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[Economy]NitiAyog,PlanningCommission:Evolution,Structure,Functionand
truckloadofCriticism
PostedByMrunalOn21/01/2015@1:00pmInFiscalPolicy|63Comments

1. TimelineofplanninginIndia
1. FiveYearplans:from1stto12th
2. PlanningCommission:Criticism/AntiArguments
2. NitiAyog:Structure,Membership
1. NITIAyog:functions,Mandates
2. FunctionalComparison:NitivsPC
3. NitiAyog:Criticism/AntiArguments
4. AllocationoffundstoStates?
5. ChineseNitiAyog?
3. MockQuestions

1934
1938
1944
1944
1945
1950
1950,March
15
1952,Aug.
2014,Aug.
2015,Jan

TimelineofplanninginIndia
VisvesvarayaplaninthisbookTheplannedeconomyofIndia.HewasanEngineer,ExDiwanof
MysoreandBharatRatnarecipient.
NehrusCongressplan.ButnotimplementedduetoWW2.
BombayplanbynotedindustrialistssuchasJRDTata,GDBirla,KasturbhaiLalbhaietal.
SrimanNarayanAgrawalsGandhianplan.
MNRoyspeoplesplanwithsocialistleanings.
VinobaBhavesSarvodayaPlan
CabinetresolutiontoformPlanningcommission.
NationalDevelopmentcouncil(NDC)madebyCabinetresolution.
Modishutsdownplanningcommission.
GovernmentnotifiedtheformationofNitiAyogNationalInstitutionforTransformingIndia.


Plan

Period

FiveYearplansinIndia
theme/Model/target

1st

5156

HarrodDomarModel
Mainfocus:Agriculture,irrigationandpower.
GotmoreGDPgrowththanitsoriginaltarget.

2nd

5661

P.C.MahalanobisModel
Socialistmodel,Rapidindustrialization,heavyindustries.

3rd

6166

SukhmoyChakrabortyandSanddy
AlsocalledGadgilYojana.
FailedtoachieveitstargetduetodroughtsandwarswithPakChina

Holidays

6669

Holidaydeclaredthanksto#EPICFAILof3rdFYP.

4th

6974

AshokRudraAlonManney
growthwithstabilityandselfreliance.[GaribiHataocamehere,saysLucentGK]
#EPICFAILduetoBangladeshirefugeeproblemanddrought.

7479

C.SubramaniamandlaterredraftingbyD.P.Dhar
Originallyitwasa10yearlongtermperspectiveplanwithfocusonpovertyremoval
andselfreliance

RollingPlan 7880

MorarjiDesaisJantagovernmentcameupwithRollingplansystemwellmeasure
progresseveryyearandmakenewplansaccordinglyfornextyear.

6th

Povertyremoval(GaribiHatao),IRDP,NREM,TRYSEMetc.[GaribiHataocamehere
saysRameshSingh]

5th

8085

7th

8589

PranavMukherjee
Focusonemployment.JawaharRozgarYojanastarted.

2Annual
plans

8991

PoliticalinstabilityatCentre.Henceonlyannualplans.

8th

9297

JohnW.Millermodel.
PVNarasimhaRaoLPGreforms

9th

9702

Growthwithsocialjusticeandequity.Mostlyindicativeplanning.
#EPICFAILduetoglobalslowdownafterAsianfinancialcrisis.

10th

0207

8%GDPgrowthrate,doublepercapitaincomein10years.

11th

0712

Theme:inclusivegrowth
C.Rangarajanframeditwithtargets:810%growthrate,70millionnewjobs,lower
IMR,CMR,TFRetc.

1217

Theme:Faster,Moreinclusiveandsustainablegrowth.
Targetgrowthrates:9%GDP,4%Agriculture,10%Mfg.
10%reductioninpoverty,create50millionnewjobs.
GetIMR:26,MMR:1000,ChildSexratio:950,TFR:2.1
Increasemeanschoolyears,forestcover,infrastructureinvestment,ruralteledensity.

