NITI Aayog

Establishment: Why was NITI Aayog created?

Let’s begin with a basic fact:

• On 13 August 2014, the Government of India decided to abolish the Planning Commission, which had existed for 65 years.
• On 1 January 2015, the government established a new body: NITI Aayog — National Institution for Transforming India.

Now comes the most important conceptual point:

Is NITI Aayog a Constitutional Body?

No.
Just like the Planning Commission, the NITI Aayog was created through an executive resolution of the Union Cabinet.

Hence, it is:

• Not a Constitutional body (i.e., not mentioned anywhere in the Constitution),
• Not a Statutory body (i.e., not created through a Parliamentary Act).

So, NITI Aayog is an extra-constitutional and non-statutory institution.

What does NITI Aayog do?

It acts as the premier policy Think Tank of the Indian government.

Its responsibilities include:

• Giving directional and policy inputs,
• Designing strategic and long-term policies,
• Providing technical advice to both the Centre and the States.

How is it different from the Planning Commission?

Planning Commission followed a top-down model:
Centre used to make policies → States had to follow them.

NITI Aayog follows a bottom-up model:
States participate in designing policies as equal partners.

This is a major shift from:

• Centralized control → Cooperative Federalism
• One-way directives → Collaborative decision-making

Rationale: Why was the Planning Commission replaced?

The government explained the logic behind this transformation:

India has changed drastically in 60 years

— economically, socially, technologically, and demographically.
But the Planning Commission was still functioning with the mindset of a “command economy” of the 1950s.

Former Finance Minister Arun Jaitley clearly stated:

• A “one-size-fits-all” approach no longer works,
• States are in very different stages of development,
• India needs flexibility, competitiveness, and innovation.

Thus, a new institution was required which could:

• Work with states as equal partners,
• Promote competitive and cooperative federalism,
• Act as a knowledge and strategy hub,
• Implement programs with better monitoring and evaluation.

A Bharatiya Model of Development

The resolution also emphasized:

• India should learn from global practices,
• But cannot blindly copy any foreign model,
• Development must be based on a Bharatiya approach,
• Policies should be designed keeping India’s diversity and complexity in mind.

Composition: Who runs the NITI Aayog?

The NITI Aayog has a wide and inclusive structure.

(1) Chairperson

• Prime Minister of India

(2) Governing Council

Includes:

• Chief Ministers of all States
• Chief Ministers of UTs with Legislatures (Delhi, Puducherry, J&K)
• Lt. Governors of other UTs

This structure ensures federal participation.

(3) Regional Councils

Formed:

• For specific issues involving multiple states,
• For a limited duration,
• Convened by the Prime Minister,
• Chaired by either the PM or his nominee.

These councils help solve regional-level developmental challenges.

(4) Special Invitees

Experts and professionals with deep domain knowledge, nominated by the PM.

(5) Full-time Organisational Framework

This includes:

1. Vice-Chairperson
   • Appointed by the PM, holds the rank of a Cabinet Minister.
2. Full-Time Members
   • Hold the rank of Ministers of State.
3. Part-Time Members
   • Up to 2, from universities/research institutions, on a rotational basis.
4. Ex-Officio Members
   • Up to 4 Union Ministers nominated by the PM.
5. CEO
   • Appointed by the PM for a fixed tenure, with the rank of Secretary to the Government of India.
6. Secretariat
   • Staff and administrative support system.

This structure makes NITI Aayog a blend of political leadership, state participation, and expert consultation.

Objectives of NITI Aayog

NITI Aayog’s objectives reflect a modern approach to development.

1. Shared Vision

Create a common national vision involving the Centre and the States.

2. Strengthen Cooperative Federalism

Provide continuous support to states because strong states = strong nation.

3. Grassroots Planning

Develop mechanisms to make plans at the village level, and then integrate them upwards.

4. National Security

Ensure that national security concerns are reflected in economic policies.

5. Inclusive Development

Pay special attention to vulnerable and disadvantaged sections.

6. Long-Term Policy Design

Create strategic policies and monitor their effectiveness, making corrections when needed.

