[Yojana Archive] NITI Aayog: Redefining Federalism

May 2020
  • A few decades ago, when we talked of Federal Structure, one generally drew a uni-dimensional picture, in mind, with Centre on the top of all the States.
  • We rarely saw it as a synergy between the States, and a common strategy to develop and grow together.
  • Though, this is the new-age approach of the Federal Structure based on cooperative and competitive federalism defined and re-emphasized with the formation of NITI Aayog.

What is Federalism?

  • Essentially, federalism is an institutional mechanism to accommodate two sets of polities—one at the regional level and the other at the national level. Each government is autonomous in its sphere.
  • The Indian Constitution provides for a federation with a strong center.
  • It does not use the word ‘federation’ and has described India as a “Union of States”, which implies the ‘cooperative’ nature with certain unitary features.
  • The Union, State, and Concurrent lists demarcate the responsibilities and functions of the two.

The idea behind Indian Federalism

Federalism has to continuously maintain a difficult balance between the Centre and the States with decentralization of resources, strengthening them all by bringing the weaker leg forward, creating healthy competition among the States in the form of Health, Sanitation Rankings, etc.

  • The idea is to develop a culture and a set of values and virtues like mutual trust, and a spirit of cooperation among the people and policies.
  • It is about acknowledging and celebrating unity as well as diversity, respecting the boundaries as well as transcending the boundaries.
  • The most common analogy given for such a structure is ‘the brain’ and ‘the body parts’.
  • The way they work in tandem with perfect synchronization is the spirit, mind, and soul of federalism as well.
  • Each organ is dependent on the other for smooth functioning and growth of the entire body.

NITI Aayog

  • The NITI Aayog (abbreviation for National Institution for Transforming India) is a public policy think tank of the Government of India.
  • It is established with the aim to achieve sustainable development goals with cooperative federalism by fostering the involvement of States in the economic policy-making process using a bottom-up approach.

Its founding principles include:

  1. Cooperative federalism (a collaboration between the Central and State Governments) and
  2. Competitive federalism (spurring healthy competition among States)

NITI Aayog Vs Planning Commission: A comparison

  • Planning Commission and NITI Aayog, their mandate and approach of the two institutions, with the same overarching goal of developing India, could not be more different.
  • Planning Commission operated through the lens of Five-Year Plans, using financial resources as the primary lever for guiding development.
  • NITI Aayog, on the other hand, is driven primarily through intellectual firepower as well as the mandate and capability of forging meaningful partnerships with the stakeholders
  • While the Planning Commission acted as a fund disburser, NITI Aayog works as a thought partner with all stakeholders, especially the States, which are the principal agents for fostering economic development in the country.
  • While the Planning Commission followed a top-down model, the NITI Aayog is using a bottom-up approach.
  • While the Planning Commission impinged on the fiscal sovereignty of the States, they are now empowered to decide how best to use their funds, without being mandated to follow a top-down direction.
  • The NITI Aayog has replaced the Central Government’s practice of unilaterally designing the pan-Indian development strategy-while working with State Governments to jointly prepare development blueprints.

Notably, the Planning Commission adopted a ‘onesize- fits-all’ approach towards the Indian States. NITI Aayog, on the other hand, is guided by a ‘States-first’ approach.

Various initiatives by the NITI Aayog

[1] For regional development

  • The NITI Forum for North East has been constituted and tangible sectoral proposals are being implemented by the States in partnership with the North East Council.
  • It has designed some major initiatives for island development which are being implemented by relevant authorities under the overall guidance of the Ministry of Home Affairs.
  • It is also envisaged that like the NITI Forum for the North East, other regional councils of contiguous States could be formed in the coming months.

[2] Various Indicators

NITI promotes competitive federalism by pushing its sectoral indices which are put out in the public domain.

  • The indices on water, education, health, innovation, export preparedness, and Sustainable Development Goals (SDGs) have attracted significant positive attention through SDG India Index.
  • The ‘Performance in Health Outcomes’ Index, for instance, captures the overall performance of States in health along with annual improvements in health outcomes, governance, and processes.
  • Similarly, the Composite Water Management Index details how States have progressed on water-related issues over time.
  • The ‘School Education Quality Index’ and Performance Grading Index aims to institutionalize a focus on improving education outcomes (learning, access, equity) in India.

[3] Policy inputs

  • NITI Aayog has been continuously engaged in providing fresh policy-related inputs for implementation by relevant Central Government Ministries and State Government agencies.
  • It has been involved in drafting the National Medical Commission Bill and the bills for reforming the education system pertaining to Indian Systems of Medicine and Homeopathy.
  • Several policy suggestions are contained in NITI’s document ‘Strategy for New India @ 75’. It is a seven-year strategy.
  • The Centre has passed important legislation in the agriculture sector. The onus is now on the States to implement this reform and pave the way for significantly enhancing productivity and doubling farmers’ income.

[4] Various development programs

NITI Aayog has also introduced a competition element in the ‘Aspirational Districts Program’ which aims to raise the human development indicators in these districts to the national averages by focusing on governance improvement and achieving effective convergence among government agencies and organizations on the ground.

NITI Aayog has been focused on nurturing an innovation ecosystem across the country through the Atal Innovation Mission (AIM). It is a flagship initiative of NITI for promoting innovation and entrepreneurship across the length and breadth of the country.

AIM promotes an innovative mindset in school students through Atal Tinkering Labs (ATLs) which feed into start-ups fostered by the Atal Incubation Centres (AICs).

[5] Various schemes

  • NITI Aayog has also been closely involved with the design and monitoring of the Ayushman Bharat program.
  • It has played a similar key role in the POSHAN Abhiyaan which the Government launched to provide an appropriate governance structure that affects the nutritional status of an individual or household.
  • It has also implemented the SATH – ‘Sustainable Action for Transforming Human Capital’ program in 3 States.
  • It shared a road map for Pradhan Mantri Krishi Sinchayee Yojana with all States and Union Territories.

Way forward

  • In the years to come, India needs to make similar persistent efforts wherein both the Central and State Governments work jointly to solve the country’s most complex issues and unleash growth.
  • To meet the rising aspirations of our young population, India needs to achieve and sustain a high rate of GDP growth for the next three decades.
  • In pursuit of this goal, continued structural reforms are crucial for laying new foundations to ensure sustained and inclusive growth.
  • NITI Aayog has a key role to play in helping India undertake these reforms and implement policy initiatives in a scalable and impactful manner through partnerships with States.
  • To achieve the goal of rapid, sustained, and clean growth that generates employment for all, investing in the right physical and social infrastructure, is a prerequisite.

NITI Aayog with its intellectual breadth and depth is well placed to help India achieve these goals.


  • NITI Aayog has endeavored to pursue its twin mandate of promoting cooperative and competitive federalism through partnerships with States for designing and reviewing development plans.
  • Ultimately, the onus of putting India on a high-growth trajectory and ensuring that the benefits of growth are equitably distributed rests with both the Centre and States.
  • NITI Aayog will continue to work towards strengthening cooperative federalism in the country, thereby enabling the Centre and States to work in tandem as equal partners for ensuring India’s success.
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