‭Regardless of the form of governance—whether monarchical or aristocratic, totalitarian or‬

‭democratic—public policies have been formulated and implemented across almost all systems of‬
‭governance. Since the primary objective of politics and administration is to achieve good governance‬
‭and the good life, the study and analysis of public policy becomes especially significant. Marshall‬
‭DeMonk defines policy as a consciously accepted code of conduct that guides administrative‬
‭decisions. It is noteworthy that the policy-making process has always been an essential element of‬
‭political and administrative activities. From this perspective, public policies are as old as‬
‭governments themselves.‬

‭Thomas R. Dye, in his seminal work‬‭Understanding Public Policy‬‭(1975), defines public policy as those‬
‭decisions and actions taken—or not taken—by the government. Paul H. Appleby, recognizing the‬
‭interrelation between administration and policy, asserted that “the essence of public administration‬
‭is policy-making.” Public policies are primarily developed by governmental structures and officials,‬
‭although non-governmental organizations and institutions also exert both direct and indirect‬
‭influence on the policy-making process. In essence, public policies are government decisions arising‬
‭from actions undertaken to achieve specific goals and objectives. Understanding the nature of public‬
‭policy requires highlighting some of its key characteristics, as contextualized by Sushant Jha (2015).‬

‭In India, developmental work and schemes have historically been executed according to the‬
‭five-year plans formulated by the Planning Commission, which was established on 15 March 1950.‬
‭However, with changing economic and social dynamics, the Planning Commission was replaced by a‬
‭new institution, the NITI Aayog, which was constituted on 1 January 2015 through a resolution of the‬
‭Union Cabinet. NITI Aayog serves as the principal policy-oriented think tank of the Government of‬
‭India, offering policy direction and guidance. In addition to formulating long-term strategies and‬
‭programs for the government, NITI Aayog provides strategic and technical advice to the Centre as‬
‭well as to the States and Union Territories.‬

‭NITI Aayog serves as a crucial platform for cooperative federalism by bringing states together to‬
‭work in the national interest. As per the NITI Aayog Report (2022), the Honorable Prime Minister‬
‭Narendra Modi currently serves as the Chairman, while Mr. Suman Berry holds the position of Vice‬
‭Chairman (NITI Aayog Report, 2022–2023). The formal conclusion of the Planning Commission's role‬
‭in governance was announced by Prime Minister Modi during his Independence Day address from‬
‭the historic Red Fort on 15 August 2014—India’s 67th Independence Anniversary. In January 2015,‬
‭with the establishment of NITI Aayog, India laid the foundation for a new indigenous ideological‬
‭revolution by forming the National Institution for Transforming India.‬

‭It is important to note that industrialized countries have demonstrated that capitalism is not‬
‭inconsistent with planning. In India (and elsewhere), the association of central planning with‬
‭socialism is understandable, especially given that Jawaharlal Nehru, India's first Prime Minister, was‬
‭a Fabian Socialist who was significantly influenced by the achievements of the Soviet Union in the‬
‭decades following its 1917 revolution. This socialist influence was also visible in the tenure of Indira‬
‭Gandhi—Nehru’s daughter and India’s third Prime Minister (1967–1977 and again from‬
‭1980–1984)—who amended the Indian Constitution to include the term “socialist republic” in its‬
‭Preamble. It now reads: “We, the People of India, having solemnly resolved to constitute India into a‬
‭sovereign socialist secular democratic republic…” (emphasis added).‬

‭However, there was little substantive evidence of socialism in her policies. Indira Gandhi equated an‬
‭increase in public sector enterprises and the nationalization of private banks in 1969 with socialism.‬
‭Yet, state intervention or ownership alone does not constitute socialism. India was essentially a‬
‭mixed economy—marked by a growing public sector in industry during the first three decades of‬
‭planned development, and a blend of semi-feudalism and capitalism in the organization of agrarian‬
‭relations (Bhaduri 1973; Bharadwaj 1974).‬

‭India’s economy performed reasonably well under the state-driven model during its first fifteen‬
‭years. Between 1951 and 1965, during the first three five-year plans, industry grew faster than‬
‭during the colonial era, primarily due to an import-substitution industrialization (ISI) strategy. This‬
‭was widely considered an appropriate development approach at the time and was adopted by many‬
‭developing countries. However, problems arose when this ISI strategy was retained well beyond its‬
‭effective period—largely due to early socialist-leaning influences and strong anti-colonial sentiment‬
‭(Bhagwati and Panagariya 2012). This prolonged adherence to ISI contributed to the failure of India's‬
‭economic strategy, but it should not be mistaken for a failure of planning per se.‬

‭Many East and Southeast Asian countries also implemented five-year plans, combining ISI with‬
‭export-oriented, labor-intensive industrial strategies. Planning played a vital role in their economic‬
‭"miracles," largely because they ensured the productive use of their most abundant‬
‭resource—labor—through export-driven manufacturing. India, by contrast, neglected this strategy. It‬
‭failed to produce for international markets during a time when the global economy (especially‬
‭Europe, North America, and Japan) was expanding rapidly. Instead, it focused inwardly on its‬
‭domestic market, a strategy that faltered because it was not accompanied by adequate investment‬
‭in agriculture, which would have increased consumer demand for manufactured goods (Chakravarty‬
‭1987).‬

‭The prevailing belief was that institutional agrarian reforms—such as the abolition of the zamindari‬
‭system, imposition of land ceiling laws, and land consolidation—would be sufficient to foster‬
‭equitable growth. However, this proved illusory. The real failure lay in the policy strategy itself, which‬
‭did not correctly identify or address the economy's key constraints—especially the lack of consumer‬
‭demand. Poor strategy and the use of crude policy instruments should not be mistaken for the‬
‭failure of planning as a concept.‬

‭Another serious shortcoming of India’s development model was the neglect of school education and‬
‭public/preventive healthcare. These were not failures of planning itself, but rather catastrophic‬
‭failures of the strategies employed within the planning framework. Nonetheless, one of the clear‬
‭successes of early planning in India was the growth of heavy industry and capital goods sectors‬
‭under state ownership—similar to developments in the Soviet Union and China. These initiatives led‬
‭to the establishment of various industries in which private investors had shown little interest.‬

‭Although the Planning Commission had been in decline well before the current government’s‬
‭resounding electoral victory, its formal end was marked by the Prime Minister’s Independence Day‬
‭speech from the Red Fort. The creation of NITI Aayog in January 2015 signaled the beginning of a‬
‭new era in India’s policy-making, grounded in indigenous thinking and strategic planning.‬

‭Here is a refined version of your text. All details and facts have been preserved while improving‬
‭clarity, structure, grammar, and readability:‬

‭In the popular imagination, national planning in India is closely associated with the names of‬
‭Jawaharlal Nehru and P.C. Mahalanobis, often evoking images of Soviet-style centralization.‬
‭However, from a historical perspective, the roots of planning in India are deeply indigenous, dating‬
‭back to 19th-century nationalist thinkers like Dadabhai Naoroji, R.C. Dutt, and Mahadeo Govind‬
‭Ranade. These early intellectuals emphasized state-led industrialization as essential for eradicating‬
‭national poverty. They argued that private initiative alone was insufficient to generate the scale of‬
‭economic stimulus required and highlighted the state's role in mobilizing savings, expanding‬
‭banking infrastructure, and promoting higher education.‬

‭Socialist ideas gained traction within the Indian National Congress after the Russian Revolution. At‬
‭its 1931 Karachi session, the Congress officially adopted the goal of a “socialist pattern of‬
‭development” for India. Nehru and Subhas Chandra Bose, both rising young leaders, were‬
‭particularly committed to this vision. After becoming Congress president at the Haripura session in‬
‭1938, Bose established the National Planning Committee on December 17, 1938, appointing Nehru‬
‭as its chairman.‬

