NITI Aayog’s Assessment

Ex-finance panel chief Kelkar for setting up ‘Niti Aayog 2.0’


Mains Paper 3: Economy | Indian Economy Issues relating to planning

From the UPSC perspective, the following things are important:

Prelims level: Not Much

Mains level: Analysing effectiveness of the erstwhile NITI Aayog and Planning Commission


  • Former Finance Commission chairman Vijay Kelkar has pitched for setting up of a ‘new NITI Aayog’ and giving it responsibility for allocating capital and revenue grants to the states.

Towards India’s New Fiscal Federalism

  1. Kelkar, in his paper said it is desirable that a functionally distinct entity such as the new Niti Aayog be put to use to do the job at hand related to the structural issues.
  2. It should function for removal of regional imbalances in the economy.
  3. However he did not suggested that the later to take the form of the old Planning Commission.
  4. Socialist-era Planning Commission was replaced by think-tank Niti Aayog on January 1, 2015, by the Modi government.

NITI Aayog isn’t effective?

  1. Kelkar argued that replacing the Planning Commission, which was promoting regionally balanced growth in India, by the Niti Aayog, a think tank, has reduced the government’s policy reach.
  2. This would mean that the new Niti Aayog or Niti Aayog 2.0 will be responsible for allocating development or transformational capital or revenue grants to the states.
  3. Kelkar also suggested that in order to make the new Niti Aayog more effective, it is essential to ensure that the institution is at the ‘High Table’ of decision making of the government.
  4. This means the vice-chairman of the new Niti Aayog will need to be a permanent invitee of the Cabinet Committee on Economic Affairs (CCEA).
  5. Thus, the new Niti Aayog will make available to the highest level of policy making the knowledge-based advice and provide the national and long term perspective on the policy proposals.

Need for Financial Autonomy

  1. India has consistently accelerated its growth rate over the last three decades.
  2. India’s democracy has proved to be sine qua non for effectively formulating key economic policies and conducting policy reforms in a country that is so diverse.
  3. Kelkar pointed out that the new Niti Aayog will annually need the resources of around 1.5 to 2 per cent of the GDP to provide suitable grants to the states for mitigating the development imbalances.


NITI Aayog

NITI Aayog (National Institution for Transforming India)

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