertise outside government.
Failed to implement land reforms.
It was a toothless body, was not able to make union/states/UTs answerable for not
achieving the targets.
Designed plans with one size fit for all approach. Hence, many plans failed to show
tangible results.
Weak implementation, monitoring and evaluation

Why does India need a change from PC?

The contemporary world is governed by constitutional ethos like federalism

rather than centralisation.
Indias population has almost tripled to 121 Cr, and many of the Indian states
are as big as European nations.
 Indian economy has expanded from a GDP of 10,000 crore to 100 lakh crore
(at current prices) ie. from a poor nation to one of the largest economies.
India ranks 3rd in GDP at purchasing power parity, has surpassed Japan and is
now standing just below the US and China. The new economy needs
institutions which can take India forward in a global competitive environment.
Co-operative federalism and fiscal federalism will help to meet the diverse
needs of different states/UTs in which planning commission had failed
drastically. Plans have to be formulated by fulfilling the aspirations of states
by tailoring the plans to suit their needs and requirements.
The share of agriculture in GDP has been drastically decreasing while the
share of the service sector to GDP is increasing in India. From 1991, as our
economy is liberalised, private firms have been playing a major role in the
economy. Today we are living in a globalised world connected by modern
transport, media, communications and networked international institutions and
markets. With the increasing levels of development, the aspirations of people
have soared from survival to safety and surplus. So governance systems need
to be transformed to keep up with the same.

In the next article, lets see how the new institution, NITI Aayog can
change the face of Indian Planning.

AN INTRODUCTION TO NITI AAYOG

On 29 May 2014, the Independent Evaluation Office submitted an assessment report to Prime
Minister Narendra Modiwith the recommendation to replace the Planning Commission with a
"control commission." On 13 August 2014, the Union Cabinet scrapped the Planning
Commission, to be replaced with a diluted version of the National Advisory Council(NAC) of
India. On 1 January 2015 a Cabinet resolution was passed to replace the Planning
Commission with the newly formed NITI Aayog (National Institution for Transforming
India). The first meeting of NITI Aayog was chaired by Narendra Modi on 8 February 2015.

Finance Minister Arun Jaitley made the following observation on the necessity of creating
NITI Aayog, "The 65 year-old Planning Commission had become a redundant organisation.
It was relevant in a command economy structure, but not any longer. India is a diversified
country and its states are in various phases of economic development along with their own
strengths and weaknesses. In this context, a one size fits all approach to economic planning
is obsolete. It cannot make India competitive in todays global economy."
 The National Institution for Transforming India, also called NITI Aayog, was formed
via a resolution of the Union Cabinet on January 1, 2015. NITI Aayog is the premier policy
Think Tank of the Government of India, providing both directional and policy inputs. While
designing strategic and long term policies and programmes for the Government of India,
NITI Aayog also provides relevant technical advice to the Centre and States.

The Government of India, in keeping with its reform agenda, constituted the NITI
Aayog to replace the Planning Commission instituted in 1950. This was done in order to
better serve the needs and aspirations of the people of India. An important evolutionary
change from the past, NITI Aayog acts as the quintessential platform of the Government of
India to bring States to act together in national interest, and thereby fosters Cooperative
Federalism.

At the core of NITI Aayogs creation are two hubs Team India Hub and the
Knowledge and Innovation Hub. The Team India Hub leads the engagement of states with
the Central government, while the Knowledge and Innovation Hub builds NITIs think-tank
capabilities. These hubs reflect the two key tasks of the Aayog.

NITI Aayog is also developing itself as a State of the Art Resource Centre, with the
necessary resources, knowledge and skills, that will enable it to act with speed, promote
research and innovation, provide strategic policy vision for the government, and deal with
contingent issues.

Why was the Planning Comission replaced by NITI Aayog?

The Government of India, in keeping with its reform agenda, constituted the NITI Aayog to
replace the Planning Commission instituted in 1950.

This was done in order to better serve the needs and aspirations of the people of India. An
important evolutionary change from the past, NITI Aayog acts as the quintessential platform
of the Government of India to bring States to act together in national interest, and thereby
fosters Cooperative Federalism.

Top down approach (Planning Commission) vs Bottom up approach (NITI)

The planning commission followed a top- down method approach to developing India. This
meant that someone in the top decided what was suitable for people and provided monetary
resources to the state governments based on that.

Hence, the states which had lesser monetary resources compared the center had to depend
upon the planning commission for funds.

