NITI Aayog: Transforming India’s Governance through Cooperative Federalism – Part 1

📚 NITI Aayog: Transforming India’s Governance through Cooperative Federalism – (Part 01)

1. Introduction

India, a vast and diverse nation with a federal structure, has historically relied on centralised planning mechanisms to guide its socio-economic development. For over six decades, the Planning Commission served as the central authority for formulating Five-Year Plans and allocating resources. However, with changing economic realities, evolving governance paradigms, and the increasing aspirations of a dynamic population, the need for a new approach became evident.

NITI Aayog, which stands for the National Institution for Transforming India Aayog, was established on January 1, 2015, by a resolution of the Union Cabinet. It replaced the erstwhile Planning Commission, signifying a fundamental shift in the governance framework from a command-and-control model to one that fosters cooperative federalism and acts as a think tank and policy dynamo for the Government of India. This transformation aimed to empower states, encourage bottom-up planning, and leverage expertise from various sectors to accelerate India's development journey.

This first part of our comprehensive notes delves into the origins of NITI Aayog, understanding the context of its creation by examining the legacy and limitations of the Planning Commission, its establishment process, structural composition, and core objectives, particularly focusing on its role in promoting cooperative federalism.

2. Historical and Constitutional Background

India adopted planned economic development shortly after gaining independence, influenced by the socialist model prevalent at the time.

• The Planning Commission (1950-2014): Established on March 15, 1950, through a Cabinet Resolution, the Planning Commission was tasked with assessing the country's resources, formulating Five-Year Plans for their effective and balanced utilisation, and determining priorities. Headed by the Prime Minister as its Chairman, it functioned as an extra-constitutional and non-statutory body. It played a crucial role in the initial decades of nation-building, guiding significant advancements in agriculture, industry, and infrastructure.

• Shortcomings of the Planning Commission: Over time, the Planning Commission faced increasing criticism for several reasons:

  • Centralised, Top-Down Approach: Plans were often formulated at the central level with limited input from states, leading to a "one size fits all" approach that did not adequately address regional specificities and needs.
  • Lack of State Engagement: States had a limited role, often acting as mere spectators in annual plan meetings, primarily involved only in the National Development Council (NDC) meetings for plan approval.
  • Imposition of Policies and Tied Funding: The Commission had the authority to impose policies and tie the allocation of funds to projects it approved, impacting the financial and operational autonomy of states.
  • Overlapping Functions with Finance Commission: Both bodies were involved in transferring finances to states, leading to potential overlap and confusion, although Finance Commission grants were generally untied, unlike Planning Commission grants.
  • Weak Monitoring and Evaluation: There were limitations in effectively monitoring and evaluating the implementation of schemes and the outcomes achieved.
  • Limited Expertise and Think Tank Role: The Planning Commission was seen as having limited expertise and weak networks outside the government, lacking the capacity for creative problem-solving and policy evaluation.
  • More Suited to a Command Economy: The structure and functioning were deemed more appropriate for a pre-1991 command economy rather than the liberalised, globalised economy that emerged later.

• Rationale for Replacement: The need for a more dynamic, inclusive, and federalist approach to governance became apparent. The Union Government announced the decision to replace the Planning Commission in 2014, citing its redundancy in the changed economic landscape and the need for institutional changes to foster growth and development through greater participation. The replacement aimed to shift from a top-down planning model to a bottom-up approach, encouraging active participation of states and leveraging a wider range of expertise.

3. Establishment & Structure

NITI Aayog was established on January 1, 2015, through a Cabinet Resolution. This means it is neither a Constitutional body (not created by the Constitution) nor a Statutory body (not created by an Act of Parliament). It is an extra-constitutional or non-constitutional body functioning as the premier policy 'Think Tank' of the Government of India.