7. Partnerships

Collaborate with national and international think tanks, institutions, and stakeholders.

8. Knowledge and Innovation Hub

Facilitate a network of experts to promote research, innovation, and entrepreneurship.

9. Conflict Resolution Platform

Help resolve inter-departmental and inter-sectoral issues for smoother implementation.

10. Resource Centre

Maintain a repository of best practices in good governance, sustainability, and inclusive development.

11. Monitoring and Evaluation

Assess programs, identify resource requirements, and improve chances of success.

12. Technology & Capacity Building

Support technology adoption and build administrative capacity.

13. Any Other Necessary Action

Act on additional tasks needed to advance India’s development agenda.

So, in line we can say,

NITI Aayog is India’s modern policy Think Tank that promotes cooperative federalism, flexible planning, innovation, and a Bharatiya model of development—replacing the outdated Planning Commission.

Functions of NITI Aayog

NITI Aayog works through two major hubs, which together form the “heart” of this institution:

A. Team India Hub

• Works directly with States.
• Focuses on Cooperative Federalism.
• Designs policies and programmes.
• Ensures coordination between Centre and States.

You can think of it as the bridge that keeps “Team India”—the Centre + all States—working together smoothly.

B. Knowledge and Innovation Hub

• Maintains a high-quality Resource Centre.
• Works as a research and knowledge repository.
• Promotes partnerships with universities, NGOs, think tanks, etc.
• Studies good governance practices from around the world.

This is essentially the “brain” of the NITI Aayog.

Major Functional Heads

NITI Aayog’s broad functions can be grouped under four major categories:

1. Policy and Programme Framework

Designing long-term strategies and policies for the nation.

2. Cooperative and Competitive Federalism

Building partnerships with states (cooperative)
and encouraging states to perform better (competitive).

3. Monitoring and Evaluation

Tracking progress of programmes and making improvements.

4. Think-Tank, Knowledge and Innovation Hub

Conducting research, providing expertise, promoting innovation.

Verticals/Cells of NITI Aayog

To perform these functions efficiently, the NITI Aayog is divided into various sector-specific verticals. Each vertical focuses on a specific subject and assists in national-level development planning.

Here are the major verticals:

1. Administration & Support Units
2. Agriculture & Allied Sectors
3. Aspirational Districts Programme
4. Communication & Social Media
5. Data Management & Frontier Technologies
6. Economics & Finance
7. Education
8. Governance & Research
9. Governing Council Secretariat
10. Industry-I
11. Industry-II
12. Infrastructure–Connectivity
13. Infrastructure–Energy
14. MSME
15. Natural Resources & Island Development
16. Project Appraisal & Management
17. Public–Private Partnership
18. Rural Development
19. Science & Technology
20. Social Justice & Empowerment
21. Social Sector-I (Skill Development, Labour, Urban Dev.)
22. Social Sector-II (Health, Nutrition, WCD)
23. State Finances & Coordination
24. Sustainable Development Goals
25. Water & Land Resources

This wide range of verticals shows that NITI Aayog handles almost every major development sector in the country.

Guiding Principles of NITI Aayog

These principles represent the philosophical foundation of NITI Aayog’s work. Let’s understand them simply:

1. Antyodaya

Upliftment of the poorest and most marginalised, following the vision of Pandit Deendayal Upadhyay.

2. Inclusion

Ensuring participation and empowerment of all vulnerable groups—across caste, gender, religion, region or class.

3. Village

Bringing villages into the mainstream of development; strengthening rural India.

4. Demographic Dividend

Focusing on youth development through education, skills and employment.

5. People’s Participation

Making development people-driven, not merely government-driven.

6. Governance

Promoting transparency, accountability and outcome-based governance.
(From Outlay → Output → Outcome)

7. Sustainability

Ensuring environmentally sustainable development—aligned with India’s cultural respect for nature.