There were two main problems with this setup :

State governments had equal responsibility for the development of India, but they did
not have the funds
 Planning commission was an unelected body that was dictating the road map of
development to an elected state executive

This was an undemocratic approach because, a non - constitutional and unelected body had
acquired powers to decide how India was going to develop

Even in the central government, various departments had to chase the planning commission
for departmental allocations. In addition to this , there was no mechanism to assess the
performance of schemes suggested/ pushed by the planning commission.

Hence, India of the 21st century needs the states to be equal partners in the development story
of India. Since, the state governments are closer to the grassroots of this nation, they are
better equipped to decide how the money needs to be spent.

The NITI Aayog comprises the following:

MEMBERS

The Prime Minister as the Chairperson.

A Governing Council composed of Chief Ministers of all the States and Union
territories with Legislatures and lieutenant governors of Union
Territories(except Delhi and Pondichery)
Regional Councils composed of Chief Ministers of States and Lt. Governors
of Union Territories in the region to address specific issues and contingencies
impacting more than one state or a region.
Full-time organizational framework composed of a Vice-Chairperson, five
full-time members, two part-time members (from leading universities,
research organizations and other relevant institutions in an ex-officio
capacity), four ex-officio members of the Union Council of Ministers, a Chief
Executive Officer (with the rank of Secretary to the Government of India) who
looks after administration, and a secretariat.
Experts and specialists in various fields.

With the Prime Minister as the Chairperson, the committee consists of

Vice Chairperson: Rajiv Kumar

Ex-Officio Members: Rajnath Singh, Arun Jaitley, Suresh Prabhu and Radha
Mohan Singh
Special Invitees: Nitin Gadkari, Smriti Zubin Irani and Thawar Chand Gehlot
Full-time Members: Bibek Debroy (Economist), V. K. Saraswat (former
DRDO Chief), Ramesh Chand (Agriculture Expert)[8] and Dr. Vinod Paul
(Public Health expert)[9]
Chief Executive Officer (CEO): Amitabh Kant[10]
Governing Council: All Chief Ministers of States (and Delhi and Puducherry) and
Lieutenant Governors of remaining Union Territories.

OBJECTIVES OF NITI AAYOG

The active participation of States in the light of national objectives and to

provide a framework national agenda.
To promote cooperative federalism through well-ordered support initiatives
and mechanisms with the States on an uninterrupted basis.
To construct methods to formulate a reliable strategy at the village level and
aggregate these gradually at higher levels of government.
Economic policy that incorporates national security interests
To pay special consideration to the sections of the society that may be at risk
of not profiting satisfactorily from economic progress.
To propose strategic and long-term policy and programme frameworks and
initiatives, and review their progress and their effectiveness.
To grant advice and encourage partnerships between important stakeholders
and national- international Think Tanks, as well as educational and policy
research institutions.
To generate a knowledge, innovation and entrepreneurial support system
through a shared community of national and international experts etc
To provide a platform for resolution of inter-sectoral and inter-departmental
issues in order to speed up the accomplishment of the progress agenda.
To preserve a state-of-the-art Resource Centre, be a repository of research on
good governance and best practices in sustainable and equitable development
as well as help their distribution to participants.
To effectively screen and assess the implementation of programmes and
initiatives, including the identification of the needed resources to strengthen
the likelihood of success.
To pay attention to technology improvement and capacity building for the
discharge of programs and initiatives.
To undertake other necessary activities in order to the implementation of the
national development agenda, and the objectives.
7 PILLARS OF NITI AAYOG

The NITI Aayog is based on the 7 pillars of effective Governance. They are:

1. Pro- People: it fulfills the aspirations of society as well as

individuals
2. Pro-activity: in anticipation of and response to citizen needs
3. Participation: involvement of citizenry
4. Empowering: Empowering, especially women in all aspects
5. Inclusion of all: inclusion of all people irrespective of caste, creed,
and gender
6. Equality: Providing equal opportunity to all especially for youth
7. Transparency: Making the government visible and responsive

Functions
To evolve a shared vision of national development
priorities sectors and strategies with the active
involvement of States in the light of national objectives.
To foster cooperative federalism through structured
support initiatives and mechanisms with the States on a
continuous basis, recognizing that strong States make a
strong nation.
To develop mechanisms to formulate credible plans at
the village level and aggregate these progressively at
higher levels of government.
To ensure, on areas that are specifically referred to it,
that the interests of national security are incorporated in
economic strategy and policy.
To pay special attention to the sections of our society
that may be at risk of not benefiting adequately from
economic progress.
To design strategic and long term policy and
programme frameworks and initiatives, and monitor
their progress and their efficacy. The lessons learnt
through monitoring and feedback will be used for
making innovative improvements, including necessary
mid-course corrections.
To provide advice and encourage partnerships between key
stakeholders and national and international like-minded Think
tanks, as well as educational and policy research institutions.
To create a knowledge, innovation and entrepreneurial support
system through a collaborative community of national and
international experts, practitioners and other partners.
To offer a platform for resolution of inter-sectoral and inter
departmental issues in order to accelerate the implementation of
the development agenda.
To maintain a state-of-the-art Resource Centre, be a repository
of research on good governance and best practices in
sustainable and equitable development as well as help their
dissemination to stake-holders.
To actively monitor and evaluate the implementation of
programmes and initiatives, including the identification of the
 needed resources so as to strengthen the probability of success
and scope of delivery.
To focus on technology upgradation and capacity building for
implementation of programmes and initiatives.
To undertake other activities as may be necessary in order to
further the execution of the national development agenda, and
the objectives mentioned above..
.

