Will NITI Aayog-like bodies come up in the states and will they deliver?

Experts believe that merely replacing the state boards with Aayog-like bodies will not make them institutions which would be looked at seriously by the governments

The NITI (National Institution for Transforming India) Aayog may not force the states to replace their planning boards with Aayog-like bodies but will guide them if they agree to do so.

As part of its mandate of fostering cooperative federalism, the Aayog is ramping up its support to the states by aiding them in the preparation of development strategies and visions to achieve their socio-economic goals, a NITI official spokesperson said.

With the support of NITI Aayog, the states that are interested can either establish State Institutions for Transformation (SITs), which can drive their development agenda further or reimagine the role of their existing institutions such as planning departments and boards, the spokesperson said.

But the crucial issue is what will such a body deliver that the state planning boards cannot? NITI Aayog believes that such a body will help the state deliver more which would ultimately help the country's economy as well as the living standards of the people.

The spokesperson said these SITs will be structured according to a state’s unique requirements and they will play a crucial role in galvanising partnerships, resources, ideas, and synergies required for the state to achieve their aspirations.

NITI Aayog will provide sectoral expertise to make the SITs dynamic and agile, the spokesperson added.

In fact, Assam and Karnataka have created their state Aayogs. One of the primary functions of Assam’s State Innovation and Transformation Aayog is the focus on sustainable development goals (SDGs).

Uttar Pradesh has already sought assistance from NITI Aayog to restructure the state's planning board. Earlier this year, NITI Aayog vice-chairman Suman Bery and Chief Executive Officer Parameswaran Iyer had called on Chief Minister Yogi Adityanath in Lucknow to discuss the matter. They promised support to Yogi through technical cooperation for the plan.

Bery had said that Uttar Pradesh could play a key role in achieving India’s SDGs.

Pronab Sen, a principal advisor in the erstwhile planning commission, says state planning boards are defunct, except in five-six states such as Kerala and West Bengal.

"Everything depends on how seriously the states take them. If they don't take planning boards seriously, how will replacing them with SITs or creating separate SITs help the situation?" he wonders.

He says the bigger question is what has NITI Aayog achieved in its seven years of existence.

When told that NITI has done commendable work in many areas, say on electric vehicles, Sen says that could have been done by the transport ministry too. "What is it that NITI Aayog brings on a platter? Frankly, I don't see what they do. What do they do which can't be done otherwise?" he says.

N R Bhanumurthy, the vice-chancellor of Dr B R Ambedkar School of Economics University, Bengaluru, says, “It cannot be a one size fits all approach. There are a few states which have very active state planning boards, like Kerala, Madhya Pradesh, Tamil Nadu etc.”

Bhanumurthy says that conceptually, what NITI Aayog is saying is that when there is no Planning Commission at the central level, why are there planning boards at the state level?

“I would slightly disagree with that, for the simple reason that states have a larger role than the NITI Aayog in focusing on regional issues, or regional divergences, which within the states are huge. And unfortunately, NITI Aayog doesn't really look at that particular aspect.”

Bhanumurthy, who previously had a long stint at the National Institute of Public Finance and Policy, says there is still a need for a planning body as the bottoms-up approach is very important at states compared to the central level. “You could have a similar institution to NITI Aayog at the state level, but with different terms of reference.”

Most of the states have a weak planning board, and certainly, there is a need for handholding, a need for a nudge to bring those institutions back so that they address the emerging state issues, he says.

He points out that there is a regional disparity, not on the income level but more in sustainable development goals and that some of the states actually created an SDG commission, like Assam.

Arun Maira, a member of the erstwhile planning commission, however, says replacing the planning board with Aayog-like bodies is a very good idea.

"Towards the end of the planning commission, there was a proposal to change the role of the body at the Centre and also planning boards in the states. States such as Kerala, Tamil Nadu and Odisha were on board with this suggestion," he recalls.

By replacing these with Aayog-like bodies, states can improve the well-being of the people and the economy of the nation in general.

"This way governance can be made more effective," he says.

To come to Sen's point as to what NITI Aayog has done so far, let us look at its history first.

In his first Independence Day Speech as Prime Minister, Narendra Modi announced that the Planning Commission was replaced with a new body called the NITI Aayog, which is an acronym for National Institution of Transforming India.

A formal cabinet decision on the same came on January 1, 2015.

From the very beginning, policymakers were clear that, unlike the Planning Commission, NITI Aayog won’t have fund allocation powers and will play the role of a think-tank for the government and foster a sense of cooperative federalism among states.

After spending the first few months setting its house in order, the Aayog gradually got into the groove.

The first governing council meeting chaired by PM Modi along with state chief ministers came up with some valuable insights including a panel of chief ministers on rationalizing the centrally sponsored scheme (CSS) so that wasteful government expenditure could be curbed.

