March 31, 2020
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Necessary Birthing

India needs a think tank to support its developmental aims. would the Niti Aayog meet this broad objective?

Necessary Birthing

The NITI Aayog has been generally welcomed. The Planning Commission was truly outmoded and misaligned with India’s contemporary challenges. It is indeed surprising that it was not replaced earlier. The functions of the Planning Commission as outlined on March 15, 1950, obligated it to access material, capital and human resources, formulate a plan for its effective utilisation, settle priorities in allocation of resources and determine the inter se allocation of resources. Thus, apart from allocation of planned resources, it also approved ann­ual plan of states and evolved a Five Year Plan with a mid-term review.

The functions of the NITI Aayog are qualitatively different. It recognises India’s new challenges and opportunities. States have an important role to play in shaping national policies. Besides, the private sector has achieved maturity, capability and vibrancy. Thus “the NITI Aayog will seek to provide a critical directional and strategic input into the development process. This, along with being the incubator of ideas for development, will be the core mission of NITI Aayog.”

As secretary in the Union ministry of finance and later as member of the Planning Commission, I felt a hiatus between responsibility and resources—constitutional propriety versus assigned functions, domain knowledge versus obligations assigned in transaction of business rules. As expenditure secretary to the finance ministry, I felt the inadequacy of managing the outgos from the consolidated fund of India—for, a large chunk of the expenditure allocation was determined by the Planning Commission. On the other hand, as a Planning Commission member, I felt that the Commission was constrained, as it had no say in garnering revenue or foreclosing them for non-plan expenditure. It was worst of both worlds. Fortunately, NITI Aayog obliterates this hiatus. All financial functions—generation and allocation of resources—now rests with the ministry of finance.

The transition to the NITI Aayog philosophy has overwhelming positives. My concerns however are:

  • How will cooperative federalism work in practice? What happens to the centrally sponsored schemes—will they be subsumed in the allocations of Finance Commission or separately supported by the finance ministry itself?
  • On consultation with states, the mechanism given in the NITI Aayog would need to be fine-tuned. The National Development Council-type model is too large and dispersed for meaningful consensus-building.
  • Engaging with states on contentious issues like VAT, GST, and consensus on international agreements like WTO or environment need a more purposive mechanism. The Constitution, in the Article 263, provides for an inter-state council. This was meant to promote engagement with the states. A meaningful inter-state council could be a more purposive institution for fostering cooperative federalism. After all, this council, under the prime minister’s chairmanship, is the only legitimate constitutional entity for matters covering the states.
  • What would be the interplay between the Finance Commission, NITI Aayog and the finance ministry?
  • How do we promote a meaningful public-private partnership for a balanced development strategy?

There is no doubt that the obscurantist Planning Commission was jeered by all and cheered by none. It needed a replacement. The Chinese did it many years ago. India needs a national think-tank with global reach and eminence to support the complexities of its developmental challenges. Would the NITI Aayog meet this broad vision and objectives? Given the drive of the PM and the quality of the people selected as vice-chairman and members, I remain optimistic.

(The veteran bureaucrat has been a member of the Planning Commission); E-mail your columnist: nandu [AT] nksingh [DOT] com

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