12th

PlanningCommission:Criticism/AntiArguments
1. Achieved>9%GDPgrowthrateduring200507,thankstoAmericanboompriortosubprimecrisi.But
almostallnationsofworldexperiencedhighgrowth.So9%GDPdidnotcomefromMonteksmagicwand.
2. Postsubprimecrisis,failedtoevoketheanimalspiritinIndianeconomy.GDPfell,inflationroseduring
200813nonstop.
3. ReducedpovertybydoctoringtheBPLline.Tendulkarlinesays27croreBPL,ifweuseRangalinethen37

croreBPL.PlanningcommissionbragsreducingpovertylineonTendulkarsparameters.
4. Toothlessbody,cantholdState/union/ministries/departmentsaccountableforfailingtoachievetargets.
5. HopesthatCAGandPublicaccountsCommitteewilltakecareaccountabilitypart.ButPACtooispretty
muchtoothless.
6. Failedtoimplementlandreforms.FaultypoliciesforMSME,industrialization,Factorylabourlawproblems.
7. OfficemannedbyGeneralistIAS/IESwithshorttenurepanelmembersfilledwithacademiciansand
jholachhapNGOs.NeedsubjectspecialistswithinternationalexposurelikeRajanbhai.
8. DesignedCSSwithOnesizefitsallapproachandafewextracrorestoNE/J&K/HillstatesandLWE.Butfor
long,itdidnotusepilotprojects/sampletesting/interactionwithstates.
9. Hence,IAY,ICDSetc.programsfailedtoshowtangibleresultdespitepumpingcrores.
10. TheytriedtobypassstateGovernmentsviaNGOfunding,DRDA.HenceStatesunenthusiasticabout
implementingCentralschemesnamedafteryouknowwho.
11. Onlyin2013reformsdonelikereducingnumberofCentrallysponsoredschemes(CSS),10%flexifundto
states,directtransferofmoneytostateconsolidatedfunetc.Butitstoolittletoolate.
12. Shortcomingsinplanningcommission=>newbodiessprunguplikePMseconomicadvisorycouncil,PMs
projectmonitoringgroupandsoon=>morebrains=>morelackofcoordination.
13. HenceModifeltthatPCisbeyondfixingjustlikeGothamcityandDelhicity.
14. Forsomanyyears,Governmentworkedastheprovideroffirstandlastresort.But,todayIndianindustry
andservicesectorhasreachedonglobalscale,aneomiddleclasshasemerged.
15. Timeshavechanged,frombeingaunderdevelopedcountryin1950sIndiahasbecomeamajoreconomic
force.
16. Henceourneedshavechangedfrommerefoodsecuritytoprofitableagriculture.Inthisplayground,
Governmentneedstobecomeanenablerratherthanaplayer.
AndthusNitiAyogwasborn.

NitiAyog:Structure,Membership

NitiAyog:Structure,Composition,Membership
Position
Born

PlanningCommission
1950,March15th
diedin2014,August
2015,January1st
afterModibecamePM.

NITIAyog

Chairman Primeminister

same

LastDy.Chairmanwas
Vice
MontekSinghAhluwalia
Chairman
(Cabinetministerrank).

CEO

FreemarketeconomistArvindPanagriya.HewastheChief
economistofAsianDevelopmentbank,andthethebrainbehind
Rajasthanslandlabourreform.

MemberSecretary
(IAS)
SindhushreeKhullar
(IAS)

Asecretarylevelbureaucratwithfixedtenure.
SameMs.SindhushreeKhullaristhefirstCEO.
PMcannominatefourUnionministers.Modihasnominated
following:

Exofficio
members

FinanceMinister
Planningminister

Fulltime
members

47fulltimemembers,who
enjoyMinisterofState
rank.

1.
2.
3.
4.

Home
Finance
Railway
Agriculture
BibekDebroy(Freemarketeconomist)
Dr.V.K.Saraswat(technocrat,missilescientistandExDRDO
chief.)