During the months after demonetisation, the Aayog championed the digital drive in the country and in consultation with the Reserve Bank of India (RBI) came up with several valuable suggestions to widen the digital payment ecosystem in the country.

It also prepared a three-year vision document for the Central government, which replaced the Nehruvian-era legacy of five-year plans.

It was in the Budget of 2018-19, that perhaps for the first time after its formation that NITI Aayog truly found its worth in some sense as several recommendations made by it found a mention in the Budget in some form or the other.

As many as six major announcements made by then Finance Minister Arun Jaitley in that Budget had been suggested by the NITI Aayog in one form or the other.

Starting with framing a mechanism in consultation with states to devising a fool-proof mechanism to ensure farmers got an adequate price for their produce and making a national programme on ‘Artificial Intelligence' (AI), NITI Aayog played an important role in that Budget.

In the second term of the Modi government, NITI Aayog’s relationship with the government in the first few months saw some changes and observers felt that the body has been more ‘vocal’ on some issues, which even attracted criticism from top union ministers at times. In this period the Aayog embarked on one of its primary objectives; which is to design strategic and long-term policy and programme frameworks and iNITIatives and monitor their progress and efficacy.

NITI Aayog has been at the forefront of the Centre’s move to promote EVs to cut down on pollution and was one of the main drivers of the FAME scheme that announced a host of incentives for the EV sector.

In 2021–22, NITI Aayog took the lead in setting up sectoral targets and fostering an environment of innovation and cooperation by bringing together technology, enterprise, and efficient management at the core of policy formulation and implementation.

One such programme, which was being implemented right from the conceptualisation stage is the Aspirational Districts Programme (ADP) which completed four years in January 2022 — with nearly two of those years in the throes of the Covid-19 pandemic.

Despite being severely affected by the second wave, the 112 identified districts showed agility in maintaining their focus on the delivery of basic services.

Since the inception of the Programme, all the Aspirational Districts have shown improvement across socio-economic indicators.

One of the greatest success stories of the NITI Aayog in the second tenure has been putting on track the much-delayed asset monetisation programme of the government and developing an inter-ministerial coordination framework, which is helping in the faster monetisation of government assets.

Pursuant to the announcement made in the Union Budget, 2021–22, the NITI Aayog prepared the National Monetisation Pipeline (NMP) in consultation with the infrastructure Line Ministries and based on an assessment of the available asset base.

The NMP aims to prepare a medium-term pipeline, along with a roadmap for monetisation-ready assets listed under various ministries that will be monetised over a four-year period, from FY2022-25.

The NMP plans to raise Rs 6 trillion through core assets of the central government.

The Aayog has been hand-holding states to undertake asset monetisation through innovative structures such as InvITs/REITs/securitisation for various sectors and the appointment of transaction advisers.

Another major impactful intervention that the Aayog made in the last few years, is developing the framework for the production-linked incentive (PLI) schemes.

The PLI schemes are meant to provide an impetus to manufacturing in India and boost exports from the country.

The Aayog’s industry vertical in consultation with the concerned ministries and departments anchored the introduction of the PLI scheme in ten key sectors (in addition to the three sectors approved earlier) for five years.

The schemes were approved by the Union Cabinet on 11 November 2020.

Finance Minister Nirmala Sitharaman in her 2022-23 Budget speech lauded the scheme saying that it has received excellent response and has the potential to create six million new jobs and additional production of Rs 30 trillion in the next five years.

The impact of Covid has been largely disruptive in terms of economic activity as well as a loss of human lives.

With most sectors adversely affected, the economy witnessed a contraction of 7.3 per cent during 2020–21 and recovered to show 8.5 per cent growth in 2021-22. However, growth was just 1.5 per cent in 2021-22 over the pre-covid period of 2019-20.

Both the central and state Governments came out with a series of responses to protect lives and livelihoods, improve healthcare facilities, ramp up vaccinations, and undertake measures for social protection.

NITI Aayog played a big role in enhancing the country’s preparedness and response capabilities, providing technical guidance as well as active support by setting up the CovAid portal and through partnerships with civil society organisations, the private sector, and multilateral institutions.

NITI’s involvement ranged from leading and participating in Empowered Group meetings, providing trends of the pandemic for informed policymaking, ensuring health system preparedness and vaccine management to testing and genomic surveillance, providing guidance on school reopening, and setting up a dedicated portal — CovAid — for transparent and faster distribution of all foreign aid to end beneficiaries.

However, the fact remains that the organisation was a pale shadow of its illustrious predecessor as far as influencing policy making in India both at the centre and states is concerned as its working was handicapped by the clipping of its financial wings.

Sen says if NITI Aayog or state bodies are performing roles of planning, they need resource allocation power too.

Merely changing these boards with Aayog-like bodies will not make them institutions which would be looked at seriously by the state governments, he says.