‭As the first Prime Minister of independent India, Nehru sought to design an economic future that‬
‭would ensure prosperity, internal stability, and national security. To him, the Soviet Union’s rapid‬
‭industrialization from 1928 to 1952 appeared far more promising than the slower, centuries-long‬
‭Industrial Revolution of Western Europe. Thus, Indian planning in the 1950s was undeniably‬
‭influenced by the Soviet model, though it was not limited to this.‬

‭Nehru’s thinking drew from four principal influences:‬

‭1.‬ ‭The Soviet planning experiment‬‭, particularly the first Five-Year Plan (1928–1933);‬

‭2.‬ ‭Western development economics‬‭, which gained prominence in the 1950s and focused on‬
‭market imperfections, surplus labor, increasing returns, and fixed investments;‬
 ‭3.‬ ‭Elements of Gandhian thought‬‭, particularly in areas where Nehru and Gandhi shared‬
‭views on national welfare, despite ideological differences; and‬

‭4.‬ ‭Indigenous economic thinkers and early Indian economists‬‭, who shaped his‬
‭understanding of India's specific challenges.‬

‭Planning, in its broadest sense, is a universal activity practiced by both the public and private‬
‭sectors. Private firms create strategic plans for growth, while states engage in planning‬
‭infrastructure, towns, and economic development. John Hackett (2011) defines economic planning‬
‭as “the process by which key economic decisions are made or influenced by central governments,”‬
‭contrasting it with laissez-faire economics that relies on market forces.‬

‭Economic planning varies by degree of state intervention. Taruna Rajora distinguishes between‬
‭forms such as‬‭planning by direction‬‭,‬‭planning by inducement‬‭,‬‭perspective planning‬‭,‬‭indicative planning‬‭,‬
‭democratic planning‬‭,‬‭fixed planning‬‭,‬‭centralized‬‭, and‬‭decentralized planning‬‭. The form depends on the‬
‭political-economic system—capitalist, socialist, or mixed.‬

‭From the 1920s onward, the Soviet Union embraced centralized planning. After World War II, most‬
‭developing and even some Western countries adopted explicit planning mechanisms. By the late‬
‭1960s, a majority of nations operated under some form of national economic plan. However, the‬
‭rise of neo-liberal ideology in the 1980s, marked by structural adjustment programs imposed by the‬
‭World Bank and the International Monetary Fund (IMF), led to a decline in planning institutions. In‬
‭many over-indebted countries of Latin America and Sub-Saharan Africa, the role of state planning‬
‭diminished drastically. With the collapse of the Soviet Union in 1991, planning fell into further‬
‭disrepute globally, often seen as partly responsible for that regime's failure.‬

‭Nevertheless, every East Asian “miracle” economy—from Japan and South Korea to Taiwan and‬
‭China—has consistently employed Five-Year Plans. China, despite its market reforms beginning in‬
‭1979, has maintained a strong planning apparatus. Its State Planning Commission, renamed the‬
‭National Development and Reform Commission (NDRC) in 2003, remains central to economic and‬
‭social strategy. It not only formulates Five-Year Plans and annual plans but also plays a pivotal role in‬
‭implementation and acts as the key policymaking think tank for both the Communist Party of China‬
‭(CPC) and the State Council.‬

‭In Japan, South Korea, and Taiwan, governments played a crucial role in addressing “coordination‬
‭failures” in the economy by facilitating private sector development. These nations demonstrated‬
‭that successful planning could coexist with a vibrant market economy.‬

‭India adopted a mixed economy model where public and private sectors coexisted, but the‬
‭state—through the Planning Commission (PC)—played the leading role in allocating resources‬
‭across sectors. However, by the late 1980s, the PC was increasingly seen as irrelevant, relegated to‬
‭approving public investments and vetting major projects. Its strategic vision had largely vanished.‬

‭This began to shift in the 2000s. The Eleventh and Twelfth Five-Year Plans renewed focus on‬
‭inclusive growth, environmental sustainability, and industrial policy. Despite a change in institutional‬
‭nomenclature, the need for planning persisted. As Pronab Sen observed, even though the term‬
‭“plan” was avoided, the newly formed NITI Aayog was tasked with developing a 15-year vision, a‬
‭7-year strategy, and a 3-year action plan. Only the latter was prepared in 2017; the other two‬
‭documents did not materialize. Nevertheless, as of late 2019, a new 15-year vision to 2035 was‬
‭reportedly under development.‬

‭The overarching goal remained economic and social development, but the approach evolved.‬
‭Planning was evaluated by its success in improving living standards, building a productive base, and‬
‭advancing public health, sanitation, and education.‬

‭Living standards had stagnated in colonial India, but the GDP growth rate achieved during the first‬
‭five plans (1951–52 to 1979–80), including three Annual Plans (1966–1969 and 1979–80), averaged‬
‭3.5% per annum. This figure—coined the “Hindu rate of growth” by economist Raj Krishna—was‬
‭modest compared to East Asia, but comparable to China at the time. However, poverty reduction‬
‭remained minimal during this period. The population rose steadily while GDP growth lagged, leading‬
‭to a significant increase in the absolute number of poor, as defined by the Planning Commission’s‬
‭Lakdawala poverty line.‬

‭It was only during the 10th and 11th Plans (2003–2014) that significant poverty reduction occurred.‬
‭GDP growth averaged an unprecedented 8% annually from 2004–05 to 2013–14. For the first time,‬
‭the number of people living below the poverty line dropped sharply—from 406 million in 2004–05 to‬
‭268 million in 2011–12, based on the Tendulkar poverty line.‬

‭Regarding the objective of “building the productive machine,” success in industrial diversification‬
‭was notable. As T.N. Ahluwalia (1997) observed, the share of consumer goods in industrial output‬
‭fell from 50% in 1956 to 30% by 1980–81, while capital goods rose from under 5% to 15% in the‬
‭same period. Another major achievement was resource mobilization. According to World Bank data‬
‭from the early 1980s, India ranked high among low-income countries in savings rates—behind only‬
‭China and Indonesia—although this was primarily driven by private, not public, savings.‬

‭However, there were multiple failures in planning when it came to "building a productive machine."‬
‭The Mahalanobis model, which formed the basis of the import substitution industrialization (ISI)‬
‭strategy in the Second Five-Year Plan (1956–1961), notably neglected the role of foreign trade. As‬
‭Ahluwalia rightly points out, the ISI strategy made no reference to relative costs. Moreover, the‬
‭model assumed that the government would have total control over consumption. Another key‬
‭assumption was that the capital goods sector would generate surpluses and contribute “increasingly‬
‭towards resource mobilisation for further development in fresh fields,” as stated in the Industrial‬
‭Policy Resolution of 1956. These assumptions collectively formed the Indian planning strategy for‬
‭industrialization. In hindsight, they proved to be costly—especially the neglect of foreign trade.‬

‭The import intensity of industrialization was severely underestimated, leading to a chronic shortage‬
‭of foreign exchange. With exports remaining low, India could not finance industrialization through‬
‭imported equipment. Just when East Asian countries were capitalizing on growing post-war‬
‭international demand, India’s policymakers clung to a mindset of export pessimism. This, along with‬
‭an over-reliance on import substitution—despite unfavorable relative costs—undermined India's‬
‭industrial strategy. This export pessimism was rooted in the Prebisch-Singer thesis, which warned of‬
‭declining terms of trade for developing countries.‬

‭This approach also had other drawbacks. It limited labor absorption and led to a slow increase in the‬
‭supply of consumer goods in the short and medium term. As Ahluwalia (1997: 260) noted, by the‬
‭mid-1960s it was becoming increasingly clear that the premise of export pessimism was flawed.‬
‭Many developing economies changed course during this period—but India, along with several Latin‬
‭American countries, continued to hold onto this pessimism, making it a self-fulfilling prophecy.‬
‭Ahluwalia also highlighted the disregard for the infant industry argument, which advocates for‬
‭time-bound and calibrated protection of new industries. Instead, protection was granted‬
‭indiscriminately to any industry that established domestic capacity, with no consideration of‬
‭comparative advantage or performance.‬

