Is the NITI Aayog relevant today?

Is the NITI Aayog relevant today?

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1. This column debates the relevance of NITI Aayog, its shortcomings and why planning commission failed in India.

Why is Niti Aayog Relevant

2. As a premier think tank of the government:

• The first mandate of NITI Aayog is to act as a think tank. It was formed to bring fresh ideas to the government.
• It is a platform where innovative ideas come from Industry, academia, civil society etc and flow into the government system for implementation.
• Initiatives like Ayushman Bharat, Draft bill to establish the National Medical centre to Replace Medical Council of India, etc have been conceptualized by the NITI Aayog.
• By collecting fresh ideas and sharing them with the Central and State governments, it pushes frontiers and ensures that there is no inertia, which is quite natural in any organization or institution.

3. NITI Aayog acts as a bridge between various ministries:

• Any important government scheme requires a huge degree of convergence across a number of Ministries and between Central and state governments.
• NITI Aayog is best placed to achieve this convergence and push the agenda forward.

4. NITI Aayog helps in bringing about a greater accountability in the system:

• The Five-Year Plans were mostly evaluated long after the plan period had ended. Hence, there was no real accountability.
• NITI Aayog has established a Development Monitoring and Evaluation Office which collects data on the performance of various Ministries on a real-time basis.
• This performance- and outcome-based real-time monitoring and evaluation of government work can have a significant impact on improving the efficiency of governance.
• NITI Aayog also comes up with performance-based rankings of States across various verticals to foster a spirit of competitive federalism.
• NITI Aayog remains an integral and relevant component of the government’s plans to put in place an efficient, transparent, innovative and accountable governance system in the country.

5. NITI Aayog is also instrumental in Improving innovation

• The Atal Innovation Mission, which is established under NITI Aayog, has done commendable work in improving the innovation ecosystem in India.
• It has established more than 1,500 Atal Tinkering Labs in schools across the country and this number is expected to go up to 5,000 by March 2019.
• It has also set up 20 Atal Incubation Centers for encouraging young innovators and start-ups.

6. NITI Aayog identifies the best practices in different States in various sectors and then replicates them in other States.

7. It also plays an important role of being the States’ representative in Delhi, and facilitates direct interactions with the line ministries, which can address issues in a relatively shorter time.

Problems with NITI Aayog

8. NITI Aayog has no role in influencing, let alone directing, public or private investment.

9. It does not seem to have any influence in policy making with long-term consequences (for instance, demonetization and the Goods and Services Tax).

10. NITI Aayog should maintain a respectable intellectual distance from the government and give honest opinion whenever necessary but instead it just sings praise of all the government’s initiative.

11. NITI Aayog hails the private corporate sector as the savior of Indian economy but fails to appreciate the contribution of India’s public sector in building Indian society.

Why Planning Commission declined in India

12. The erstwhile Planning Commission had been on the decline since 1991, much before the final blow was delivered to it by the present regime in 2014.

13. The charge of the Planning Commission was entrusted to eminent experts, many of whom had trained in neoliberal schools.

14. These neoliberals could not understand the importance of an inclusive and equitable path of economic development in India.

15 The rise of neoliberals, the decline of erstwhile socialist regimes worldwide, and the rise of right-wing market fundamentalists within the country paved the way for the demise of the Planning Commission.

What India lacked in its planning

• India could not harness the productive use of labour through an export-oriented manufacturing strategy unlike the East Asian and Southeast countries.

Planning in Other countries

16. China and other East Asian countries: where planning succeeded.

• China ensured that after its market oriented economic reforms began, its State Planning Commission became more powerful.
• This resulted in growth and poverty reduction on an unprecedented scale.
• Backed by an industrial policy driven by its planning commission it became the ‘factory of the world’.
• Similarly, in all East Asian and Southeast Asian countries, industry policy was planned and executed as part of five-year or longer-term plans.
• Since these countries had a planning institution which guided their industrial policy, they managed to survive global economic crisis and at the same time sustained good growth rate.

17. Latin America and Sub-Saharan Africa: where lack of planning proved costly

• These countries abandoned planning and became captives of the Washington Consensus; an economic reforms package promoted by US based institutions like the IMF, World Bank etc.
• Two full decades of potential economic growth and human development were lost when per capita income barely rose even as populations continued to grow.

Way Forward

18. India cannot risk going the way of Latin American or Sub-Saharan countries, since it is already past the midpoint of its demographic dividend.

19. Complex country like India cannot transform itself with new ideas and strategies if it doesn’t have a paradigm of planning for development.

20. India requires planning that addresses social justice, reduces regional and gender inequalities, and ensures environmental sustainability.

21. If NITI Aayog is to implement such a strategy within a planning framework in India, two major changes in governance structures are needed.

• First, planning will have to become more decentralized, but within a five-year plan framework.
• Second, bureaucracy will need to change from generalist to specialist, and its accountability will have to be based on outcomes achieved, not inputs or funds spent.

22. If it succeeds, NITI Aayog could emerge as an agent of change over time and contribute to the Prime Minister’s agenda of improving governance and implementing innovative measures for better delivery of public services.