Unionministersfor
Special
Invitees

1. Transport
2. HRD
3. SocialJustice
+PMcaninviteotherexpertsasandwhenneeded.

parttime
members
Governing

Techexpertsfromresearchinstitutes.Currentlynonedeclared.
Rotationalposts.
Chairman:Primeminister
Chiefministersofallstates

Council
adhoc
Regional
Councils

NITIAyog:functions,Mandates

LieutenantgovernorsofallUnionterritories.
WillhaveCMsofstatesthatfallintheregion.Theyllbedealingwith
specificissueconcerningagroupofstatesforexampleirrigation,
naxalproblem,infrastructureetc.

NitiAyog:functions&mandate
1. ThinktankforGovernmentpolicyformulation.
2. Findbestpracticesfromothercountries,partnerwithotherdesividesibodiestohelptheiradoptionin
India.
3. CooperativeFederalism:Involvestategovernmentsandevenvillagesinplanningprocess.
4. Sustainabledevelopment:+ModisZerodefectzeroeffect(onenvironment)manufacturingmantra.
5. UrbanDevelopment:toensurecitiescanremainhabitableandprovideeconomicvenuestoeveryone.
6. ParticipatoryDevelopment:withhelpofprivatesectorandcitizens.
7. InclusiveDevelopmentorAntyodaya.EnsureSC,STandWomentooenjoythefruitsofDevelopment.
(becauseDinDayalsaidso.)
8. Povertyeliminationtoensuredignityandselfrespect.(becausePoetTiruvalluvarsaidso)
9. Focuson5croreSmallenterprisestogeneratemoreemploymentforweakersections.
10. Monitoringandfeedback.Midwaycoursecorrection,ifneeded.
11. Makepoliciestoreapdemographicdividendandsocialcapital.
12. RegionalCouncilswilladdressspecificissuesforagroupofstates.Example:RegionalCouncilfor
drought,Leftwingextremism,Tribalwelfareandsoon.
13. ExtractmaximumbenefitfromNRIsgeoeconomicandGeopoliticalstrengthforIndiasDevelopment.
14. UseSocialmediaandICTtoolstoensuretransparency,accountabilityandgoodgovernance.
15. Helpsortinginterdepartmentalconflicts.
16. Lotofbolbachachangiriandvagueideasaboutnationalselfinterest,capacitybuilding,participatingin
globalvillageetc.
Planningcommission
DesignFYPFiveyearplans
Decidetwomoneymatters:
1. Howmuchmoneytogiveto
eachstateforcentrally
sponsoredschemes(CSS)
2. Howmuchmoneytogivefor
eachstatesownstatefive
yearplans.
States/UTwererepresentedin

FunctionalComparison:NitivsPC
NITIAyog
Designnationalagenda,andcooperativefederalism.
Mostlyworkasapolicyformulationhub.ThePressreleaseis
silentonmoney/funding.so,mostprobablyitllbelefttofinance
ministry.
SomeexpertsbelieveInterstatecouncilwilldecidemoney
allocationtostates,thenfinanceministrywillreleasethefund.

NationalDevelopmentCouncil.
PCframedFYP=>wentto
Cabinet=>NDCapproved
FYP=>Tabledinparliament.

Onesizefitsall,topdownsocialist
planningbyArmchairNehruvian
economistsandIEScadreofficers
(IndianEconomicService).

States/UTrepresentedinGoverningcouncil.Butnospecific
mentionaboutwhethertheycanapprove/reject/amendNitiAyogs
proposals?

Pressreleasetalksaboutparticipatoryplanningbuthowexactlywill
theydothat?Nospecificdetailslaidout.
IESofficersarerarelyinvitedinModismeetings.
ButgiventheentryofFreemarketeconomistsandTechnocrats,
mostprobablyitllbeanindicativeplanning+coreplanningi.e.
afterinputsofstategovernments,abroadoutlinewithselected
targets,limitedsubsidiesandmonitoringthroughICT.