‭From the First Five-Year Plan onwards, planning emphasized the role of small-scale industries (SSIs)‬
‭in industrialization. The Planning Commission justified this focus for three main reasons: (a) SSIs,‬
‭especially cottage and village industries like handlooms and handicrafts, would generate‬
‭employment; (b) they would prevent concentration of economic power; and (c) they would ensure‬
‭regional dispersal of industry. The state promoted small enterprises while restricting the growth of‬
‭large ones through production licensing.‬

‭Initially, the first three Plans focused on promoting SSIs. However, starting in 1967, the focus shifted‬
‭to protecting them from competition by reserving specific products for SSIs. By the Fourth Plan‬
‭(1969–1974), this approach was firmly in place, and by 1991, 836 products were reserved for SSIs.‬
‭Financial incentives and protective measures, while well-intentioned, discouraged SSIs from scaling‬
‭up, leading to the emergence of a “missing middle” in Indian industry (Mehrotra et al., 2014). This‬
‭contributed to the growing informality in both industry and services. Instead of evolving into‬
‭medium-sized enterprises, millions of micro-enterprises remained small, informal, and outside the‬
‭tax net. These enterprises relied on low technology, offered low wages, and were trapped in a cycle‬
‭of low productivity and low growth.‬

‭A better strategy would have been an integrated approach that simultaneously encouraged both‬
‭small- and large-scale industries, as suggested in the Second and Third Plans and reaffirmed in the‬
‭Sixth and Seventh Plans. This dual-track strategy, successfully employed in Japan, was never truly‬
‭implemented in India.‬
‭Efforts to achieve regional dispersal of industry through planning were also largely ineffective due to‬
‭inappropriate instruments. Ahluwalia (1997) observed that the early Plans rightly emphasized‬
‭infrastructure development as the basis for dispersing industry. However, this approach was later‬
‭replaced with industrial licensing and, worse, with financial incentives during the Fourth Plan to‬
‭attract industry to backward regions. Without adequate infrastructure, these incentives failed to‬
‭produce meaningful results.‬

‭Planning was particularly weak in the social sectors—health, sanitation, and education. Drèze and‬
‭Sen (2013) have chronicled India's poor performance in these areas. In contrast, another planned‬
‭economy—China—achieved far superior social indicators over its first three decades of planning‬
‭(1949–1979). In India, weak strategies and poorly chosen instruments led to severe deficiencies.‬
‭Sanitation, for instance, was seriously neglected. By 2014, half of India’s population defecated in the‬
‭open, accounting for 60% of the global population doing so—despite India comprising only 17% of‬
‭the world’s population. This led to rampant oral–faecal contamination, contributing to some of the‬
‭world's worst rates of malnutrition, worse even than Sub-Saharan Africa.‬

‭As of 2015–2016, India’s child malnutrition rate was 36%, and stunting was at 39%, with India‬
‭accounting for half of the world’s undernourished children. Adult malnutrition was also high at 21%.‬
‭Yet, government spending on health remained just 1.15% of GDP in 2017. Human capital formation‬
‭was similarly neglected: by 2011, India had nearly 310 million illiterate people—almost equal to its‬
‭total population in 1947.‬

‭While these failures cannot be blamed solely on the Planning Commission, it did become more‬
‭involved in social policy after 1991. Economic growth post-liberalization led to increased tax‬
‭revenues, allowing for higher spending on centrally sponsored schemes (CSSs). These included the‬
‭National Rural Employment Guarantee Scheme and targeted health and education programs.‬
‭Designed in consultation with central ministries, these schemes were a hallmark of the PC’s social‬
‭role. However, their “one-size-fits-all” design ignored growing disparities among states in social‬
‭outcomes.‬

‭This expanded role of the Planning Commission came after the 1991 economic reforms. But‬
‭ironically, as social planning gained importance, the more powerful economic ministries—especially‬
‭the Ministry of Finance—came to dominate policymaking. This was unfortunate, as effective human‬
‭development depends on coordinated interventions across health, nutrition, education, sanitation,‬
‭and family planning (Mehrotra and Delamonica 2007; Mehrotra and Jolly 1997; Mehrotra 2016). The‬
‭absence of such coordination has undermined India’s human development outcomes. A revitalized‬
‭Planning Commission—or its successor, NITI Aayog—must take up this coordinating role.‬

‭Despite its limitations, the Planning Commission had two periods of significant influence: the early‬
‭years of industrialization, and the post-1991 period of social policy expansion. It is understandable‬
‭that a government with a new mandate would wish to leave its mark on the country’s institutional‬
‭framework. The creation of NITI Aayog (National Institution for Transforming India) marked both a‬
‭break from the past and the culmination of a gradual shift already underway.‬

‭Critics had long seen the Planning Commission as a rigid, bureaucratic body. The most dramatic‬
‭challenge to the planning regime came with the 1991 economic liberalization, which sought to‬
‭replace the state-dominated system with a market-driven one. Planning, once seen as central to‬
‭India’s economic strategy, now appeared incompatible with the opening up of the economy to‬
‭private enterprise and the removal of licensing controls. Yet, despite the radical shift in policy, the‬
‭institutional transformation from PC to NITI Aayog took nearly 25 years to materialize.‬

‭Emanating from the 1950 Planning Commission Resolution (PCR), the Planning Commission (PC)‬
‭gradually assumed three core functions over time:‬
‭(a) formulating Five-Year Plans (Function 2),‬
‭(b) allocating financial resources for the Plans (Function 3), and‬
‭(c) determining policies and programs, in coordination with Union ministries, consistent with the‬
‭Plan (Function 7), including appraisal of programs (Function 6).‬

‭For nearly 65 years, these remained the PC's central responsibilities—until it was abruptly disbanded‬
‭at the end of 2014. The PC typically allocated around 26% of the Union budget. This budgetary‬
‭allocation comprised three components: central sector schemes, centrally sponsored schemes, and‬
‭block grants. The remaining 75% of the Union budget—classified as the non-Plan component (e.g.,‬
‭subsidies, interest payments, and other committed expenditures)—was managed by the Ministry of‬
‭Finance.‬

‭Importantly, there was also consensus that the PC should refrain from short-term forecasts (e.g.,‬
‭quarterly revisions of growth or inflation). Instead, its focus should be on medium-term structural‬
‭issues. This structural focus aligns with the vision of the PC (and its successor) as the body‬
‭responsible for outlining the contours of industrial strategy, while implementation remains the‬
‭domain of line ministries such as the Department of Industrial Policy and Promotion, Department of‬
‭Commerce, Ministry of MSMEs, and the Department of Heavy Industries.‬

‭Hence, any future planning institution must prioritize industrial development, with its modelling‬
‭activities serving this strategic goal.‬

‭For over six decades, the Planning Commission held a venerable position in India’s economic and‬
‭political architecture—largely due to its foundation and early leadership under Jawaharlal Nehru. Its‬
‭prominence was rooted in a time when the state dominated the economy and a single political party‬
‭held sway across both the Centre and the states.‬

‭Over time, however, these foundational advantages eroded. Though the PC played a central role in‬
‭the initial industrial "big push," its prolonged emphasis on state-led heavy industry, in the Soviet‬
‭mold, led to relatively sluggish industrial and economic growth—especially when compared to the‬
‭rapid progress of East Asian nations.‬

‭Eventually, demands grew for a greater role for the market and private sector, culminating in the‬
‭landmark economic liberalization of 1991. This policy shift reduced the prominence of public‬
‭investment and the role of the PC. Simultaneously, India’s states began asserting themselves more‬
‭forcefully in economic governance, further diminishing the PC’s influence.‬

‭Despite these challenges, the PC made a concerted effort to adapt. Four major shifts characterized‬
‭its transformation over the 25 years following liberalization:‬