Seven Pillars of Effective Governance

Building on these principles, NITI Aayog identifies seven governance pillars:

1. Pro-people agenda — meeting the aspirations of individuals and society.
2. Pro-active governance — anticipating and responding to citizen needs.
3. Participative governance — involving citizens in decision-making.
4. Women empowerment — strengthening women’s role in all domains.
5. Inclusion of all groups — SCs, STs, OBCs, minorities.
6. Equality of opportunity for youth — enabling India’s young population.
7. Transparency through technology — making government open and responsive.

Together, these principles and pillars define NITI Aayog’s approach:
citizen-centric, inclusive, equitable and tech-driven governance.

Cooperative Federalism

NITI Aayog’s core mission is to strengthen cooperative federalism.

The idea is simple:
If states become strong, India becomes strong.

To promote this, NITI Aayog undertakes many initiatives:

Major Steps to Promote Cooperative Federalism

1. Regular meetings of Prime Minister/Cabinet Ministers with all Chief Ministers.
2. Subgroups of Chief Ministers on issues of national importance.
3. Sharing of best practices across states.
4. Capacity development of State/UT officials.
5. Aspirational Districts Programme — uplifting backward districts.
6. Theme-based engagements with states in various sectors.
7. Model laws on land leasing and agricultural marketing.
8. Special interventions for NE States, Himalayan States and Islands.

Major Initiatives

• DSSS (Development Support Services to States/UTs)
• SATH (Sustainable Action for Transforming Human Capital)

These initiatives help states improve governance, infrastructure and human development.

Competitive Federalism

Along with cooperation, NITI Aayog also promotes healthy competition among states.

How does NITI encourage competition?

By releasing transparent rankings and indices in various sectors:

Some major indices include:

• School Education Quality Index
• State Health Index
• Composite Water Management Index
• SDG Index
• India Innovation Index
• Export Competitiveness Index

Delta Rankings

NITI Aayog also releases monthly rankings of Aspirational Districts, based on improvement.

Why rankings matter?

• They push states and districts to perform better.
• They create a race to improve governance, not merely to follow rules.
• They are based on quantitative and objective indicators, reducing bias.

NITI Aayog also works closely with states and ministries to:

• Develop indicator frameworks,
• Set up review mechanisms,
• Conduct capacity-building.

This combination of cooperation + competition helps India move towards a more efficient governance model.

Autonomous and Attached Bodies of NITI Aayog

NITI Aayog is supported by two major institutions, each performing a specialized role:

1. National Institute of Labour Economics Research and Development (NILERD) – Autonomous Body
2. Development Monitoring and Evaluation Office (DMEO) – Attached Office

Let us understand them clearly.

1. National Institute of Labour Economics Research and Development (NILERD)

What is NILERD?

NILERD was earlier known as the Institute of Applied Manpower Research (IAMR).

It is an autonomous organization functioning under the NITI Aayog.

Purpose

It focuses on:

• Human capital planning
• Human resource development
• Research and data collection
• Monitoring and evaluation
• Training and education related to manpower planning

Historical Background

• IAMR was set up in 1962 under the Societies Registration Act, 1860.
• Its purpose was to act as a clearing-house of ideas on human capital development.
• In 2014, IAMR was renamed NILERD.

Funding

• Mainly funded by NITI Aayog (formerly Planning Commission).
• Also earns from:
  • Contract research projects
  • Training programs
  • Educational activities

Location

• In 2002, the institute shifted to its own campus at Narela, Delhi.
• Narela is a developing knowledge and institutional hub in NCR.

2. Development Monitoring and Evaluation Office (DMEO)

Why was DMEO created?

India needed a professional and independent evaluation system to examine government programmes objectively.

So, the evolution happened in three stages:

1. 1952 → Programme Evaluation Organisation (PEO)
   • Evaluated Central Government-funded schemes.
2. 2010 → Independent Evaluation Office (IEO)
   • To give more autonomy to evaluation mechanisms.
3. 2015 → DMEO
   • Formed by merging PEO and IEO.
   • Now functions as an attached office of NITI Aayog.

Role of DMEO

It is the apex monitoring and evaluation body in India.

