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MrunalExplained:NitiAayog,PlanningCommission,Functions

Mrunalhttp://mrunal.org

[Economy]NitiAayog,PlanningCommission:Evolution,Structure,Functionand
truckloadofCriticismexplained
PostedByMrunalOn21/01/2015@1:00pmInEconomy|106Comments

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

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

TimelineofplanninginIndia
VisvesvarayaplaninthisbookTheplannedeconomyofIndia.HewasanEngineer,ExDiwan
ofMysoreandBharatRatnarecipient.
NehrusCongressplan.ButnotimplementedduetoWW2.
BombayplanbynotedindustrialistssuchasJRDTata,GDBirla,KasturbhaiLalbhaietal.
SrimanNarayanAgrawalsGandhianplan.
MNRoyspeoplesplanwithsocialistleanings.
JayprakashNarayansSarvodayaPlanbasedonVinobaBhavesphilosophy
CabinetresolutiontoformPlanningcommission.
NationalDevelopmentcouncil(NDC)madebyCabinetresolution.
Modishutsdownplanningcommission.
GovernmentnotifiedtheformationofNitiAayogNationalInstitutionforTransformingIndia.

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.

5th

7479

C.SubramaniamandlaterredraftingbyD.P.Dhar
Originallyitwasa10yearlongtermperspectiveplanwithfocusonpovertyremoval

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MrunalExplained:NitiAayog,PlanningCommission,Functions

andselfreliance

RollingPlan 7880

MorarjiDesaisJantagovernmentcameupwithRollingplansystemwellmeasure
progresseveryyearandmakenewplansaccordinglyfornextyear.

6th

8085

Povertyremoval(GaribiHatao),IRDP,NREM,TRYSEMetc.[GaribiHataocame
heresaysRameshSingh]

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,ruraltele
density.

12th

PlanningCommission:Criticism/AntiArguments
1. Achieved>9%GDPgrowthrateduring200507,thankstoAmericanboompriortosubprimecrisis.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.But
forlong,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
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andservicesectorhasreachedonglobalscale,aneomiddleclasshasemerged.
15. Timeshavechanged,frombeingaunderdevelopedcountryin1950sIndiahasbecomeamajor
economicforce.
16. Henceourneedshavechangedfrommerefoodsecuritytoprofitableagriculture.Inthisplayground,
Governmentneedstobecomeanenablerratherthanaplayer.
AndthusNitiAayogwasborn.

NitiAayog:Structure,Membership

NitiAayog:Structure,Composition,Membership
Position
Born

PlanningCommission

NITIAayog

1950,March15th
diedin2014,August
2015,January1st
afterModibecamePM.

Chairman Primeminister
LastDy.Chairmanwas
Vice
MontekSinghAhluwalia
Chairman
(Cabinetministerrank).

same
FreemarketeconomistArvindPanagriya.HewastheChief
economistofAsianDevelopmentbank,andthethebrain
behindRajasthanslandlabourreform.

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MrunalExplained:NitiAayog,PlanningCommission,Functions

MemberSecretary
(IAS)
SindhushreeKhullar
(IAS)

CEO

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
Council
adhoc
Regional
Councils

Techexpertsfromresearchinstitutes.Currentlynonedeclared.
Rotationalposts.
Chairman:Primeminister
Chiefministersofallstates
LieutenantgovernorsofallUnionterritories.
WillhaveCMsofstatesthatfallintheregion.Theyllbedealingwith
specificissueconcerningagroupofstatesforexampleirrigation,
naxalproblem,infrastructureetc.

NITIAayog:functions,Mandates

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NitiAayog: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:

FunctionalComparison:NitivsPC
NITIAayog
Designnationalagenda,andcooperativefederalism.

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1. Howmuchmoneytogiveto
eachstateforcentrally
sponsoredschemes(CSS)
2. Howmuchmoneytogivefor
eachstatesownstatefive
yearplans.
States/UTwererepresentedin
NationalDevelopmentCouncil.
PCframedFYP=>wentto
Cabinet=>NDCapproved
FYP=>Tabledinparliament.

Onesizefitsall,topdownsocialist
planningbyArmchairNehruvian
economistsandIEScadreofficers
(IndianEconomicService).

Mostlyworkasapolicyformulationhub.ThePressreleaseis
silentonmoney/funding.so,mostprobablyitllbelefttofinance
ministry.
SomeexpertsbelieveInterstatecouncilwilldecidemoney
allocationtostates,thenfinanceministrywillreleasethefund.