The structure of NITI Aayog is designed to be inclusive and draw expertise from various fields. The key components are:

• Chairperson: The Prime Minister of India serves as the ex-officio Chairperson.
• Governing Council: This is the apex body, comprising the Chief Ministers of all States and Lieutenant Governors of Union Territories with Legislatures. It is the primary platform for evolving a shared vision of national priorities and strategies with active state involvement, embodying the spirit of cooperative federalism.
• Regional Councils: These are constituted to address specific regional issues affecting more than one state. They are formed for a fixed tenure and include the Chief Ministers of the concerned states and Lieutenant Governors of the concerned UTs. These councils are convened by the Prime Minister and chaired by the Chairperson of NITI Aayog or their nominee.
• Vice-Chairperson: Appointed by the Prime Minister, the Vice-Chairperson holds the rank of a Cabinet Minister and is the administrative head, leading the technical and organisational matters.
• Full-Time Members: These members hold the rank of Minister of State and are experts in various domains, contributing to policy formulation and research.
• Part-Time Members: A maximum of two members from leading universities, research organisations, and other innovative institutions can be part-time members on a rotational basis, bringing external expertise.
• Ex-Officio Members: A maximum of four members of the Union Council of Ministers, nominated by the Prime Minister, serve as ex-officio members.
• Chief Executive Officer (CEO): Appointed by the Prime Minister for a fixed tenure, the CEO holds the rank of Secretary to the Government of India and is responsible for the day-to-day administration and implementation.
• Special Invitees: Eminent experts, specialists, and practitioners with relevant domain knowledge are nominated by the Prime Minister as special invitees.

NITI Aayog also has various divisions and units focusing on specific sectors and areas like agriculture, industry, infrastructure, education, health, governance, etc., along with a Knowledge and Innovation Hub and a Team India Hub. The Team India Hub is specifically intended to facilitate the engagement of states with the Central Government.

Organogram of NITI Aayog

graph TD
    A[Chairperson<br>(Prime Minister)] --> B(Governing Council<br>(CMs of States & LGs of UTs))
    A --> C(Vice Chairperson)
    C --> D(Chief Executive Officer)
    D --> E(Full-Time Members)
    D --> F(Part-Time Members)
    D --> G(Ex-Officio Members<br>(Union Ministers))
    D --> H(Special Invitees)
    D --> I(Verticals/Divisions<br>e.g., Agriculture, Health, Energy)
    B --> J(Regional Councils<br>(CMs & LGs of specific regions))
    D --> K(Knowledge and Innovation Hub)
    D --> L(Team India Hub)

Explanation of the Organogram:

• This chart illustrates the hierarchical structure of NITI Aayog.
• The Prime Minister is at the apex as the Chairperson.
• The Governing Council, representing the states and UTs, is crucial for incorporating federal perspectives.
• The Vice-Chairperson, CEO, Members (Full-time, Part-time, Ex-officio), and Special Invitees form the core operational and advisory team.
• The Verticals/Divisions represent specialized areas of policy focus.
• Regional Councils address specific inter-state issues.
• The Knowledge & Innovation Hub and Team India Hub represent its dual functions as a think tank and a facilitator of federal cooperation.

4. Key Objectives and Principles

The establishment of NITI Aayog was guided by a set of key objectives and principles aimed at transforming India's development agenda. These include:

• To evolve a Shared Vision of National Development: With the active involvement of States, to develop priorities, sectors, and strategies that form a 'national agenda' for the Prime Minister and Chief Ministers.
• To Foster Cooperative Federalism: Through structured support initiatives and mechanisms with the States on a continuous basis, recognising that strong States make a strong nation. This is a central pillar of NITI Aayog's mandate, aiming to ensure active state participation in national policymaking.
• To Develop Mechanisms for Bottom-Up Planning: To formulate credible plans at the village level and progressively aggregate them at higher levels of government. This contrasts sharply with the Planning Commission's top-down approach.
• To Serve as a 'Think Tank' and 'Policy Dynamo': To provide relevant strategic and technical advice to the Central and State governments across a wide spectrum of policy areas. This includes economic matters, best practices dissemination, infusion of new policy ideas, and issue-based support.
• To Create a Knowledge, Innovation, and Entrepreneurial Support System: Through a collaborative community of national and international experts, practitioners, and partners.
• To Offer a Platform for Resolution of Inter-sectoral and Inter-departmental Issues: To accelerate the implementation of the development agenda.
• To Pay Special Attention to Marginalised Sections: To ensure that sections of society at risk of not benefiting adequately from economic progress receive special attention.
• To Design Strategic and Long-Term Policy Frameworks: And monitor their progress and efficacy, using lessons learned for innovative improvements and mid-course corrections.
• To Facilitate Inclusive Growth: Ensuring social and economic development tailored to India's needs.
• To Promote Competitive Federalism: Encouraging states to set and achieve their own growth targets, alongside cooperative federalism.

