Planning Commission of India: Functions, Change to NITI Aayog

Planning Commission of India is considered as an important institution in India’s governance system. It has major role in country’s economic planning for the overall growth.

Central Government had formed Planning Commission in India as central body to work comprehensively with the consecutive term of five years as country’s Five-Year Plans for economic and social sustenance cum governance.

A historic jump was by the freedom fighter, Netaji Subhas Chanrda Bose in 1938 while he brought an idea of such economic planning which was aimed at country’s independent authority. The first idea came when he was Congress president and insisted for its development.

A Planning Commission had already been established by the British government before India’s independence that was for a short tenure from 1944 to 1946.

After independence, its democratic setup involved industrialists as well as economists to work independently and form development plans. It enhanced country’s economic planning.

First and Subsequent Planning Commissions (India)

India espoused formal model of planning by constituting its 1st Planning Commission after independence on March 15, 1950. This Commission team was authorized to report to Prime Minister directly as first Prime Minister, Pundit Jawaharlal Nehru was its chairman and rest members were supposed to work in synchronization with Deputy Chairman of this Commission.

Main purpose to constitute 1st Five-year Plan and its launch in 1951 was to assure country’s agricultural sector getting more support for timely growth and the complete development. Two more plans were made as succeeding Planning Commissions until 1965 but a break came thereafter due to neighbourhood conflicts between India and Pakistan during that period.

Other issues hindered development of Planning Commission for two more years when country faced drought condition and currency devaluation issues correspondingly. These two issues caused rise in general prices. The 3rd Planning Commission was established from 1966 to 1969 and then things normalized with the setup of 4th Five-year plan starting from 1969.

Since then Five-yearly Planning Commission continued until disruption in the setting up of 8th Plan in 1990 which did not devise due to country’s political volatility. Two years from 1990-91 to 1991-92 were considered for annual plans until setting up of 8th Plan in 1992.

Functions of the Indian Planning Commission

  1. To make an evaluation of the material, capital and human resources of the country, including technical employees, and investigate the possibilities of augmenting those are related resources which are found to be deficient in relation to the nation’s requirement.
  2. To devise a plan for the most effective and balanced utilisation of country’s resources.
  3. To define the stages, on the basis of priority, in which the plan should be implemented and propose the allocation of resources for the due completion of each stage.
  4. To specify the factors that tends to retard economic development.
  5. To determine the conditions which need to be established for the triumphant execution of the plan within the incumbent socio-political situation of the country.
  6. To determine the nature of the mechanism required for securing the successful implementation of each stage of the plan in all its aspects.
  7. To evaluate from time to time the improvement achieved in the implementation of each stage of the plan and also recommend the adjustments of policy and measures which are deemed important for successful implementation of the plan.
  8. To make required recommendations from time to time regarding those things which are deemed necessary for facilitating the execution of these functions. Such recommendations can be related to the current economic conditions, current policies, measures or development programmes.

In 2014, Prime Minister Narendra Modi announced his objective to dissolve the Planning Commission. It has since been replaced by a new institution named NITI Aayog. NITI Aayog is a Government of India policy think-tank.

The assured aim for NITI Aayog’s formation is to promote involvement and participation in the economic policy-making process by the State Governments of India.

It has adopted a bottom-up approach in planning which is a noteworthy contrast to the Planning Commission’s tradition of top-down decision-making. One of the important directives of NITI Aayog is to bring cooperative competitive federalism and to improve Centre-State relation.

Composition of NITI Aayog

The NITI Aayog comprises the following:

  1. Prime Minister of India as the Chairperson,
  2. Governing Council comprising the Chief Ministers of all the States and
  3. Lt. Governors of Union Territories

Regional Councils formed to address specific issues and contingencies impacting more than one state or a region. These will be formed for a specified tenure.

The Regional Councils will be convened by the Prime Minister and will comprise of the Chief Ministers of States and Lt. Governors of Union Territories in the region.

These will be chaired by the Chairperson of the NITI Aayog or his nominee. Experts, specialists and practitioners with relevant domain knowledge as special invitees are nominated by the Prime Minister.

The full-time organizational framework will comprise of, in addition to the Prime Minister as the Chairperson.

Major objectives of The NITI Aayog

  1. To evolve a shared vision of national development priorities, sectors and strategies with the active involvement of States in the light of national objectives. The vision of the NITI Aayog will then provide a framework ‘national agenda’ for the Prime Minister and the Chief Ministers to provide impetus to.
  2. To promote cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognizing that strong States make a strong nation.
  3. To develop mechanisms to formulate credible plans at the village level and aggregate these progressively at higher levels of government.
  4. To ensure, on areas that are specifically referred to it, that the interests of national security are incorporated in economic strategy and policy.
  5. To pay special attention to the sections of our society that may be at risk of not benefitting adequately from economic progress.
  6. 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.
  7. To provide advice and support partnerships between key stakeholders and national and international like-minded Think Tanks, as well as educational and policy research institutions.
  8. To create a knowledge, innovation and entrepreneurial support system through a collaborative community of national and international experts, practitioners and other partners.
  9. To offer a platform for resolution of inter-sectorial and inter-departmental issues in order to accelerate the implementation of the development agenda.
  10. 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.
  11. 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.
  12. To focus on technology up-gradation and capacity building for implementation of programmes and initiatives.
  13. To undertake other activities as may be necessary in order to further the execution of the national development agenda, and the objectives mentioned above.

Planning Commission was an advisory body, and so is NITI Aayog. Main difference between Planning commission and NITI Aayog is that while the former had powers to allocate funds to ministries and states, this function will be now of finance ministry. 

The role of states in the planning commission era was restricted. The states yearly needed to interact with the planning commission to get their annual plan approved. They had some limited function in the National Development Council.

Since NITI Aayog has all chief ministers of states and administrators of UT in its Governing Council, it is obvious that states are expected to have greater role and say in planning/ implementation of policies.

By B2B

Revisiting the Basics

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