‭1.‬ ‭From comprehensive to‬‭indicative planning‬‭,‬

‭2.‬ ‭From‬‭state hegemony‬‭to accommodation of‬‭private sector expansion‬‭,‬

‭3.‬ ‭From planning for a‬‭producer state‬‭to that of a‬‭quasi-welfare state‬‭, and‬

‭4.‬ ‭From centralized control to‬‭coordinated planning‬‭within a framework of cooperative‬

‭federalism.‬

‭However, these adaptations did not satisfy growing criticisms. Ultimately, the PC was abolished in‬
‭2014 and replaced in 2015 by the‬‭NITI Aayog‬‭, envisioned as a think-tank rather than a‬
‭resource-allocating authority. This institutional overhaul followed a historic electoral victory that‬
‭brought a new government to power—one with a stronger orientation toward federalism and a‬
‭commitment to empowering states.‬

‭Crucially, the real driver behind this transformation was not any irremediable flaw within the PC, but‬
‭the‬‭cumulative rise in state power‬‭. This shift was most clearly reflected in the‬‭Fourteenth‬
‭Finance Commission’s‬‭recommendation to increase the states’ share in national tax revenues from‬
‭32% to 42%‬‭—a landmark move that significantly enhanced state autonomy.‬

‭While this decentralization is politically popular, it is worth noting a paradox: many states—often‬
‭governed by political dynasties or plagued by corruption—have shown‬‭reluctance to devolve‬
‭power further‬‭, especially to local bodies. In this context, the‬‭Goods and Services Tax (GST)‬‭holds‬
‭promise. By fostering a unified national market, the GST may promote greater integration and‬
‭coordination within India’s federal structure.‬

‭The Planning Experience in India‬

‭In recent years, there has been a tendency to view India’s development strategy as a continuous,‬
‭undifferentiated process, with little substantive variation from one plan to another. Nothing could‬
‭be further from the truth. Indian development strategies have evolved significantly across different‬
‭Five-Year Plans, shaped by the prevailing economic conditions and the challenges of the time. While‬
‭some of these changes were bold and innovative, others were more modest—but change was a‬
‭constant.‬

‭The First Five-Year Plan was more an agenda for national reconstruction than a true economic plan.‬
‭Emerging from the trauma of Partition, it focused on stabilizing a damaged economy. The Second‬
‭Five-Year Plan, however, marked the beginning of structured economic planning. Its primary‬
‭objective, set by political mandate, was to maximize the GDP growth rate within the limits of‬
‭available resources. At the time, the main constraint was the low domestic savings rate.‬
‭Conventional growth theories offered little optimism for rapid improvement.‬

‭The decision to treat the savings rate not merely as a constraint but also as an explicit objective was‬
‭influenced by Professor P.C. Mahalanobis—a technocrat rather than a politician. The emphasis on‬
‭building heavy industries through public investment served the dual purpose of industrialization and‬
‭increasing the economy’s savings rate. This approach was innovative and reflected the political‬
‭leadership’s confidence—especially that of Prime Minister Nehru—in the analytical capabilities of‬
‭technocrats. Planning began to be conceived over multiple time horizons: a 15-year perspective‬
‭plan, a five-year operative plan, and annual plans for detailed resource allocation.‬

‭By the time of the Third Plan, India faced growing balance of payments issues and a decline in global‬
‭primary product prices, prompting a strategic shift. A new constraint—foreign exchange—emerged,‬
‭alongside the existing savings constraint. Two approaches were considered: increasing exports or‬
‭reducing imports through domestic production. Boosting exports risked undermining the long-term‬
‭goal of raising the savings rate. Thus, the plan adopted‬‭import substitution‬‭as a strategy for‬
‭industrial growth. This aligned with both political aspirations for self-reliance and prevailing‬
‭economic theories skeptical of export-led growth. Despite its mixed legacy, this strategy garnered‬
‭considerable attention and was emulated by many developing countries.‬

‭Two key institutional developments also occurred during this period. First, the federal nature of‬
‭India’s Constitution necessitated decentralized planning. States were expected to prepare their own‬
‭plans within the framework of the national plan, supported technically by the Centre. Second,‬
‭import substitution required greater government intervention in industrial planning, leading to‬
‭detailed sectoral blueprints based on input–output models—even for private sector capacity‬
‭creation.‬

‭The Fourth Plan followed a period of economic hardship. Between 1965 and 1967, India experienced‬
‭severe droughts and food shortages. Simultaneously, foreign aid, including food assistance, was‬
‭withdrawn following the 1965 Indo-Pakistan War. These events brought‬‭food security‬‭to the‬
‭forefront of planning. The need to ensure adequate wage goods introduced a third constraint into‬
‭growth theory—the‬‭wage-goods constraint‬‭. Consequently, the Centre took a more active role in‬
‭agricultural development, a domain traditionally reserved for states. The Fourth Plan also‬
‭introduced early concepts of‬‭environmental sustainability‬‭, a theme that would only gain global‬
‭traction decades later.‬

‭The Fifth Plan was pivotal in recognizing that economic growth and industrialization alone would not‬
‭improve living standards for the poor. This led to a political shift in strategy, exemplified by Indira‬
‭Gandhi’s powerful slogan:‬‭"Garibi Hatao" (Remove Poverty)‬‭. The plan introduced the concepts of‬
‭minimum needs‬‭and targeted‬‭anti-poverty programmes‬‭. It also marked a departure from the‬
‭Mahalanobis model, reverting to the‬‭Harrod–Domar model‬‭, suggesting that savings had ceased to‬
‭be the dominant constraint and could once again be treated as a constraint rather than an objective.‬

‭The Sixth Plan explicitly acknowledged that the previous strategy had successfully raised the‬
‭national savings rate, making it no longer a binding constraint. Signs of‬‭excess industrial capacity‬
‭began to appear, prompting a strategic shift toward infrastructure and reduced focus on heavy‬
‭industries. This plan initiated a more‬‭technocratic‬‭approach, emphasizing realistic, rather than‬
‭visionary, targets—a trend that continued over the next three plans. During this time, political‬
‭enthusiasm for planning began to wane.‬

‭The Seventh Plan consolidated this shift and is often referred to as the‬‭"infrastructure plan"‬‭. It also‬
‭marked the beginning of a‬‭policy re-evaluation‬‭, with gradual movement toward a more‬‭liberal‬
‭trade regime‬‭and away from import substitution. Unlike earlier strategies, this change was‬
‭politically driven—spearheaded by Prime Minister Rajiv Gandhi—though technocrats were‬
‭responsible for translating it into an operational framework. In retrospect, the associated risks were‬
‭not fully appreciated.‬

‭The Eighth Plan was disrupted by the‬‭1991 foreign exchange crisis‬‭, intensified by the Gulf War,‬
‭which led to wide-ranging‬‭economic reforms‬‭during a two-year plan holiday. This plan was India’s‬
‭first attempt at planning in a‬‭market-oriented economy‬‭. While the transition was incomplete, the‬
‭economy performed unexpectedly well, achieving an average annual growth of‬‭6.7%‬‭.‬

‭Despite methodological improvements, the‬‭Ninth Plan‬‭failed to sustain this momentum. It made‬

‭significant adjustments to reflect new realities, recognizing that‬‭private investment‬‭was central to‬
‭achieving plan targets, and that it depended heavily on a well-functioning‬‭financial sector‬‭. For the‬
‭first time,‬‭financial constraints‬‭were identified as distinct from savings constraints. Weak financial‬
‭institutions could inhibit the productive use of available investible resources. Another major shift‬
‭was the recognition that‬‭aggregate demand‬‭—rather than resource availability—could become a‬
‭growth constraint, necessitating the integration of‬‭fiscal policy‬‭into the planning framework.‬
‭However, this insight was not fully acted upon. Fiscal pressures from implementing the Fifth Pay‬
‭Commission’s recommendations led to a sharp decline in public investment, triggering an economic‬
‭slowdown. A series of agricultural failures and tight monetary policy compounded the problem.‬

‭The‬‭Tenth Plan‬‭marked a return to‬‭visionary planning‬‭after a long period of incrementalism.‬‭It set‬