NITI Aayog's philosophy is based on the 7 pillars of effective governance: Pro-people, Pro-activity, Participation, Empowering, Inclusion of all, Equality, and Transparency.

5. Role & Functions (Overview)

NITI Aayog's role is multifaceted, acting primarily as an advisory body and a think tank. Its key functions broadly include:

• Acting as a Platform for Cooperative Federalism: Bringing together states and the centre to discuss and collaborate on national development priorities.
• Providing Strategic and Technical Advice: To both Central and State governments on policy formulation and implementation.
• Designing Policy and Programme Frameworks: Developing long-term strategies and initiatives for development.
• Monitoring and Evaluating Progress: Tracking the implementation and effectiveness of government schemes and initiatives.
• Fostering Knowledge and Innovation: Creating a system to leverage expertise, share best practices, and infuse new ideas.
• Facilitating Inter-sectoral Coordination: Helping resolve issues between different government departments and sectors.

Unlike the Planning Commission, NITI Aayog does not have the power to allocate funds; this power rests with the Ministry of Finance. It is an advisory body, and its recommendations are not binding on the government.

6. Distinction between Planning Commission and NITI Aayog

The transformation from the Planning Commission to NITI Aayog represents a significant paradigm shift in India's governance approach. The key differences can be summarised in the following table:

Comparative Chart: Planning Commission vs. NITI Aayog

Significance of the Shift: This comparison highlights NITI Aayog's emphasis on collaboration, flexibility, and leveraging a wider pool of expertise, moving away from the rigid, centralised planning model of its predecessor. The focus on cooperative federalism empowers states and promotes a more inclusive approach to national development.

7. Constitutional Basis (or lack thereof)

It is crucial to understand the constitutional status of NITI Aayog. Like the Planning Commission before it, NITI Aayog is not a creature of the Constitution of India. It was established by a Resolution of the Union Cabinet.

Therefore, NITI Aayog is an extra-constitutional body or a non-constitutional body. It is also not a statutory body, as it was not created by an Act passed by the Parliament. Its existence and functions are based on the executive decision of the government. This nature implies that its powers are advisory, and its structure and mandate can be altered by a subsequent executive resolution.

8. Conclusion & Summary (Part 01)

Part 01 of our notes provides a foundational understanding of NITI Aayog. We traced its genesis back to the Planning Commission, highlighting the reasons for the shift in India's planning architecture. The establishment of NITI Aayog on January 1, 2015, through a Cabinet Resolution marked a significant departure towards a model based on cooperative federalism, bottom-up planning, and the role of a policy think tank. We examined its structural components, including the pivotal Governing Council and Regional Councils, and outlined its core objectives aimed at fostering a shared national development agenda with active state participation. Crucially, we clarified its status as an extra-constitutional, non-statutory body and presented a comparative analysis with the Planning Commission to underscore the transformation in India's governance approach.

This part sets the stage for a deeper exploration of NITI Aayog's specific functions, initiatives, impact on cooperative federalism, criticisms, and future role in the subsequent parts of these notes.

9. Practice Questions & Answers

To reinforce your understanding of the concepts covered in Part 01, attempt the following practice questions:

✅ Multiple-Choice Questions (MCQs)

Q1. NITI Aayog was established on which date? (a) 15th March 1950 (b) 1st April 2014 (c) 1st January 2015 (d) 8th February 2015

Q2. NITI Aayog is a: (a) Constitutional Body (b) Statutory Body (c) Extra-Constitutional Body (d) Quasi-Judicial Body

Q3. The ex-officio Chairperson of NITI Aayog is the: (a) President of India (b) Union Finance Minister (c) Prime Minister of India (d) Vice-President of India

Q4. The Governing Council of NITI Aayog comprises: (a) Union Cabinet Ministers (b) Chief Ministers of all States and LGs of UTs with Legislatures (c) Members of Parliament (d) Governors of all States

Q5. Which of the following was a major criticism of the erstwhile Planning Commission? (a) Emphasis on bottom-up planning (b) Lack of fund allocation powers (c) Centralised, top-down approach (d) Strong focus on state autonomy

Detailed Answer Explanations:

A1. (c) 1st January 2015

• Explanation: NITI Aayog was officially established on January 1, 2015, replacing the Planning Commission.

