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05 January 2015

NDA's Intent Of Transforming India

The establishment of NITI Aayog is a clear message that the government is committed to reforms, decentralization and a cooperative federalism that advocates involving states in the Centre’s decision making.

In what can be seen as the greatest policy shift by the new dispensation, the NDA government has begun the year 2015 with scrapping of the Soviet-modelled Planning Commission with NITI Aayog. While “niti” sounds like the Sanskrit-origin word implying “policy” and “ethics”, it’s actually an acronym for National Institution for Transforming India. 
Swarajya was the first media outlet to forecast the change rather than speculate what it would be like: “…the Planning Commission will soon morph into a body that facilitates coordination between the Centre and the states.It will certainly not be a planning organ by another name, and it will not be a typical think-tank as is being speculated in the media,” read our 23 October article on the issue. And that is precisely what the new body has turned out to be. This writer had broken the story on 25 August on Facebook.
This change had been in the offing since the Narendra Modi government assumed office in May last year. Since the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) was voted to power with the expectation of structural changes in governance, the antiquated Planning Commission had to face the axe before everything.
Besides the accompanying cartoon, the Nehruvian agency was famously ridiculed for getting its ‘plans’ and targets all wrong by legendary cartoonist RK Laxman; he showed a shooter in a firing range missing the bull’s eye repeatedly, with the trainer asking, “Where do you think you are? Planning Commission?”
Even the Congress, which is emotionally attached to the body since it was an essential part of Nehruvian socialism, had some prominent agents of change post-1991, who conceded in private circles that the commission was no more than a shibboleth.
It’s not that the Planning Commission stayed unchanged since it was established on 15 March 1950 following a history of proposals for such a governing body by astrophysicist Meghnad Saha and revolutionary Subhas Chandra Bose in 1938. The British, acceding to the demand, made a planning board that worked between 1944 and 1946.
It was also not that it was against the market; industrialists and economists had independently formulated at least three development plans for it in 1944 to bridge the gap between the ideologies of MK Gandhi and Jawaharlal Nehru. However, since the body was formed under the aegis of the first prime minister, who was trained in British socialism, two years after the assassination of Gandhi, it lost much of the decentralising measures suggested by the original proposers.
The authority for creation of the Planning Commission was not derived from the Constitution of India or statute; it was an arm of the central Government of India.
The first Five-Year Plan was launched in 1951, with dictations from the Centre as to how the agricultural sector must be managed. Two subsequent Five-Year Plans were formulated before 1965 when there was a break because of the India-Pakistan war. Two successive years of drought, devaluation of the Indian Rupee, a general rise in prices and erosion of resources disrupted the planning process and, after three Annual Plans between 1966 and 1969, the fourth Five-Year Plan was started in 1969.
A Planning Commission Meeting
A meeting of the first Planning Commission
The Eighth Plan could not take off in 1990 due to the fast changing political situation at the Centre, and the years 1990–91 and 1991–92 were treated as Annual Plans. The Eighth Plan was finally launched in 1992 after the initiation of structural adjustment policies. This chequered history showed that central planning was subject vagaries of the Central government.
The first eight Plans were Keynesian at best and Marxist at worst. The emphasis was on a growing public sector with massive investments in basic and heavy industries; since the launch of the Ninth Plan in 1997, the emphasis on the public sector became less pronounced—six years after liberalisation was unleashed by the prime minister of the 1991-96 period, PV Narasimha Rao.
While the Planning Commission went through quite a few operational makeovers over the years — ranging from being a simple planning body to a powerful ‘control commission’ to a fiscal decentralisation instrument to an official think tank — voices had begun to grow louder for an overhaul even before the new government took charge.
Subsequently, a consultation process was launched for suggestions on the structure and role of the new body and there was a strong view that this should play the role of a catalyst and provide a platform to the Centre, states and experts to discuss issues and arrive at the best solutions.
But then, as the Congress spent the last seven months criticising the Modi government of doing nothing but furthering the United Progressive Alliance (UPA) government’s policies, the displeasure it is betraying once NITI has replaced the archaism is ironical. The declared intent to empower states has played well as non-NDA chief ministers have also supported the dissolution of Planning Commission.
However, on the day of the announcement, without knowing what the changes would be, socialists Manish Tewari of the Congress, Sitaram Yechury of the Communist Party of India (Marxist), KC Tyagi of the Janata Dal (United) and Yogendra Yadav of the Aam Aadmi Party disapproved of the change, much as they had all been championing the cause of decentralisation for years and decades.