‭ambitious goals:‬‭doubling per capita income‬‭in 10 years and‬‭creating 100 million jobs‬‭. This‬
‭reflected the growing challenge of providing employment to a rapidly expanding workforce, driven‬
‭by‬‭demographic changes‬‭. Although population growth was slowing, the working-age population‬
‭had peaked during the Ninth Plan. However, employment growth had fallen sharply since the 1990s.‬
‭If this trend continued, about 2.5 million people would be added to the ranks of the unemployed‬
‭each year—an unsustainable scenario. Recognizing regional disparities in labour force growth and‬
‭economic opportunity, the plan emphasized‬‭balanced regional development‬‭and included, for the‬
‭first time, a‬‭separate volume on state-level planning‬‭.‬

‭The‬‭Eleventh Plan‬‭built on the Tenth Plan’s emphasis on employment and infrastructure, and‬
‭introduced the idea of‬‭inclusive growth‬‭. It prioritized‬‭human development‬‭, especially in health‬
‭and skills. This foresight proved crucial, as skill shortages became widespread with the economy‬
‭growing at 9% annually. Despite rising incomes in rural areas, underemployment of unskilled and‬
‭semi-skilled workers remained a problem, prompting the plan to focus on expanding‬‭alternative‬
‭employment in rural areas‬‭. However, the Centre’s deeper involvement in areas traditionally‬
‭reserved for states became increasingly apparent. The plan’s trajectory was disrupted by the‬‭global‬
‭financial crisis of 2008–09‬‭and a‬‭severe drought in 2009‬‭, which hampered growth momentum.‬
‭Rising rural incomes led to greater demand for non-cereal foods, but inadequate supply caused‬
‭persistent food inflation‬‭.‬

‭The‬‭Twelfth Plan‬‭was formulated in an unfavourable environment. The global recovery was slow,‬
‭and India's growth had decelerated.‬‭Corporate investment‬‭—which had previously driven‬
‭growth—was weakening due to tight monetary policy and regulatory hurdles. By now, India’s‬
‭economy was deeply integrated with the global economy, and its fortunes could not be shaped in‬
‭isolation. Thus, this plan focused less on new initiatives and more on‬‭coherence in development‬
‭policy‬‭. Its basic priorities—such as employment, infrastructure, and human‬
‭development—remained largely unchanged from the Eleventh Plan.‬

‭The Lessons‬

‭The main learning from this experience is that the NITI Aayog needs to devote as careful‬
‭thought to the planning process as to formulating the strategic plan itself. This is not a‬
‭technical exercise, and involves a deep understanding of people and of organizational‬
‭behaviour. Some of the features of this process can be summarized as follows:‬
‭1. The prime minister should articulate the broad vision for the country, and not merely‬
‭endorse a suggestion put up by the bureaucracy.‬
‭2. The NITI Aayog should work out the components of this vision in terms of the objectives‬
‭and targets, and obtain full support of the prime minister. It may also be desirable to place‬
‭these before the Governing Council of the NITI Aayog for its endorsement.‬
‭3. The broad strategy for attaining the expanded vision should be worked out within the‬
‭NITI Aayog, keeping in mind the interrelationships and synergies that may exist among the‬
‭various objectives. This strategic plan should confine itself to strategy and not extend itself‬
‭to detailed design, which should be left to the lower tiers. This involves laying out the‬
‭objectives, the targets, the time path, and the resources. All else is detail, which is best‬
‭done by others.‬
‭4. In framing the implementation or action plan, the NITI Aayog should clearly specify which‬
‭interventions should be designed and controlled by the central ministries and which should‬
‭be left to the state governments with only financial support from the centre.‬
‭5. In the course of formulating the strategic plan, there will inevitably be serious differences‬
‭of opinion between the NITI Aayog and the ministries/ state governments. These‬
‭differences need to be resolved before the strategic plan is finalized. The resolution can‬
‭only be done at a level higher than that of the Aayog, and this role has to be played by the‬
‭chief executive officer (CEO).‬
‭6. Last, but not least, the NITI Aayog should consciously guard against developing hubris,‬
‭which inevitably leads to micro-prescriptions – the bane of the erstwhile Planning‬
‭Commission.‬

‭Becoming a Knowledge Bank‬

‭The original‬‭Planning Commission Report (1950)‬‭did not envision the Planning Commission (PC)‬
‭evolving into a‬‭knowledge hub‬‭. Yet this was a natural role that should have emerged over‬
‭time—but didn’t. In 1950, most Indian states were at comparable levels of income and development.‬
‭Over time, however, some states progressed rapidly while others lagged. These divergent‬
‭experiences made Indian states a‬‭laboratory of development practice‬‭, rich with lessons that could‬
‭have been shared.‬

‭No institution was better positioned than the PC to collect and disseminate successful policies and‬
‭programmes. Doing so would have required domain expertise to identify best practices and engage‬
‭effectively with states. Unfortunately, this role was never embraced—partly because its value went‬
‭unrecognized, and partly due to the‬‭decline of domain expertise‬‭within the Commission's senior‬
‭bureaucracy. As a result—and likely for additional unstated reasons—the Planning Commission was‬
‭ultimately‬‭superseded in 2014‬

‭Why Planning? The Contemporary Argument (Refined)‬

‭When the Planning Commission (PC) was dismantled, the government offered no substantial‬
‭justification—only simplistic claims. Chief among them was that India, as an open economy in a‬
‭globalized world, no longer needed a centralized, "Soviet-style" planning institution. This argument is‬
‭flawed for several reasons.‬
‭First, the Planning Commission never practiced Soviet-style centralized planning, even during the‬
‭Mahalanobis era. A significant portion of India’s economy has always been privately driven. More‬
‭importantly, the nature of Five-Year Plans evolved significantly over time—from prescriptive to‬
‭indicative planning, as several contributors to this volume have noted.‬

‭Second, while markets are undeniably important, they also fail. Traditional arguments for state‬
‭intervention to correct market failures remain valid. In India's context, a large segment of the‬
‭population cannot meaningfully participate in the market economy. Addressing their needs cannot‬
‭be achieved through fragmented "schemes"; it demands a cohesive and integrated plan. A planning‬
‭institution must work alongside markets—strengthening them where they are weak and‬
‭supplementing them where they fall short. This remains a compelling rationale for planning,‬
‭regardless of the prevailing enthusiasm for market-based solutions—ironically championed by many‬
‭senior bureaucrats themselves.‬

‭Planning is also essential for inclusive development and for realizing the full potential of India’s‬
‭demographic dividend‬‭. This window of opportunity will‬‭remain open for only two more decades. A‬
‭well-crafted national plan is necessary to guide investments in health, education, and employment‬
‭to harness this demographic shift effectively.‬

‭A second compelling reason for maintaining a strong central planning institution is the need to‬
‭sustain‬‭high GDP growth‬‭over a prolonged period. Between‬‭2003–04 and 2011–12, India achieved‬
‭an average growth rate of 8.4% (at factor cost, 2004–05 base year). Since then, growth has been‬
‭volatile and generally below potential, rarely exceeding 7% annually (at 2011–12 market prices).‬
‭Sustained, high growth is critical to capitalize on India’s demographic advantage and avoid the fate‬
‭of many middle-income countries.‬

‭East Asian economies‬‭, notably South Korea and Taiwan,‬‭sustained rapid growth for 15–20 years;‬
‭China‬‭did so for over three decades—an achievement‬‭unparalleled in economic history. Their‬
‭success in navigating the so-called‬‭middle-income‬‭trap‬‭was due in large part to active, adaptive‬
‭industrial policies driven by strong planning institutions, such as China’s State Planning Commission.‬

‭The middle-income trap, as described in the 2018 Economic Survey, is akin to a pair of scissors. On‬
‭one blade, rising wages push countries out of low-cost manufacturing sectors, which are taken over‬
‭by poorer, cheaper economies like Vietnam, Bangladesh, and Cambodia. On the other blade, these‬
‭middle-income countries often lack the institutional, technological, and human capital to transition‬
‭into higher-value sectors. Squeezed from both above and below, they struggle to progress beyond‬
‭middle-income status.‬

