Planning Commission Vs Niti Ayog

Planning Commission Vs Niti Ayog

In his first Independence day speech Prime Minister Narendra Modi announced that the Planning Commission was going to be replaced by the Niti (National Institution for Transforming India) Ayog.

About Planning Commission

1. The history of the Planning Commission goes back to Meghanand Saha in 1938. He pursued his friend, the then congress President Subhash Chandra Bose, who encouraged the establishment of the National Planning Committee with Jawaharlal Nehru as its first chairman.

2. Upon Independence, the Planning Commission was set up by a resolution of the Government of India in 1950 with the ruling PM as the ex-officio chairman.

3. Deputy Chairman was mostly an economic expert or politician who enjoyed the rank of cabinet minister.

4. Centralized planning was the goal of the Planning Commission. It was a Socialist Era institution based on the Russian model of five-year plan. The main function of Planning Commission was to formulate and review five-year plans, and review and monitor their progress.

5. Fixing target for sectoral growth and allocate resources to state were important functions of the Planning Commission

Reasons why Planning commission became obsolete

1. The year 1991 changed the economic policy of India completely. India adopted the LPG (Liberalization, Privatization, Globalization) policy. As the view of the government changed, the role of planning also changed. It became indicative of the planning in a world of free market institutions.

2. Allocation of scarce resources was the biggest problem before the Planning Commission as different states have more knowledge about their local requirements. Allocation of resources by the central government and dictating terms to the states was not liked by them.

3. The Planning Commission suffered from accusations of discrimination if different parties were governing at the state and central levels.

4. The role of private sector has become crucial in increasing the growth rate as it can provide new knowledge and technology to develop the infrastructure.

5. Most of the 5 year plans failed to achieve their target, thereby raising questions against the Planning Commission.

Niti Ayog

1. Modi claims, 'less government, more governance' so he plans to move away from centralized planning.

2. Niti Ayog will also be headed by the PM but its functioning style would be different. There will be vice chairman and CEO. It has provisions for the appointment of full time as well as part time members. There are speculations about industry experts being appointed to get their opinion on economic policy forum.

3. It will be a think-tank. Its function is limited only to the monitoring and evaluation of a plan. Allocation of resources might be done by the finance commission which is a constitutional body.

4. States can tailor their schemes according to their unique needs, ultimately recognizing diversity of India.

5. It will follow co-operative federalism truly as a governing council is made up of chief ministers and Lt. Governors.