Besides making themselves objects of loathing to Hindus for frowning only when conversion into the Hindu fold occur while turning a blind eye to conversions out of Hinduism, these socialists have begun appearing as a monolith also in their commentaries on economic policies.
This beats electoral reason because their mutual indistinguishability is making it a Modi-versus-the-rest contest for the voters, which spells a clear advantage for the BJP.
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Nevertheless, NITI per se does not have an electoral message. It is only a statement of intent, which is reassuring for the people, who voted for Modi for better governance and not for reasons of Hindutva that the BJP’s  far-right campaigners love to espouse.
For pragmatists among the advocates of free market — for whom Swarajya stands — government cannot disappear from every sphere of work; it needs to minimise its presence, for which decentralisation is an imperative.
For the ‘people like us’ (PLU) — borrowing from a Rajiv Gandhi-era coinage whose PLU were not like us — it is all the more reassuring that economist and professor at Columbia University, Arvind Panagariya has been appointed as the first Vice-Chairman of the NITI Aayog.(We are delighted to see Bibek Debroy,an editorial advisory board member of Swarajya appointed as a full time member of NITI Aayog)
For the bureaucrats, however, it is more than intent; it’s an order. The Yojana Bhawan staff began hectic preparations to welcome new Vice-Chairman of Niti Aayog and other members.
The landmark sign board in front of Yojana Bhawan has been repainted as NITI Aayog and rooms to seat the senior functionaries have been decked up.
But in the office, there is chaos, albeit of the teething variety. First, the name NITI Aayog has mutually conflicting “institution” and “commission” in it. The new board in Hindi translates to the body being a policy commission while the ‘I’ stands for institution.
So, is it an institutionalised commission? That’s hardly a change; the Planning Commission was an institution, too. Or, is it a commissioned institution? So was the Planning Commission!
Jokes apart, an official at the commission says, although all preparations are on to welcome the vice-chairman and members, they would have preferred if there was some clarity on the functions and the role of the new body.
The post of Minister of State for Planning (independent charge) Rao Inderjit Singh needs to be clarified. Officials with the project appraisal and management division in the former commission need to know about their role, too.
Finally, the babus have not signed any cabinet note which has been sent to the Planning Commission for vetting, as the commission does not exist, while the role of NITI Aayog is still not clearly defined.
For the ordinary citizens, there should be relief once these teething problems are overcome. To address their quotidian needs with the state, it will be easier to deal with a smaller local government than an overbearing but remote New Delhi that is difficult to move.
Here, NITI will, instead of moving funds to the states through a tortuous process after the chief minister goes running to New Delhi like a courtier to beg for funds, only advise the local administration how the emerging demand is to be met through meetings between representatives of the body and the region’s government.
Unlike the Nehruvian plan panel, NITI will not have the power to disburse funds to central ministries and state governments with strings attached. These riders were funny to say the least.
They could be best exemplified with instances where a state had enough money in its treasury, sent from the Centre, for drought relief (say) in a year when it was facing a severe drought, but it could not spend it because the fund had arrived with qualification that it could only be spent on flood relief! The Centre had sent this money with the said rider because historically the state used to face floods and not droughts. It was, therefore, a welcome statement from Prime Minister Modi that NITI marked the end of a one-size-fits-all approach of the Union government.
The changes
NITI Aayog “aims 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.”
The Cabinet resolution released by the government through the Press Information Bureau says, the states will continue to receive support for removing bottlenecks and will be able to approach the new institution for consulting and capacity building. Further, the states will also tailor their plans to suit their needs under more than 40 centrally sponsored schemes.
Instead of the top-down approach of the Planning Commission, the new body will adopt a bottom-up approach, where decisions will be taken at the local level and then endorsed at the Central level. This also reflects the new government’s approach to develop mechanisms to formulate credible plans at the village level and aggregate these progressively at higher levels of Government.
NITI Aayog will also serve as a think tank of the government and provide the Centre and States with relevant strategic and technical advice across the spectrum of key elements of policy.
Prime Minister Narendra Modi with Chief Ministers and Governors of various States at the retreat at Race Course Road, following the meeting on Planning Commission revamp, in New Delhi on 7 December 2014. Photo: PTI

The article must end with a message to the PLU. The establishment of NITI announces in no uncertain terms that this government is committed to reforms. It does have some status quoists, though. A judicious manner of making it work as per our expectations will, therefore, involve sustaining our pressure on it for decentralisation as well as further liberalisation rather than dismissing the NDA II as a UPA III avatar.

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Surajit Dasgupta treats no individual, organisation or institution as a holy cow.