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

Pressreleasetalksaboutparticipatoryplanningbuthowexactly
willtheydothat?Nospecificdetailslaidout.
IESofficersarerarelyinvitedinModismeetings.
ButgiventheentryofFreemarketeconomistsandTechnocrats,
mostprobablyitllbeanindicativeplanning+coreplanningi.e.
afterinputsofstategovernments,abroadoutlinewithselected
targets,limitedsubsidiesandmonitoringthroughICT.

NitiAayog:Criticism/AntiArguments
1. BibekDebroy(Fulltimemember)himselfcriticizedthevaguelywordedpressreleaseonNitiAayogformation.
Modishouldhavespecificallypointedoutitsfunctionsandjurisdiction.
2. ModisarbitrarydecisiontodismantlethePlanningCommission,withouttakingNDCorstatesinto
confidencethisunderminescooperativefederalism.(SaysKeralaCM).
3. FromunionterritoryonlyLieutenantGovernorsinvited.CMofDelhiandPuducherrycantparticipatein
Governingcouncil.
4. LikePC,NITIAayogtooisanonConstitutional,nonstatutorybodyformedbyacabinetresolution.Itisnot
accountabletoparliament,andiflineministriesfailtoachievetargets,NITIAayogcannotpunishthem.
5. NitiAayogshouldhavebeencreatedthroughalegal/Constitutionalamendment.Thereshouldbea
perspectiveplanspanningfor15to20years.Otherwise,whatifanotherpartycomesintopowerand
dismantlesthis?RecallMorarjivsIndira.
6. Itlltakeminimum68monthsforNitiAayogtosetthingsinmotion.Inbetweenthattime,Developmentwill
behaltedduetopaucityoffundsandideas.
7. PlanningcommissionandNDCdecidedspecialcategorystatesandgavethemadditionalfundingtohelp
thepoorandbackwardregions.WithadventofNitiAayog,willthosestateslosetheirstatusandextra
funding?Uncertaintyprevails.
8. NitiAayogwillconflictwithCabinetSecretariat(forinterministerialcoordination)andconstitutionalbody
InterStateCouncil(forcoordinationwithstates).
9. FinMinofficialsalwaystrytosqueezebudgettokeepthefiscaldeficitunderFRBMtargets.NitiAayogand
itsfreemarketeconomistswillfurtherreducewelfareschemestohelpthem.
10. Atpresentweve60+centrallysponsoredschemes.Modiaimstocombinethemintojust10schemes.
Thus,poorandmarginalizedcommunitieswillsuffer.
11. PlanningcommissionusedtomonitorofhumandevelopmentintheStates,Subplansforwomen,SCand
ST.NitiAayogdoesntsayhowtheylldoit.
12. NitiAayogsmandaterepeatedlysaystheyllfocusonmanufacturingsector.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. ThereisnoneedforanyPlanningcommissionorNitiAayog.Goodworkcanbedoneevenwithoutthem
throughlineministriesandinterstatecouncils.
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Anyways,therealworkofNITIAayogisyettobegin.So,mostcriticismiscentredaroundthethemethatSince
pressreleasedoesnttalkaboutxyzthingsoonlybadthingwillhappen..But,onlytimewilltellhowNITIAayog
faresinreallife.

AllocationoffundstoStates?

Untilnow,Statesgotfundingfromtwoplaces
Finance
commission

GavesharefromUnionrevenuetostates.Decidestheformulaforevery5years.
~2%ofGDPflewthisway.
Gavetwotypesoffunding

Planning
commission

1. Centrallysponsoredschemes(~66schemes).MoneygivenafterconsultationbetweenPC
andrespectiveministriesofhealth,educationetc.atunionandstatelevel.
2. Centralassistanceforstateplans.MoneygivenafterconsultationbetweenPC,FMand
StateGovernment.
~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.ButplanningExpenditurerequires
expertmemberswithdevelopment,capitalassetbuildingperspective.
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MrunalExplained:NitiAayog,PlanningCommission,Functions

GujaratCMevensaid,Unionitselfshouldgivetheplanmoneytostates,insteadofkeepingsuch
backdoormechanism.