‭The global context post-2008 presents additional challenges. Global growth rates have‬
‭declined—from 4.3% in the decade preceding the financial crisis to 2.9% in the decade following it.‬
‭For late industrializers like India, four key post-crisis trends may further undermine long-term‬
‭growth prospects:‬
 ‭1.‬ ‭Retreat from globalization‬‭: India must maintain export and GDP growth despite rising‬
‭protectionism and a slowdown in global trade integration. Earlier convergers, such as Japan,‬
‭South Korea, and China, benefited from a surge in world trade, enabling them to grow‬
‭exports at over 15% annually during their convergence phases. Since 2011, however, the‬
‭world trade-to-GDP ratio has fallen, limiting India's ability to replicate this model.‬
‭Nonetheless, India's low service-sector wages and the fragmentation of global value chains‬
‭present some ongoing opportunities for export-led growth.‬

‭2.‬ ‭Stagnant manufacturing sector‬‭: Manufacturing is crucial‬‭for structural transformation due‬

‭to its capacity for‬‭unconditional convergence‬‭with‬‭global productivity levels (Rodrik, 2015).‬
‭Yet India’s manufacturing-to-GDP ratio has hovered below 17% for over 25 years since‬
‭liberalization began in 1991. The advent of‬‭Industry‬‭4.0‬‭further complicates matters. A‬
‭robust‬‭industrial policy‬‭—outlined in Chapter 11—is‬‭vital to raise productivity and support‬
‭manufacturing growth.‬

‭3.‬ ‭Low human capital‬‭: Unlike early industrializers, India‬‭failed to provide widespread basic‬
‭education early in its development journey. This failure now hinders structural‬
‭transformation, especially in an era where‬‭technology‬‭increasingly favors skilled labor‬‭.‬
‭The convergence of educated but relatively unskilled labor with manufacturing—central to‬
‭East Asia’s growth—is missing in India. As the Economic Survey rightly notes, building a‬
‭learning society‬‭(Stiglitz, 2014) is essential, requiring‬‭adaptable and continuously upskilled‬
‭human capital.‬

‭4.‬ ‭Climate-change-induced agricultural stress‬‭: Agriculture,‬‭a backbone of India’s rural‬

‭economy, is increasingly vulnerable. Although agricultural growth averaged just over 4%‬
‭between 2004 and 2014, it dropped to 2.7% between 2014 and 2018. A long-term study‬
‭(Mallya et al., 2016) found that drought severity and frequency have increased in India.‬
‭Agricultural productivity growth has stagnated at around 3% annually over the last 30 years.‬
‭Climate variability could reduce farmer incomes by 20–25% in rain-fed regions,‬
‭compounding rural distress.‬

‭BACKGROUND OF NITI AAYOG‬

‭After gaining independence from colonial rule in 1947 AD, a serious challenge before‬
‭India was what type of governance system it should adopt to ensure the development‬
‭of India. In such a situation, India considered it inappropriate to adopt a purely socialist‬
‭model and also did not consider a completely capitalist form of governance appropriate.‬
‭Therefore, according to its needs, even in this mixed form of governance, India was‬
‭more inclined towards socialism rather than capitalism.‬
‭During this period, India had kept its socialist inclination towards the then, Soviet‬
‭Union and India had adopted the format of five-year plans on the basis of the governance‬
‭system of the, then Soviet Union and had dreamed of the development of the country‬
‭on this basis. To fulfill this dream related to the development of India, the then‬
‭Government of India formed an executive body named - “Planning Commission, it‬
‭was formed on 15 March 1950 under the leadership of the first Prime Minister of‬
‭India, Jawaharlal Nehru, by the then Government of India was done through executive‬
‭order. Thus, the Planning Commission was an executive institution.‬
‭The Planning Commission was given the main task of preparing five-year plans‬
‭related to the development of the country. Apart from this, the Planning Commission‬
‭also recommended to the government how much financial assistance should be given‬
‭by the Center to the states for the implementation of those five-year plans. On this‬
‭basis, it can be said that the Planning Commission was an important institution to‬
‭ensure the development of the country.‬
‭In the year 2014, the NDA government formed under the leadership of Prime‬
‭Minister Modi, through a new executive order in January 2015, abolished the already‬
‭existing Planning Commission and formed NITI Aayog in its place.‬
‭Structure of NITI Aayog: Through a resolution of the Council of Ministers on 1 January 2015,‬
‭the Government of India constituted NITI Aayog. The Prime Minister is the Chairman of NITI‬
‭Aayog. The Governing Council will include the Chief Ministers‬
‭of all the states and the Lieutenant Governors of all the Union Territories. Regional‬
‭Councils (State will be established to deal with area specific problems. They will be‬
‭convened by the Prime Minister and will include the Chief Ministers and Lieutenant‬
‭Governors of all Union Territories in that region, and will be chaired by the Chairman‬
‭of NITI Aayog or his nominee. The Prime Minister can call experts and special invitees‬
‭through nomination.‬

‭Ultimately, the formal organization of NITI Aayog will consist of:‬

‭●‬ ‭The Vice President is appointed by the Prime Minister.‬
‭●‬ ‭Full time members‬
‭●‬ ‭Part-time Members (two from the best research universities or organizations in‬
‭ex-officio capacity and and also will be on rotation basis)‬
‭●‬ ‭Ex-Officio Members:- Maximum four members of the Union Council of‬
‭●‬ ‭Ministers who will be nominated by the Prime Minister.‬
‭●‬ ‭The primary functions of NITI Aayog can be divided into four broad categories.‬
‭●‬ ‭Amended Entry 49 of the Business Allocation Rules, 1961 (Annexure 1.3) envisages‬
‭the detailed tasks to be carried out under each of these heads.‬
 ‭●‬ ‭To promote cooperative federalism.‬
‭●‬ ‭Working as a resource center and knowledge center‬
‭●‬ ‭Policy-making and program design‬
‭●‬ ‭Monitoring and evaluation‬

‭In terms of governance structures, the changing needs of our country point to‬
‭the need to establish an institution that will act as a think tank of the government – a‬
‭directional and policy dynamos.‬

‭2.4 DEVELOPMENT: TWO CENTERS‬

‭Development:- In Sanskrit, the word ‘Niti’ means morality, behavior, guidance etc.‬
‭But in the present context it means policy and policy means “National Institute for‬
‭Transforming India”. This is the main policy making body of the country which is‬
‭expected to promote the economic growth of the country. Its goal is to build a strong‬
‭state which will help in building a dynamic and strong nation. This helps India to emerge‬
‭as a major economy of the world. The formation of NITI Aayog has two centers which are‬
‭called “Team India Hub” and “Knowledge and Innovation Hub”.‬

‭1. Team India Hub: Through this, Indian states is partner with the central‬
‭government. Promotes cooperative federalism and designs policy and program‬
‭framework. It provides the required coordination and support framework to‬
‭NITI Aayog in its engagement with states.‬

‭2. Knowledge & Innovation Hub: This builds the think tank capabilities of the‬
‭institute. It ensures to fulfill the mandate of maintaining a state-of-the-art resource‬
‭centre, creating a repository of research on good governance and best practices‬
‭in sustainable and equitable development as well as helping in their dissemination‬
‭to stakeholders. To provide advice and encourage partnerships between key‬
‭stakeholders and national, international like-minded think tanks as well as‬
‭academic and policy research institutions. Both the hubs are headed by the‬
‭Chief Executive Officer of NITI Aayog (NITI Aayog Report, 2016)‬