Working of NITI AAYOG

Two key activities of the Planning Commission had been to prepare
and implement the Five Year Plans and to allocate financial resources
to states. Neither of these activities forms a part of the mandate of Niti
Aayog. The Twelfth Five Year Plan, which will conclude on March 31
this year, will be Indias last Five Year Plan.
Likewise, Niti Aayog does not allocate any financial resources to
states. The 14th Finance Commission raised the share of states in the
divisible pool from 32% to 42%, leaving no additional funds for
allocation to states through Niti Aayog. The annual resource allocation
exercise that brought state chief ministers to the doorstep of the
Planning Commission is now a thing of the past.
Among many functions that Niti Aayog performs, three stand out:
promotion of cooperative, competitive federalism; assisting the central
government in policy making; and serving as the governments
thinktank. These three functions complement each other instead of
being mutually exclusive.
The Governing Council of Niti Aayog, which includes all state chief
ministers and lieutenant governors of the Union territories, set in
motion the first function at its maiden meeting on February 8, 2015. It
appointed three subgroups of chief ministers to advise the central
government on the subjects of Centrally Sponsored Schemes, Skill
Development and Swachh Bharat Mission. It also set up two task
forces at the Aayog on Agricultural Development and Elimination of
Poverty, with parallel task forces on each subject constituted in the
states and Union territories.
Assisted by the Aayog, the subgroups completed their work and
submitted the reports in relatively short time. The two task forces
followed. The recommendations in the five reports have been either
implemented or are under consideration.
The Aayog has also helped promote reforms in the states. It has
formulated a model land-leasing law, which Madhya Pradesh has
adopted and Uttar Pradesh has substantially incorporated into a
pre-existing law. Several other states are actively considering
adopting the model law.
The Aayog is also leading a campaign to bring about major reforms in
agricultural marketing. Furthermore, it has taken the initiative to help
resolve and expedite decisions on numerous issues of states pending
for months with various central ministries. It also identifies and
spreads the best practices across states in various areas through regular
interactions with state officials from relevant ministries.
In its policy making role at the Centre, the Aayog has taken the
initiative to identify numerous sick Public Sector units for closure.
Action on 17 such units is under way. The Aayog has also
identified several functioning units for strategic disinvestment.
Finance ministry must now move ahead with the actual sales of
these units.
A big bang reform the Aayog has proposed is the replacement of
the Indian Medical Council Act, 1956, by a Medical Education
Commission Act to overhaul medical education in India. The
proposed Act would require entrance and exit examinations and
replace input norms in the assessment of medical colleges by
outcome norms.
A comprehensive National Energy Policy draft is ready to be placed in
public domain for wider consultation. The Aayog is also working on
the creation of 20 world-class universities and reform of the University
Grants Commission Act, 1956 and All India Council of Technical
Education Act, 1987. It has also championed the launch of Coastal
Employment Zones to accelerate the creation of well-paid jobs.
As a part of its thinktank function, the Aayog has brought out a book
of best practices, conducted workshops of state officials to spread these
practices, collaborated with thinktanks, created the utility India Energy
Security Scenarios 2047, sponsored policy research and published
several occasional papers. It is also in the process of bringing out the
15-year Vision, 7-year Strategy and 3-year Action Plan documents.
It also organises the Transforming India lecture series featuring such
high-profile speakers as Tharman Shanmugaratnam, Deputy Prime
Minister of Singapore and Bill Gates. The Prime Minister, the entire
Cabinet and the top bureaucrats attend these lectures.
The Aayog has also led the way for the creation of a vibrant innovation
and entrepreneurship ecosystem in the country through its Atal
Innovation Mission. The mission will soon establish tinkering labs in
more than 200 schools as well as several incubators to promote
innovation and entrepreneurship.
Organisationally, the Aayog had inherited 1,200 positions from the
Planning Commission, which it downsized to 500. Subsequently, it
has taken the initiative to appoint approximately 45 young
professionals and a dozen senior officers from outside. These
additions have brought great energy to the institution.
When the Prime Minister invited me to join the Niti Aayog two years
ago, the excitement of assisting him in the transformation of India
overwhelmed the fear of taking up the challenge. I instantly accepted
his generous offer. I feel proud, two years later, of what the hard-
working staff of Niti Aayog have accomplished. I hope we can
maintain this momentum as we step into our third year.
.
Let's look at some structural features of the NITI Aayog, and let's
find out the differences from those in the Planning Commission:
Governing Council: It consists of the CM's of all the states and the
LG's of all the Union Territories. What this means is that the states will
have a say in the proceedings of the new Commission. Earlier, this
communication used to happen in the NDC which constituted the CM's
of all the states and was headed by the Prime Minister. That looked OK
on paper but as time passed, the states came to have lesser and lesser
say on the allocation of funds from the center to the states. Let's see if
this Governing Council is as good as it claims to be in actual working
for cooperative federalism.