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

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

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

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

Peoplesplan
BombayPlan
CongressPlan
Visvesvarayaplan

Answerchoices
A. 1234
B. 4321
C. 1243
D. 2143
Q2.MNRoywasassociatedwith_____.
A. CongressPlan
B. Peoplesplan
C. BombayPlan
D. GandhianPlan
Q3.FirstFiveyearplanwasbasedon____model
A. Mahalanobis
B. C.Subramaniam
C. JohnW.Miller
D. HarrodDomar
Q4.Findincorrectpairsofplanvsfocus:
A. 1stFYP:heavyindustries
B. 2ndFYP:Agriculture,irrigation,power
C. BothAandB
D. NeitherAnorB
Q5.Themeofthe12thFiveyearplanwas
A. Faster,Moreinclusiveandsustainablegrowth
B. Faster,Moresustainableandsustainablegrowth
C. Inclusivegrowthwithsocialjustice
D. Socialjusticeandsustainablegrowth
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Q6.iffiveyearplanningwascontinued,theperiodof13thfiveyearplanwouldbe
A. 20132018
B. 20152020
C. 20172022
D. Noneofabove
Q7.WhatisthefullformofNitiAayog?
A. NationalInstitutetoTransformIndia.
B. NationalInstituteforTransformingIndia.
C. NationalInstitutiontoTransformIndia.
D. NationalInstitutionforTransformingIndia.
Q8.NitiAayogisformedvia____.
A. Presidentialordinance
B. AllocationofbusinessrulesbyPresidentofIndia.
C. Cabinetresolution
D. Noneofabove.
Q9.Aunionministercanbecome___ofNitiAayog
1. Parttimemember
2. Exofficiomember
3. Specialinvitee
Answerchoices
A. Only1and2
B. Only2and3
C. Only1and3
D. Allofthem
Q10.FindcorrectpairsofpersonvspositionheldinNitiAayog
1. SindhushreeKhullar:Secretary
2. EconomistJagdishBhagwati:parttimemember
3. VKSaraswat:specialinvitee
Answerchoices
A. Only1and2
B. Only2and3
C. Only1and3
D. noneofthem
Q11.WhocanbecomeaparttimememberoftheNitiAayog?
A. AservingIESofficer
B. AservingIASofficer
C. Aunionminister
D. AnExpertfromResearchinstitutes
Q12.GoverningcounciloftheNitiAayogincludes
1. Primeminister
2. Financeminister
3. Chiefministersofallstates
Answerchoices
A. Only1and2
B. Only2and3
C. Only1and3
D. allofthem
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Q13.OfficialmandateoftheNitiAayogincludes___.
1. CadrecontrollingauthorityforIndianEconomicservice
2. Decideallocationoffundingamongthestates,forcentrallysponsoredschemes
3. Approvingfundsforstateplans.
Answerchoices
A. Only1and2
B. Only2and3
C. Only1and3
D. Noneofthem
Q14.MatchcorrectpairsPersonvstheirbrainchildservice
1. AllIndiaservices:Nehru
2. IndianEconomicservice:LalBahadurShashtri
3. IndianCivilservice:LordCurzon
Answerchoices
A. Only1and2
B. Only2and3
C. Only1and3
D. Noneofthem
Q15.Findstatutorybodiesamongfollowing
1. NitiAayog
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. Examinetheinadequaciesofmachineryforplanningtoensuredemocraticbutdepoliticizedplanning
processinIndianfederationsinceindependence.DiscusshowNitiAayogaimstofixthisanomaly.
2. TheplanningprocessIndiainthepostNehruperiodhasconductedtobetterCentreStaterelations,but(it
has)notnecessarilybroughtaboutdecentralizationoftheplanningprocess.CanNitiAayogfillthislacuna?
Ifnot,suggestremedialsteps.
3. InterstatecouncilandnottheNitiAayog,istheappropriateinstrumenttoensurelinkagesbetweenthe
district,theStateandtheregionallevelsofnationalplanningprocesses.Doyouagree?
4. TheultimatepictureofthedevelopmentinIndiahastobeanetworkofplanningunitsinthevillagesand
enterprises,coordinatedatsuccessivehigherlevelsbyState,whichwillultimatelyfeedtheNitiAayogat
NewDelhi.MakeoutacasefordecentralizedanddepoliticizedfederalplanninginIndia.
5. ANationalplanningbodymusthaveastatutoryorConstitutionalbacking.Examinetheargumentinfavor
andagainstsuchdesign.
6. CompareandcontrastthestructureandmandateofplanningcommissionandNitiAayog.
7. (Interview)WithoutfinancialandAdministrativepowers,NitiAayogmayendupbecomingyetanother
armchairadvisorybodylikeNAC.Doyouagree?

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