NitiAyog:Criticism/AntiArguments
1. BibekDebroy(Fulltimemember)himselfcriticizedthevaguelywordedpressreleaseonNitiAyogformation.
Modishouldhavespecificallypointedoutitsfunctionsandjurisdiction.
2. ModisarbitrarydecisiontodismantlethePlanningCommission,withouttakingNDCorstatesinto
confidencethisunderminescooperativefederalism.(SaysKeralaCM).
3. FromunionterritoryonlyLieutenantGovernorsinvited.CMofDelhiandPuducherrycantparticipatein
Governingcouncil.
4. LikePC,NITIAyogtooisanonConstitutional,nonstatutorybodyformedbyacabinetresolution.Itisnot
accountabletoparliament,andiflineministriesfailtoachievetargets,NITIAyogcannotpunishthem.
5. NitiAyogshouldhavebeencreatedthroughalegal/Constitutionalamendment.Thereshouldbea
perspectiveplanspanningfor15to20years.Otherwise,whatifanotherpartycomesintopowerand
dismantlesthis?RecallMorarjivsIndira.
6. Itlltakeminimum68monthsforNitiAyogtosetthingsinmotion.Inbetweenthattime,Developmentwillbe
haltedduetopaucityoffundsandideas.
7. PlanningcommissionandNDCdecidedspecialcategorystatesandgavethemadditionalfundingtohelp
thepoorandbackwardregions.WithadventofNitiAyog,willthosestateslosetheirstatusandextra
funding?Uncertaintyprevails.
8. NitiAyogwillconflictwithCabinetSecretariat(forinterministerialcoordination)andconstitutionalbody
InterStateCouncil(forcoordinationwithstates).
9. FinMinofficialsalwaystrytosqueezebudgettokeepthefiscaldeficitunderFRBMtargets.NitiAyogandits
freemarketeconomistswillfurtherreducewelfareschemestohelpthem.

10. Atpresentweve60+centrallysponsoredschemes.Modiaimstocombinethemintojust10schemes.Thus,
poorandmarginalizedcommunitieswillsuffer.
11. PlanningcommissionusedtomonitorofhumandevelopmentintheStates,Subplansforwomen,SCand
ST.NitiAyogdoesntsayhowtheylldoit.
12. NitiAyogsmandaterepeatedlysaystheyllfocusonmanufacturingsector.Rajanbhaisaysjustbecause
Chinasucceededonmanufacturingfocus,doesntautomaticallyguaranteethatsameCinderellastorywill
repeathere.
13. ModidistributedtheplanningExpenditurefunctiontoFinMinandsubjectmatterstorespectiveministries.
Thiswillresultinlossofperspectiveandlongtermview.NowStategovernmentswillhavetolobbyatboth
typeofministriestogetfundsreleased.
14. PlanningCommissionsNehruvianEconomistsadvocateddecentralizedplanning.Modisfreemarket
economistsandtechnocratswillpursuecentralizedplanningandemonitoring.(Itisbothproandanti
argumentdependingonhowbrainwashedapersonisafterreadingtheHindu.)
15. 1961:IndianEconomicService(IES)wasbornonNehrusinitiative.Modidoesntinvitetheminmeetings,
freemarketeconomistslookdownuponthemwithutterdisdain.Howtheyllbeintegratedinthenew
system?Noclearanswersgiveninthepressrelease.
16. ThereisnoneedforanyPlanningcommissionorNitiAyog.Goodworkcanbedoneevenwithoutthem
throughlineministriesandinterstatecouncils.
Anyways,therealworkofNITIAyogisyettobegin.So,mostcriticismiscentredaroundthethemethatSince
pressreleasedoesnttalkaboutxyzthingsoonlybadthingwillhappen..But,onlytimewilltellhowNITIAyog
faresinreallife.

AllocationoffundstoStates?