‭2.5 PHILOSOPHY OF NITI AAYOG‬

‭Philosophy of NITI Aayog:- While the Prime Minister said goodbye to the Nehru era‬
‭economic policies by abolishing the Planning Commission, he has laid the foundation‬
‭of a new indigenous ideological revolution by creating “NITI Aayog” in January 2015,‬
‭which will integrate development with the global symbols of capitalism, communism‬
‭and liberalism and will move towards analyzing and implementing it completely in‬
‭accordance with nationalist and Indian philosophy.‬
‭Under this, India’s development model will be based on the philosophy of six‬
‭Indian personalities - Mahatma Gandhi, Swami Vivekananda, Bhimrao Ambedkar,‬
‭Pandit Deendayal Upadhyay, Tamil poet Thiruvallur, Assamese saint Sankardev. The‬
‭important philosophy of NITI Aayog is based on the formula of Gandhiji:- “Continuous‬
‭development is the law of life and the person who always tries to maintain dogmatism‬
‭leads himself astray. Similarly, the intention of the government has become clear from‬
‭Dr. Bhimrao Ambedkar’s formula ‘centralizing powers is imprudent’. The priority of‬
‭the Commission has been made clear from the statement of Tamil saint Thiruvalluvar,‬
‭“There is nothing more terrible and painful than poverty and the sting of poverty takes‬
‭away the excellence of a person and his nobility”. For the first time, The statement of‬
‭poet Sankardeva’s treatise Kirtanghosh, “Seeing every living being as equal to one’s‬
‭soul is the greatest means of attaining salvation” clearly depicts the ultimate goal of the‬
‭government’s plans for the first time and in achieving this goal, Deendayal Upadhyay’s‬
‭‘Antyodaya Darshan’ ‘ Which emphasizes on the upliftment of the poor to provide‬
‭them the fruits of development, has been included in the ideological background of‬
‭NITI Aayog (Anuj Kumar Aggarwal, 2015).‬

‭2.6 MAIN POINTS OF NITI AAYOG‬

‭Main points of NITI Aayog:-‬

‭x Completely based on Indian philosophy‬

‭x Based on rural poor as well as youth, new middle class, non-resident Indians‬
‭and urbanization, urbanization was considered an opportunity.‬
‭x Spread of this philosophy equally in policy making of both Center and States.‬
‭x Will absorb all the positive things from around the world because no single model‬
‭accepted from other models can fit the Indian scenario.‬
‭x The role of the government will be as an assistant (enabler) of the public.‬
‭x Importance of the service sector in the economy.‬
‭x Emphasis on information technology and various types of connectivity to realize‬
‭the concept of a global village.‬
‭x More focus on the neo-middle and middle class.‬
‭x Emphasis on increasing the role of NRIs in terms of professional management‬
‭and technology.‬
‭x Appointment of Chief Executive Officer in place of Secretary to work in‬
‭accordance with the corporate culture (Anuj Kumar Aggarwal, 2015).‬

‭2.7 OBJECTIVES AND CHARACTERISTICS OF NITI AAYOG‬

‭The NITI Aayog serves as the apex public policy “think tank” of the Government of‬
‭India. It is nodal agency is mandated to facilitate the participation of the state‬
‭governments of India in the economic policy making process using a bottom-up‬
‭approach. It has been entrusted with the task of catalyzing greater development through‬
‭medium and cooperative federalism. Its main objectives and features are as follows:-‬

‭x To develop a common vision of national development priorities, areas and‬

‭strategies through active participation of States.‬
‭x To promote cooperative federalism through initiatives and mechanisms for‬
‭structured cooperation with States on an ongoing basis, recognizing that strong‬
‭States create strong nations.‬
‭x To develop mechanisms to prepare credible plans at the village level and‬
‭progressively disseminate these to higher levels of government.‬
‭x To ensure that national security interests are integrated into the economic strategy‬
‭and policy of the sectors specifically designated.‬
‭x To pay special attention to those sections of our society who may be at risk of‬
‭not benefiting adequately from economic progress.‬
‭x To formulate strategic and long-term policy and program frameworks and‬
‭initiatives and monitor their progress and impact. Lessons learned through‬
‭monitoring and feedback will be used to make innovative improvements including‬
‭necessary mid-term revisions.‬
‭x Advising and encouraging partnerships between key stakeholders and like minded‬
‭national and international “think tanks” as well as academic and policy‬
‭research institutions.‬
‭x To create knowledge, innovation and entrepreneurial support systems through‬
‭a collaborative community of national and international experts, practitioners‬
‭and other stakeholders.‬
‭x To provide a forum to address inter-sectoral and inter-departmental issues with‬
‭a view to accelerating the implementation of the development agenda.‬
‭x To maintain a state-of-the-art resource centre, to be a repository of research‬
‭on good governance and best practices for sustainable and equitable‬
‭development and also to help disseminate the same to stakeholders.‬
‭x Proactively evaluate and monitor the implementation of programs and initiatives,‬
‭including identifying needed resources, to enhance the chances of success in‬
‭delivering services.‬
‭x Emphasis on technology upgradation and capacity building for implementation‬
‭of programs and initiatives.‬
‭x To undertake such other activities as may be necessary to implement the national‬
‭development agenda and achieve the above objectives (Niti Aayog Report,‬
‭2023).‬
‭NITI Aayog is developing itself into a state-of-the-art resource center with the‬
‭necessary knowledge and skills that will enable it to act quickly, promote research and‬
‭innovation, provide strategic policy vision for the government and deal with emergent‬
‭issues. It is supported by a Liaison Office i.e. Development Monitoring and Evaluation‬
‭Organization (DMEO), a flagship initiative i.e. Atal Innovation Mission (AIM) and an‬
‭autonomous body i.e. Institute of Labor Economics Research and Development‬
‭(NILERD).‬

‭2.8 SCOPE OF WORK OF NITI AAYOG‬

‭Subsidiary bodies or work areas of NITI Aayog help in smoothly running the work‬
‭required by the organization, work areas are:-‬
‭1. Administration and supporting units‬
‭2. Agriculture and allied sector‬
‭3. Aspirational District Program Cell‬
‭4. Communication and Social Media Cell‬
‭5. Data Management and Analytics and Frontier Technologies‬
‭6. Economics and Finance Room‬
‭7. Education‬
‭8. Governance and Research‬
‭9. Governing Council Secretariat and Coordination‬
‭10. Infrastructure-Energy‬
‭11. Micro, Small and Medium Enterprises‬
‭12. Natural Resources and Environment and Island Development‬
‭13. Project Appraisal and Management Division‬
‭14. Rural Development‬
‭15. Science and Technology‬
‭16. Social Sector-I (Skill Development, Capability and Employment and Urban‬
‭Development)‬
‭17. Social Sector-II (Health and Nutrition and Women and Child Development)‬
‭18. State Finance and Coordination‬
‭19. Sustainable Development Goals‬
‭20. Water and land resources‬

‭2.9 SEVEN PILLARS OF EFFECTIVE GOVERNANCE BY NITI AAYOG‬

‭1. Pro-People: It fulfills the aspirations of the society as well as the individuals.‬
‭2. Pro-active: Proactivity in anticipation and response to citizen needs.‬
‭3. Participation: Inclusion of Citizenship.‬
‭4. Empowerment: Especially to include women by empowering them in all aspects.‬
‭5. Inclusion of all: Inclusion of all people irrespective of caste, creed and gender.‬
‭6. Equality: Providing equal opportunities to everyone, especially the youth.‬
‭7. Transparency: Making government visible and accountable (Sources,‬
‭PIB.NIC.IN)‬