Its mandate includes:

1. Monitoring the progress and effectiveness of long-term policy and program frameworks.
2. Evaluating implementation of government schemes, identifying resource gaps, and suggesting corrections.

Additional Role

Under cooperative and competitive federalism, DMEO also:

• Provides technical advisory support to States and UTs,
• Creates a platform for advancing monitoring and evaluation practices nationwide.

Regional Offices

• Until 2017, DMEO had 15 Regional Development Monitoring and Evaluation Offices (RDMEOs).
• They conducted field surveys and helped in centre–state coordination.
• In 2017, these regional offices were closed, and staff were shifted to DMEO Headquarters in New Delhi.

Erstwhile Planning Commission

To understand NITI Aayog completely, we must understand what it replaced:
The Planning Commission, which existed from 1950 to 2014.

Let’s understand this:

Establishment

• Formed in March 1950 by an executive resolution of the Government of India.
• Based on recommendation of the Advisory Planning Board (1946) headed by K.C. Neogi.
• Not a Constitutional body.
• Not a Statutory body.

It served as India’s supreme planning institution for social and economic development.

Functions of Planning Commission

1. Assess national resources — material, capital, human.
2. Formulate plans for effective and balanced use of resources.
3. Determine priorities and stages of implementation.
4. Identify obstacles to economic development.
5. Decide on administrative machinery needed for implementation.
6. Review plan performance periodically and suggest adjustments.
7. Make recommendations on matters referred by Centre or States.

Important Note

The Planning Commission was only an advisory and staff agency.
It did not implement policies.
Implementation remained with the Central and State Governments.

Composition of Planning Commission

1. Chairman → Prime Minister of India
2. Deputy Chairman → De facto executive head
3. Part-time Members → Some Union Ministers
4. Full-time Members → Experts (4 to 7)
5. Member-Secretary

Absence of States

States were not represented in the Planning Commission.
This made it a centralized body.

Critical Evaluation of Planning Commission

Over time, although it was set up as an advisory body, it became extremely powerful.

Hence, critics called it:

• “Super Cabinet”
• “Economic Cabinet”
• “Parallel Cabinet”
• “Fifth Wheel of the Coach”

Some key criticisms:

1. First Administrative Reforms Commission (ARC)

Said that Planning Commission acted like a Parallel Cabinet, overshadowing the executive authority of ministers.

2. K. Santhanam

Said, “Planning has superseded the federation,” meaning it pushed India towards unitary functioning.

3. P.V. Rajamannar

Pointed out overlaps in financial roles between the Planning Commission and the Finance Commission.

National Development Council (NDC)

The NDC was the apex body for planning coordination between Centre and States.

Establishment

• Formed in August 1952 by executive resolution.
• Not a Constitutional or Statutory body.

Recent Development

• In 2016, government indicated plans to abolish NDC and transfer its powers to the Governing Council of NITI Aayog.
• However, no such resolution has been passed yet.
• The last NDC meeting was the 57th meeting on 27 December 2012 to approve the 12th Five-Year Plan.

Composition of NDC

1. Prime Minister of India (Chairman)
2. Union Cabinet Ministers
3. Chief Ministers of all States
4. Chief Ministers/Administrators of all UTs
5. Members of Planning Commission (now NITI Aayog)

Objectives of NDC

1. Secure cooperation of states in plan execution.
2. Mobilize national resources for planning.
3. Promote common economic policies across nations.
4. Ensure balanced and rapid development across regions.

Functions of NDC

1. Prescribe guidelines for preparing the national plan.
2. Consider the national plan prepared by Planning Commission.
3. Assess resources needed for plan implementation.
4. Discuss major issues of national development.
5. Review working of national plans.
6. Recommend measures to achieve plan targets.

Final Summary

• NITI Aayog is India’s modern policy think tank focused on cooperative federalism, innovation, and evidence-based governance.
• Supported by NILERD (research) and DMEO (monitoring & evaluation).
• Replaced the centralized and often criticized Planning Commission.
• The NDC, once the apex inter-governmental planning body, has become functionally dormant.