Untilnow,Statesgotfundingfromtwoplaces
Finance
commission

GavesharefromUnionrevenuetostates.Decidestheformulaforevery5years.
~2%ofGDPflewthisway.
Gavetwotypesoffunding

Planning

1. Centrallysponsoredschemes(~66schemes).MoneygivenafterconsultationbetweenPC
andrespectiveministriesofhealth,educationetc.atunionandstatelevel.
2. Centralassistanceforstateplans.MoneygivenafterconsultationbetweenPC,FMandState

commission

Government.
~2.5%ofGDPflewthisway.

Afterscrappingtheplanningcommission,ModiwantedtheFinancecommissiontoovereseeallthreetypesof
moneyallocationsi.e.
1. Sharefromuniontaxes
2. CSS:Centrallysponsoredschemes
3. Unionsassistancetostatesplans.
ButModicouldntdoiteasilybecause:
1. Constitutionamendmentnecessary,togivefinancecommissionthesenewpowers.
2. ButtheChairmenof13thand14thFinancecommissiondontlikethisadditionalhomework.NOTONEbit.
Because
Financecommissionisanonpermanentbodyconstitutedevery5thyear,henceitcanlookatthe
issuesfromafreshperspective.Ifitsturnedintoapermanentbodythenincrementalistapproachwill
creepini.e.throwingmoremoneyinexistingschemesratherthanfixingfromscratch.
Financecommissionmembersareexpertinrevenuesharing.ButplanningExpenditurerequiresexpert
memberswithdevelopment,capitalassetbuildingperspective.
GujaratCMevensaid,Unionitselfshouldgivetheplanmoneytostates,insteadofkeepingsuch
backdoormechanism.

ChineseNitiAyog?
ChineseNDRC
Makesmacroeconomicpolicy
Approvesinvestment&constructionprojects
MakesEnergy&oilpolicy
LooksafterbackwardprovincesintheWestern
region.
RealBoss:StatecouncilheadedbyPresidentof

Indiapresentsystem
Financeministrymakesfiscalpolicy.
RBImakesmonetarypolicy.
CCI,FIPBandmanyotherbodies@unionandstate
level.
Oilministry,DGHydrocarbondecideit.
SeparateministryforNEDevelopment

China.

CabinetHeadedbyPM.

ExpertsthoughtModiwantedtoreplacePCwithabodylikeChinasNDRC.(NationalDevelopmentand
reformcommission).
ButNitiAyogpressreleaseandjurisdictionissovague,itsnowherenearChineseNDRC.
ReadbackgroundtheoryinIndianPolitybyM.Laxmikanth(4thEd.)Chapter15,41,48,49.

MockQuestions
Q1.Arrangefollowingplansincorrectchronologicalorder
1.
2.
3.
4.

Peoplesplan
BombayPlan
CongressPlan
Visvesvarayaplan

Answerchoices
A.
B.
C.
D.

1234
4321
1243
2143

Q2.MNRoywasassociatedwith_____.
A.
B.
C.
D.

CongressPlan
Peoplesplan
BombayPlan
GandhianPlan

Q3.FirstFiveyearplanwasbasedon____model
A.
B.
C.
D.

Mahalanobis
C.Subramaniam
JohnW.Miller
HarrodDomar

Q4.Findincorrectpairsofplanvsfocus:
A.
B.
C.
D.

1stFYP:heavyindustries
2ndFYP:Agriculture,irrigation,power
BothAandB
NeitherAnorB

Q5.Themeofthe12thFiveyearplanwas
A.
B.
C.
D.

Faster,Moreinclusiveandsustainablegrowth
Faster,Moresustainableandsustainablegrowth
Inclusivegrowthwithsocialjustice
Socialjusticeandsustainablegrowth

Q6.iffiveyearplanningwascontinued,theperiodof13thfiveyearplanwouldbe
A.
B.
C.
D.

20132018
20152020
20172022
Noneofabove

Q7.WhatisthefullformofNitiAyog?
A.
B.
C.
D.

NationalInstitutetoTransformIndia.
NationalInstituteforTransformingIndia.
NationalInstitutiontoTransformIndia.
NationalInstitutionforTransformingIndia.