‭“NITI Aayog oversees the monitoring and adoption of Sustainable Development‬

‭Goals (SDGs) and promotes competition and cooperative federalism among states‬
‭and government undertakings. It is a policy think tank of the Government of India‬
‭whose objective is to “promote coordination and participation in the economic policy‬
‭making process by the state governments of India.” The Prime Minister serves as the‬
‭ex-officio Chairman of NITI Aayog. NITI Aayog can provide an important directional‬
‭and strategic input regarding India’s developmental processes. The centre-to-state,‬
‭one-way flow of policy, the hallmark of the Planning Commission era, has been replaced‬
‭by a genuine and sustained partnership with and between Indian states. “Public policy”‬
‭is mainly a means of directing social actions according to some predetermined goals. In a‬
‭sense, public policy is a directional means of achieving goals driven by ‘ideology’ that‬
‭usually arise from dialectical interactions between governments and the governed.‬
‭Planning Commission has been replaced by ‘National Institute for Transforming India’‬
‭or ‘NITI’ in short. What are the differences from “plan” to “policy”? First and foremost,‬
‭it meant an initiative towards institutional change to transform “policy” and “India”‬
‭from Soviet-inspired national development (five-year) plans. Paragraph three of the‬
‭Cabinet resolution states: We need “‬‭institutional reforms in governance and dynamic‬
‭policy changes that can sow and nurture change on a large scale”‬‭(Virmani, A. 2015).‬

‭The primary objective of NITI Aayog is to promote economic growth and development‬
‭in India by providing strategic and technical advice to the Central and State‬
‭Governments. This includes national and international imports on economic fronts,‬
‭dissemination of best practices from within the country as well as other countries,‬
‭assimilation of new policy ideas and specific issue-based support.‬

‭2.10‬‭FUNCTIONS AND ROLE OF NITI AAYOG‬

‭NITI Aayog formulated its objectives keeping in mind the national objectives as well‬
‭as through the approach of national development along with the active participation of‬
‭the states. Following are the main functions of NITI Aayog:-‬
‭1. Cooperative Federalism:- It will promote cooperative federalism through‬
‭structured support initiatives and mechanisms on an ongoing basis with the states,‬
‭recognizing that strong states make a strong nation.‬
‭2. Credible Plans:- It will develop mechanisms to make credible plans at the village‬
‭level and disseminate them to higher levels of the government.‬
‭3. National Security:- National security issues will be considered and coordinated‬
‭with any specific issues in economic strategy and policy.‬
‭4. The Weaker Section:- NITI Aayog will give special emphasis on the weaker‬
‭sections of the society.‬
‭5. Policy & Strategy Formulation and Their Monitoring:- Policy and strategy will‬
‭be formulated by the Commission and monitoring and feedback will be provided‬
‭to encourage innovations and necessary midcourse reforms.‬
‭6. Partnerships:- It will make provisions to provide advice and promote partnerships‬
‭Academic and policy research institutions will be encouraged to work together to come up‬
‭with new ideas.‬
‭7. Experts:- It will have this support system which will initiate creativity and‬
‭entrepreneurship by uniting national and international experts from different fields.‬
‭8. Resolution Platform:- A platform will be set up to resolve inter-regional and‬
‭inter-departmental disputes to enhance the level of execution of developmental‬
‭projects and activities.‬
‭9. Resource Centre:- A state-of-the-art resource center will be set up which will‬
‭be a repository of research on good governance and best practices in sustainable‬
‭development across all sectors and departments and will help stakeholders access‬
‭information.‬
‭10. Assessment & Evaluation:- Timely monitoring and evaluation of programs is‬
‭necessary for effective and timely implementation of policies. Along with this, it‬
‭is also helpful in estimating the required money and other resources.‬
‭11. Technical Upgradation:- Special attention should be given to upgrading‬
‭technology in all sectors, so that projects can be better implemented.‬
‭NITI Aayog will aim to consolidate the vast pool of scientific and highly intelligent‬
‭resources by adopting the approach of helping the tribal Indian community. To become‬
‭a major power on the global economic stage, it will have to register its presence by‬
‭participating in all such summits. Use of modern technology in all sections of the society‬
‭has to be made a goal. The centre-to-state one-way flow of policy that characterized‬
‭the Planning Commission era has been replaced by increased participation of Indian‬
‭states, and a genuine and sustained partnership between them. ‘Public policy’ is mainly‬
‭a means of directing social actions according to some clearly defined goals. Thus,‬
‭public policy is “a directional means of achieving ideology-driven goals that usually‬
‭arise from dialectical interactions between governments and the governed” (Pandey,‬
‭A., Shukla, S.P. 2022).‬
‭On January 1, 2015, the Cabinet passed a resolution to establish the National‬
‭Institution for Transforming India (NITI Aayog). This marked the end of the erstwhile‬
‭Planning Commission, which had played an important role in the country’s economy‬
‭from very low initial conditions to a high growth path for more than six and a half‬
‭decades. What prompted the NDA government to replace Planning Commission with‬
‭NITI Aayog? What are its initiatives in the last four years? Was it inevitable to dissolve‬
‭the Planning Commission and create a new institution to do what NITI Aayog is doing?‬

‭MAJOR INITIATIVES‬
‭1)‬ ‭Atal Innovation Mission:- Atal Innovation Mission (AIM) is a major initiative of‬
‭the Government of India with the aim of promoting the culture of innovation and‬
‭entrepreneurship in the country. Since its inception in 2016, AIM has established‬
‭more than 10,000 Atal Tinkering Labs, 69 Atal Incubation Centres, 14 Atal‬
‭Community Innovation Centers and launched 24 Atal New India Challenges‬
‭across sectors (Niti Aayog Report, 2023). Atal Community Innovation Centers‬
‭are a means to drive innovation towards achieving Sustainable Development‬
‭Goals through new solutions in deprived areas of the country. Atal Community‬
‭Innovation Center (ACIC) program was launched on 31 July 2019 under Atal‬
‭Innovation Mission, a program of NITI Aayog to promote innovation in India.‬
‭2)‬ ‭Aspirational Districts Programme:- The objective of this program started in the‬
‭year 2018 is to identify the socially and economically backward districts of the‬
‭country and help in their overall development. Under this program, the progress‬
‭of the districts is evaluated by NITI Aayog and they are given ranking. Since its‬
‭inception, the program has studied ways to enable convergence of its three‬
‭approaches: district, state and central level initiatives; To facilitate collaboration‬
‭between civil society organizations, communities and district administration‬
‭towards a common goal and preparing strategy to promote a healthy spirit of‬
‭competition by releasing monthly ranks based on the performance of the districts‬
‭etc. to reduce conflict with the districts (NITI Aayog Report, 2022)‬
‭3)‬ ‭Nutrition Campaign Program:- Nutrition Campaign was implemented in March‬
‭2018. The objective of that campaign is to reduce the problems like malnutrition,‬
‭anemia in women and low birth weight of children in the country. This mission is‬
‭under women and child development. NITI Aayog has played an important‬
‭role in conceptualizing and organizing National Nutrition Month and Nutrition‬
‭Fortnight across the country in the months of March and September 2019. The‬
‭objective of celebrating Nutrition Month is to spread the message of nutrition to‬
‭every corner of the country. Poshan Maah 2019 had five components: Child’s‬
‭First 1,000 Days, Diarrhea-Free India, Diarrhea Prevention, WASH (or‬
‭Washing, Sanitation and Hygiene) and Nutritious India (NITI Aayog, 2020).‬
‭4)‬ ‭Zero Campaign:- NITI Aayog in collaboration with Rocky Mountain Institute‬
‭launched Zero Campaign in September 2021, which is an initiative to promote‬
‭zero pollution vehicles by working with consumers and industry. The campaign‬
‭aims to accelerate the adoption of electronic vehicles in the urban delivery‬
‭segment and sensitize consumers about the benefits of leaving zero pollution‬
‭(NITI Aayog Annual Report, 2022).‬
‭5)‬ ‭Women Entrepreneurship Platform:- The Women Entrepreneurship Platform‬
‭(WEP) is the first of its kind integrated-access portal to enable women of India‬
‭to realize their entrepreneurial aspirations. The idea of such a platform was first‬
‭mooted by NITI Aayog CEO Abitabh Kant, who announced its establishment‬
‭at the conclusion of the eighth Global Entrepreneurship Summit held in‬
‭Hyderabad in 2017, the theme of which was ‘Women First, Prosperity for All’‬
‭(NITI Aayog Report, 2020)‬