NITI Aayog & State Institution for Transformation

2022 SEP 20

Mains   > Economic Development   >   Indian Economy and issues   >   NITI Aayog


  • The NITI Aayog will handhold each state to set up similar bodies, replacing their planning boards for faster and inclusive economic growth, in tandem with the vision of becoming a developed nation by 2047.


  • The National Institution for Transforming India (NITI) Aayog is the premier policy 'Think Tank' of the Government of India, providing both directional and policy inputs.
  • It was formed on 1st January 2015, replacing the Planning Commission of India.


  1. To evolve a shared vision of national development priorities, sectors and strategies with the active involvement of States.
  2. To foster cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognizing that strong States make a strong nation.
  3. To develop mechanisms to formulate credible plans at the village level and aggregate these progressively at higher levels of government.
  4. To pay special attention to the sections of our society that may be at risk of not benefiting adequately from economic progress.
  5. To design strategic and long-term policy and programme frameworks and initiatives, and monitor their progress and their efficacy. The lessons learned through monitoring and feedback will be used for making innovative improvements, including necessary mid-course corrections.
  6. To provide advice and encourage partnerships between key stakeholders and national and international like-minded think tanks, as well as educational and policy research institutions.
  7. To create a knowledge, innovation and entrepreneurial support system through a collaborative community of national and international experts, practitioners and other partners.
  8. To offer a platform for the resolution of inter-sectoral and inter­ departmental issues in order to accelerate the implementation of the development agenda.
  9. To maintain a state-of-the-art resource centre, be a repository of research on good governance and best practices in sustainable and equitable development as well as help their dissemination to stake-holders.
  10. To actively monitor and evaluate the implementation of programmes and initiatives, including the identification of the needed resources so as to strengthen the probability of success and scope of delivery.
  11. To focus on technology upgradation and capacity building for implementation of programmes and initiatives.
  12. To ensure, on areas that are specifically referred to it, that the interests of national security are incorporated in economic strategy and policy.
  13. To undertake other activities as may be necessary in order to further the execution of the national development agenda, and the objectives mentioned above.


  • NITI Aayog’s entire gamut of activities can be divided into four main heads:
  1. Policy and Programme Framework
  2. Cooperative Federalism
  3. Monitoring and Evaluation
  4. Think Tank, and Knowledge and Innovation Hub
  • The different verticals, cells, attached and autonomous bodies of NITI provide the requisite coordination and support framework needed to carry out its mandate.


  • Adapt to changing times:
    • India has undergone a paradigm shift over the past six decades. The 65-year-old Planning Commission was relevant in a command economy structure. But its ‘one size fits all’ approach to economic planning is obsolete in today’s market economy.
  • Dynamism in policy making:
    • The planning commission was bound with the idea of 5-year plans. But with the NITI Aayog, there are 15-year vision document and mid-term goals of 7 years, with scope for periodic reviews and amendments in due course.
  • Foster cooperative federalism:
    • The institution extends an empowered role of States as equal partners in national development.
    • Eg: The Governing Council of NITI Aayog comprises of the Chief Ministers of all the States & Union Territories with Legislatures and Lt. Governors of other Union Territories.
  • Decentralised approach:
    • The NITI Aayog substitutes the centralised planning with a ‘bottom-up’ approach where the body will support formulation of plans at the village level and aggregate them at higher levels of government.
  • Policy advisor:  
    • NITI Aayog provides governments with relevant strategic and technical advice across the spectrum of key elements of policy.
    • Several important efforts like the National Medical Commission, National Education Policy, Ayushman Bharat, production-linked incentives, doubling farmers income etc. have come from NITI Aayog.
  • Objective planning & accountability:
    • NITI Aayog has established a Development Monitoring and Evaluation Office which collects data on the performance of various Ministries on a real-time basis. The data are then used at the highest policymaking levels to establish accountability and improve performance.
  • Foster competitive federalism:
    • NITI Aayog encourages healthy competition among states through transparent rankings, in various sectors, along with a hand-holding approach.
    • Eg: ‘India Innovation Index’ ranks the states and UTs on their innovation performance. It also provides a report card of every state and UT’s performance and identifies its strengths and weaknesses.
  • Repository of information:
    • NITI Aayog is maintaining a state-of-the-art resource centre which acts as a repository of good governance best practices and offers domain knowledge as well as strategic expertise to all levels of government.
    • Eg: ‘Waste-Wise Cities: Best Practices in Municipal Solid Waste Management’ report, which showcases the best practices adopted in India.


  • No power to allocate finances:
    • Unlike the planning commission, NITI Aayog has no powers in granting discretionary funds to states. Also, it has no role in influencing private or public investment. This renders it with limited scope to undertake transformational interventions.
  • Ambitious recommendations:
    • Some of NITI Aayog's reports/recommendations are criticised for being too ambitious and bothering little with the limitations of the government in implementing them.
  • “Centralisation of ideas”:
    • With the emergence of NITI Aayog, the theatre of activity has shifted from ministries to the Aayog. This occasionally results in tussles.
    • Eg: In 2017, former Union minister Maneka Gandhi clashed with the Aayog when the latter insisted that children and mothers be given cash transfers instead of cooked or uncooked food under the Integrated Child Development Services (ICDS) scheme.
  • Tool to justify government’s interests:
    • Its actions are often criticised for retrospectively justifying policy decisions already made by the top hierarchy in the government.
    • For instance, the government first articulated the need for simultaneous polls in 2016 and in 2017, the NITI Aayog came out with a paper supporting synchronised elections in India in “national interest”.



  • Role of states is critical for overall development and sustained economic growth. This is because areas like health, education, skilling, improving ease of doing business, land reforms, infrastructure development, credit flows and urbanisation are primarily with the state government.
  • Despite the replacement of Planning commission with NITI Aayog, states so far have done little to rejuvenate their planning departments/boards.
  • Except for sectors like defence, railways and highways, the national GDP growth is an aggregation of states’ rates of growth.


  • Initially, it aims for 8-10 states to set up such bodies, before reaching out to all by March 2023.
  • Besides reorienting state planning boards as SITs, a blueprint will be made on how it will guide states in policy formulation, take up monitoring and evaluation of government policies and programmes, and suggest better technology or models for delivery of schemes.
  • Lateral entry of professionals will be encouraged in SITs to undertake high-quality analytical work and policy recommendations.


Q. Write a critical note on the performance of NITI Aayog in attaining its objectives?