Q8.NitiAyogisformedvia____.
A.
B.
C.
D.

Presidentialordinance
AllocationofbusinessrulesbyPresidentofIndia.
Cabinetresolution
Noneofabove.

Q9.Aunionministercanbecome___ofNitiAyog
1. Parttimemember

2. Exofficiomember
3. Specialinvitee
Answerchoices
A.
B.
C.
D.

Only1and2
Only2and3
Only1and3
Allofthem

Q10.FindcorrectpairsofpersonvspositionheldinNitiAyog
1. SindhushreeKhullar:Secretary
2. EconomistJagdishBhagwati:parttimemember
3. VKSaraswat:specialinvitee
Answerchoices
A.
B.
C.
D.

Only1and2
Only2and3
Only1and3
noneofthem

Q11.WhocanbecomeaparttimememberoftheNitiAyog?
A.
B.
C.
D.

AservingIESofficer
AservingIASofficer
Aunionminister
AnExpertfromResearchinstitutes

Q12.GoverningcounciloftheNitiAyogincludes
1. Primeminister
2. Financeminister
3. Chiefministersofallstates
Answerchoices
A. Only1and2

B. Only2and3
C. Only1and3
D. allofthem
Q13.OfficialmandateoftheNitiAyogincludes___.
1. CadrecontrollingauthorityforIndianEconomicservice
2. Decideallocationoffundingamongthestates,forcentrallysponsoredschemes
3. Approvingfundsforstateplans.
Answerchoices
A.
B.
C.
D.

Only1and2
Only2and3
Only1and3
allofthem

Q14.MatchcorrectpairsPersonvstheirbrainchildservice
1. AllIndiaservices:Nehru
2. IndianEconomicservice:LalBahadurShashtri
3. IndianCivilservice:LordCurzon
Answerchoices
A.
B.
C.
D.

Only1and2
Only2and3
Only1and3
Noneofthem

Q15.Findstatutorybodiesamongfollowing
1. NitiAyog
2. ControllerofCertifyingauthorities
3. Atomicenergyregulationboard
Answerchoices
A. Only1and2

B. Only2and3
C. Only1and3
D. Noneofthem
Q16.Findcorrectstatements
a.
b.
c.
d.

IfModiwantstoexpandthepowersoffinancecommission,hemustamendarticle335.
IfModiwantstoimplementGST,hemustamendarticle315.
BothAandB
NeitherAnorB

UPSCMainsexamination:GeneralStudiesPaper2
Answerfollowingin150200wordseach:
1. Examinetheinadequaciesofmachineryforplanningtoensuredemocraticbutdepoliticizedplanningprocess
inIndianfederationsinceindependence.DiscusshowNitiAyogaimstofixthisanomaly.
2. TheplanningprocessIndiainthepostNehruperiodhasconductedtobetterCentreStaterelations,but(it
has)notnecessarilybroughtaboutdecentralizationoftheplanningprocess.CanNitiAyogfillthislacuna?If
not,suggestremedialsteps.
3. InterstatecouncilandnottheNitiAyog,istheappropriateinstrumenttoensurelinkagesbetweenthe
district,theStateandtheregionallevelsofnationalplanningprocesses.Doyouagree?
4. TheultimatepictureofthedevelopmentinIndiahastobeanetworkofplanningunitsinthevillagesand
enterprises,coordinatedatsuccessivehigherlevelsbyState,whichwillultimatelyfeedtheNitiAyogat
NewDelhi.MakeoutacasefordecentralizedanddepoliticizedfederalplanninginIndia.
5. ANationalplanningbodymusthaveastatutoryorConstitutionalbacking.Examinetheargumentinfavor
andagainstsuchdesign.
6. CompareandcontrastthestructureandmandateofplanningcommissionandNitiAyog.
7. (Interview)WithoutfinancialandAdministrativepowers,NitiAyogmayendupbecomingyetanother
armchairadvisorybodylikeNAC.Doyouagree?

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