Advisory Body: The Planning Commission too was an advisory and

non-statutory body. The problem with such kind of bodies is that once
their credibility is established, their powers and influences know no
bounds since they are not properly defined nor limited by any law or
any provisions of the constitution. Thus, the Planning Commission had
the audacity to bring the povery line down to a ridiculous level.

Planning Approach: This is where things get interesting. Earlier, the

Planning Commission would prepare an approach paper regarding the
next five year plan, keeping in mind sectoral targets, implementation
and progress of the present plan and overall growth profile envisaged
for the economy for the next 15-20 years. Within this approach the
states were then asked to formulate and submit their own plans which
would then be taken up for discussions at the expert or political level.
The NITI Aayog is constituted to do the opposite. It's working is
supposed to be based on a bottom-up approach wherein the decisions
will first be taken at local level and then endorsed by the central govt.
But here is another catch, "The NITI Aayog will develop mechanisms
to formulate credible plans to the village level and aggregate these
progressively at higher levels of government", said the govt. press
release. Whether this means that villages will formulate their own
plans with our without the interference of the Aayog is yet to be seen.
In any case though, it's a welcome change from the earlier position in
which the local bodies had little to no say in the planning process.
Reactions of various state govts
This is an important point to consider. The details of the working of the
NITI Aayog are not available, not even to the state govts. By and large,
they have welcomed the change. But they are also skeptical of the fine
print. The actual mechanism of funds transfer and information flow
from the center to the states and vice versa is not available as of now.
There are also concerns as to whether the NITI Aayog will eventually
work as an appendage of the PMO, in which case it will do more harm
than good.
The states of Telangana, Andhra Pradesh and Gujarat have whole
heartedly supported the scrapping of the Planning Commission and the
formation of the NITI Aayog.
On the other hand, states like Kerala, Karnataka and Bihar are
opposing it. While Kerala and Karnataka, being ruled by Congress led
govts. are still nostalgic about the Planning Commission, Bihar's
opposition comes due to the lack of consulation with the state govts.
before the formation of the NITI Aayog. This seems to be credible
given the lack of details with the state govts. themselves.
Somewhere in the middle, the states of Tamil Nadu, Orissa and Assam
are wary of the lack of clarity in the press release and are eagerly
waiting for the details to emerge regarding the allocation of funds.
Conclusion:
Its very early to say whether the NITI Aayog will be different from the
Planning Commission or it is the same old wine in a new bottle. It is
still an advisory and non-statutory body so it can be scrapped easily if
it does not fit in the scheme of things. It's better to let it work for one
round to come to any conclusion. Until that time, all we can have is
speculations from different and opposing quarters.
NITI Aayog will function in close cooperation, consultation and
coordination with the Ministries of the Central Government and State
governments. While it will make recommendations to the Central and
State Governments, the responsibility for taking and implementing
decisions will rest with them. NITI Aayog will seek to facilitate and
empower the critical requirement of good governance which is
people-centric, participative, collaborative, transparent and policy-
driven. It will provide critical directional and strategic input to the
development process, focussing on deliverables and outcomes. This,
along with being as incubator and disseminator of fresh thought and
ideas for development, will be the core mission of NITI Aayog.
Any criticism that leads to improvement or transformation is welcome.
More studies are required to be done along with accountability. A clear
roadmap of plans and ideas have to be there. The institution is
expected to serve the purpose of co-operative federalism. NITI Aayog
should make evaluations of the flagship programmes being run by the
Government and help in delivering those programmes on ground. It
has a role in governance and its larger role is to align with the
Government policies and give them suggestions. To make it strong,
some powers should also be vested in them