[Economy] Niti Aayog, Planning Commission: Evolution, Structure, Function and truckload of Criticism explained

Niti Aayog: Structure, Composition, Membership

[Economy] Niti Aayog, Planning Commission: Evolution, Structure, Function and truckload of Criticism explained

  1. Timeline of planning in India
    1. Five Year plans: from 1st to 12th
    2. Planning Commission: Criticism/Anti-Arguments
  2. Niti Aayog: Structure, Membership
    1. NITI Aayog: functions, Mandates
    2. Functional Comparison: Niti vs PC
    3. Niti Aayog: Criticism/Anti-Arguments
    4. Allocation of funds to States?
    5. Chinese Niti Aayog?
  3. Mock Questions
Timeline of planning in India
1934 Visvesvaraya plan in this book “The planned economy of India”. He was an Engineer, Ex-Diwan of Mysore and Bharat Ratna recipient.
1938 Nehru’s Congress plan. But not implemented due to WW2.
1944 Bombay plan by noted industrialists such as JRD Tata, GD Birla, Kasturbhai Lalbhai et al.
1944 Sriman Narayan Agrawal’s Gandhian plan.
1945 MN Roy’s “people’s plan” – with socialist leanings.
1950 Jayprakash Narayan’s Sarvodaya Plan based on Vinoba Bhave’s philosophy
1950,March 15 Cabinet resolution to form Planning commission.
1952,Aug. National Development council (NDC) made by Cabinet resolution.
2014,Aug. Modi shuts down planning commission.
2015, Jan Government notified the formation of Niti Aayog- National Institution for Transforming India.


Five Year plans in India
Plan Period theme/Model/target
1st 51-56
  • Harrod Domar Model
  • Main focus: Agriculture, irrigation and power.
  • Got more GDP growth than its original target.
2nd 56-61
  • P.C.Mahalanobis Model
  • Socialist model, Rapid industrialization, heavy industries.
3rd 61-66
  • Sukhmoy Chakraborty and Sanddy
  • Also called “Gadgil Yojana”.
  • Failed to achieve its target due to droughts and wars with Pak-China
Holidays 66-69
  • Holiday declared thanks to #EPICFAIL of 3rd FYP.
4th 69-74
  • Ashok Rudra-Alon Manney
  • growth with stability and self-reliance. [Garibi Hatao came here, says LucentGK]
  • #EPICFAIL due to Bangladeshi refugee problem and drought.
5th 74-79
  • C.Subramaniam and later redrafting by D.P.Dhar
  • Originally it was a 10 year long term perspective plan with focus on poverty removal and self-reliance
RollingPlan 78-80
  • Morarji Desai’s Janta government came up with Rolling plan system – we’ll measure progress every year and make new plans accordingly for next year.
6th 80-85
  • Poverty removal (Garibi Hatao), IRDP, NREM, TRYSEM etc. [Garibi Hatao came here says Ramesh Singh]
7th 85-89
  • Pranav Mukherjee
  • Focus on employment. Jawahar Rozgar Yojana started.
2 Annual plans 89-91
  • Political instability at Centre. Hence only annual plans.
8th 92-97
  • John W.Miller model.
  • PV Narasimha Rao- LPG reforms
9th 97-02
  • Growth with social justice and equity. Mostly “indicative” planning.
  • #EPICFAIL due to global slowdown after Asian financial crisis.
10th 02-07
  • 8% GDP growth rate, double per capita income in 10 years.
11th 07-12
  • Theme: “inclusive growth”
  • C.Rangarajan framed it with targets: 8-10% growth rate, 70 million new jobs, lower IMR, CMR, TFR etc.
12th 12-17
  • Theme: “Faster, More inclusive and sustainable growth”.
  • Target growth rates: 9% GDP, 4% Agriculture, 10% Mfg.
  • 10% reduction in poverty, create 50 million new jobs.
  • Get IMR:26, MMR:1000,Child Sex ratio: 950, TFR: 2.1
  • Increase mean school years, forest cover, infrastructure investment, rural tele-density.

Planning Commission: Criticism/Anti-Arguments

  1. Achieved >9% GDP growth-rate during 2005-07, thanks to American boom prior to sub-prime crisis. But almost all nations of world experienced high growth. So 9% GDP did not come from Montek’s magic wand.
  2. Post sub-prime crisis, failed to evoke the “animal spirit” in Indian economy. GDP-fell, inflation rose during 2008-13 nonstop.
  3. Reduced poverty by doctoring the BPL-line. Tendulkar line says 27 crore BPL, if we use Ranga line then 37 crore BPL. Planning commission brags reducing poverty line on Tendulkar’s parameters.
  4. Toothless body, can’t hold State/union/ministries/departments accountable for failing to achieve targets.
  5. Hopes that CAG and Public accounts Committee will take care accountability part. But PAC too is pretty much toothless.
  6. Failed to implement land reforms. Faulty policies for MSME, industrialization, Factory-labour law problems.
  7. Office manned by Generalist IAS/IES with short tenure; panel members filled with academicians and jholachhap NGOs. Need subject specialists with international exposure like Rajanbhai.
  8. Designed CSS with One size fits all approach and a few extra crores to NE/J&K/Hill-states and LWE. But for long, it did not use pilot projects / sample testing / interaction with states.
  9. Hence, IAY, ICDS etc. programs failed to show tangible result despite pumping crores.
  10. They tried to bypass state Governments via NGO-funding, DRDA. Hence States unenthusiastic about implementing Central-schemes named after you know who.
  11. Only in 2013- reforms done like reducing number of Centrally sponsored schemes (CSS), 10% flexifund to states, direct transfer of money to state consolidated fun etc. But it’s too little too late.
  12. Shortcomings in planning commission => new bodies sprung up like PM’s economic advisory council, PM’s project monitoring group and so on=> more brains=> more lack of coordination.
  13. Hence Modi felt that PC is beyond fixing- just like Gotham city and Delhi city.
  14. For so many years, Government worked as the “provider of first and last resort”. But, today Indian industry and service sector has reached on global scale, a neo-middle class has emerged.
  15. Times have changed, from being a underdeveloped country in 1950s – India has become a major economic force.
  16. Hence our needs have changed- from mere food security to profitable agriculture. In this playground, Government needs to become an “enabler” rather than a “player”.

And thus Niti Aayog was born.

Niti Aayog: Structure, Membership

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