A2. (c) Extra-Constitutional Body

• Explanation: NITI Aayog was created by a Cabinet Resolution, not by the Constitution or an Act of Parliament, making it an extra-constitutional and non-statutory body.

A3. (c) Prime Minister of India

• Explanation: The Prime Minister of India serves as the ex-officio Chairperson of NITI Aayog.

A4. (b) Chief Ministers of all States and LGs of UTs with Legislatures

• Explanation: The Governing Council, the apex body of NITI Aayog, consists of the Chief Ministers of all states and Lieutenant Governors of Union Territories with Legislatures.

A5. (c) Centralised, top-down approach

• Explanation: A major criticism of the Planning Commission was its centralised, top-down approach to planning, which did not adequately involve states in the decision-making process.

🔍 Scenario-Based Questions

Q1. Scenario: A major interstate river water dispute arises between two neighbouring states. How might NITI Aayog potentially play a role, given its structure and objectives discussed in Part 01?

• Thinking Process: Consider NITI Aayog's structure (Regional Councils, Governing Council) and objectives (cooperative federalism, platform for resolving inter-sectoral/inter-departmental issues).
• Potential Role of NITI Aayog: While river water disputes are primarily handled under specific constitutional provisions (like Article 262) and relevant laws/tribunals, NITI Aayog, through its Regional Councils or the Governing Council, could provide a platform for dialogue and discussion between the concerned states and the centre. Its objective to "offer a platform for resolution of inter-sectoral and inter-departmental issues" can be broadly interpreted to facilitate discussion on such federal issues. It can act as a neutral ground for deliberations and help in finding collaborative solutions, leveraging its role in fostering cooperative federalism. However, it cannot adjudicate the dispute or enforce a solution, as that power rests with constitutional or statutory bodies.

Q2. Scenario: A State government has a unique development challenge specific to its geographical and socio-economic conditions. How does NITI Aayog's approach differ from the Planning Commission in addressing such a state-specific issue?

• Thinking Process: Recall the key differences between the Planning Commission and NITI Aayog, particularly their planning approaches (top-down vs. bottom-up) and state involvement.
• Difference in Approach: Under the Planning Commission, a "one size fits all" approach was often adopted, with plans formulated centrally which might not have been optimally suited to the unique needs of a specific state. NITI Aayog, in contrast, promotes a bottom-up approach and cooperative federalism. This means the State government can actively participate in identifying its specific challenge and contributing to the formulation of tailored policies and strategies. NITI Aayog acts as a think tank and knowledge hub, providing technical assistance and expertise to the state government to address its unique challenge effectively, rather than imposing a pre-determined solution.

🔄 Match the following

Match the following bodies/terms with their descriptions:

Answers:

1. (B)
2. (C)
3. (A)
4. (D)

Key Takeaways from Part 01:

• NITI Aayog replaced the Planning Commission in 2015, signifying a shift from centralized planning to a more collaborative and federalist model.
• It is an extra-constitutional and non-statutory body established by a Cabinet Resolution.
• The Prime Minister is the Chairperson, and the Governing Council, comprising Chief Ministers and LGs, is central to its structure, promoting cooperative federalism.
• NITI Aayog functions as a think tank and policy advisor, focusing on bottom-up planning and leveraging expertise.
• Unlike the Planning Commission, it does not have the power to allocate funds.

Recommended Books

You can explore these highly recommended resources for a deeper understanding.

• Indian Polity (English) by M Laxmikanth for UPSC CSE 2025 | 7th edition (latest) | Civil Services Exam - Prelims, Mains and Interview | State PSCs exams/ PCS exams - by M Laxmikanth
• Oswaal NCERT One For All Book for UPSC & State PSCs | Indian Polity Classes 6-12 - by Oswaal Editorial Board
• Bharat Ki Rajvyavastha (भारत की राजव्यवस्था) - M Laxmikanth for UPSC CSE