‘Team India’ and the NITI Aayog


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IN its 2014 election manifesto, the BJP announced the abolition of the Planning Commission, a non-statutory body that had a significant influence on the strategic deployment of public resources across India since its inception in March 1950.1 Shortly after it took power as a majority government, the BJP followed through on its election promise and replaced the Planning Commission with the NITI Aayog (National Institution for Transforming India).2

The replacement of the Planning Commission was motivated by a number of reasons, many of which are not linked explicitly to federalism. For instance, it was argued that the transition from a state-led to a more market-led economy made detailed five and annual plans for public spending superfluous. As a body advising the Indian government on public spending projects, the commission was seen as too generalist in its composition, dominated by career civil servants drawn from the Indian Economic Services and Indian Administrative Services. Furthermore, the distinction between plan and non-plan grants and within that between plan and non-plan revenue and plan and non-plan expenditure, undermined a holistic look at public finance and spending in India.

In practice, several of these issues had been partially addressed before the NITI Aayog was set up in January 2015. Under previous Congress-led governments, planning had already become ‘indicative’, acknowledging the transition to a more liberalized economy. External consultants were also brought in to advise on sections of the plan.3 Finally, the Rangarajan Committee Report (2011) recommended abolishing the distinction between plan and non-plan revenue and expenditure.4 The 14th Finance Commission report (2015-2020) adopted this recommendation and the newly elected Modi-led government implemented it.

Yet, the Planning Commission was not just criticized for being out of tune with India’s liberalized economy. From a ‘federal’ perspective, the states perceived the Planning Commission as an arm of the federal or central government which, through discretionary grant-making and central and state planning, added to the country’s centralization. More concretely, the concerns of the states centred around two main issues.


First, the states feared that the Planning Commission was frittering away their legislative, financial or administrative autonomy. Compulsory cost sharing programmes across a range of social policy areas, generally known as Centrally Sponsored Schemes (CSS), impinged on policies in which the states held concurrent or even exclusive legislative competence. By requesting them to implement these schemes, states were left with insufficient autonomy to adopt only those schemes which met their political and social needs.5 The central government (and in particular the Planning Commission in collaboration with the relevant central ministries) played a key role in the design of these schemes in their co-funding and evaluation. In some cases, these schemes were also implemented by agencies under the control of the central, not state government.6

The Planning Commission also approved separate annual state plans, including plans for borrowing. Given that the funds disbursed as CSS, or normal or special plan assistance (see below) were not subsumed under separate state plans, the relevant amounts for which the states needed individual PC consent was generally limited.


Second, state governments argued that the increasing federal involvement in state affairs through the five year and annual state plans, through CSS and the allocation of discretionary grants (normal assistance to the states, which followed a specific formula, and special assistance to so-called underperforming ‘special category states’) was not sufficiently offset by a strengthening of their voice in central (and PC) decision-making. The National Development Council, a body in which all state chief ministers and lieutenant governors of the union territories had a seat, met on average only once a year and very often at the end of the (annual or five-yearly) planning cycle. State bureaucrats were not systematically integrated or ‘seconded’ to the Planning Commission, limiting its ability to function as an intergovernmental forum.


The NITI Aayog was given a very broad mandate, not all of which is relevant to centre-state relations. The Cabinet resolution which initiated its creation listed no less than 13 objectives, which can be broadly subsumed under four categories: (i) envisioning a socio-economic blueprint for the next few years; (ii) working with the states; in this particular context the Cabinet resolution of 1 January 2015 refers to the development of a ‘shared vision of national development priorities, sectors and strategies with the active involvement of the states in the spirit of "co-operative" federalism’7; (iii) appraise and monitor different government schemes; and (iv) serve as a knowledge hub supporting central government policy.8

In an interview with the author on 6 March 2019, a senior NITI official with previous working experience in the Planning Commission provided a rather critical assessment of the NITI’s functioning. In his view, the NITI has been most successful in meeting the third objective, but has a much weaker track record in the other domains.

For instance, in terms of developing a socio-economic blueprint and serve as a knowledge hub, the NITI falls short on a number of criteria. First, both functions require adequate human resources. The NITI was forced to thin its organization (100-500 personnel were transferred to other posts).9 In the absence of annual and five year planning and without significant grant-making powers, the overall budgetary allocation of the NITI was reduced by about half compared with that of the Planning Commission previously.


In comparison with the Planning Commission, the NITI has been able to provide more short-term contracts to externally recruited policy analysts, but mostly at the junior level. In order to fulfil its role as a ‘federal’ think thank or intergovernmental hub, the NITI could have brought in civil servants or practitioners from the states, but largely failed to do so. Central ministries only seconded junior civil servants to the NITI.10

Although the NITI produced a three-year action plan, seven-year strategy paper and fifteen-year vision document, none of these documents have emerged out of long-standing consultations with public and private actors at the (sub)-state levels. There is also no evidence that these documents have informed government policy.11 During the planning era, states were not systematically involved in the drafting of five year and annual state plans either, but the procedures for drafting the plan were generally more robust. Per draft plan chapter, they usually involved a team of around 25 people and various drafts were made subject to the consent of working groups, a steering committee and finally the full Planning Commission and Cabinet. The deputy chairman of the Planning Commission was invited to the Cabinet meeting.


In contrast, the vice chairman of the NITI Aayog no longer enjoys this privilege.12 The drafting of the action, strategy and vision papers did not involve widespread external consultation, and overall there was very limited involvement of the states in putting together the Action Plan. There is also no visible evidence that the subsequent federal (let alone state) budgets have been informed by these plans. In fact, state chief ministers were sent the draft vision documents a couple of days before a planned meeting of the Governing Council of the NITI (in which they and lieutenant governors of union territories are represented). The abolition of the plan non-plan distinction offered the NITI with an opportunity to be involved in the co-shaping of a mid-term expenditure plan per sector, alongside the Ministry of Finance. This opportunity was not seized upon, in part because the NITI was not given the task, time and resources to do so.

More widely, in terms of working with the states in Team India, and fostering ‘competitive-cooperative federalism’, the contribution of the NITI is mixed at best. Organizationally, the NITI is a central political institution subsumed under the authority of the prime minister. Next to the PM as the NITI’s chairperson, it has a CEO with the rank of secretary; a vice chairperson appointed by the PM, three full-time members, four ex-officio members and three special invitees (all federal ministers). When confronted with the assertion that this keeps the NITI firmly under the control of the Centre, the member of the NITI whom I interviewed replied that ‘as the NITI reports to the PM, it is logical for the PM to choose who will become its members and to set the NITI’s agenda.’13


At the apex, the NITI is assisted by a Governing Council made up of the chief ministers of the states and Lt Governors of the union territories; in effect mirroring the erstwhile National Development Council. Only four Governing Council meetings have taken place so far (two in 2015, one in 2017 and one in 2018), comparable in frequency to its predecessor, the NDC. These meetings, unlike NDC meetings, are not minuted (only a summary is provided and placed on-line). Not all chief ministers attend Governing Council meetings. For instance, in July 2015, several non-BJP chief ministers boycotted the Governing Council, because it sought ways in which BJP-ruled states could fast-track land acquisition for business purposes by federal executive ordinance when a proposed amendment to the federal Land Acquisition Bill was still pending in the opposition-controlled Rajya Sabha.14

In a significant departure from the PC, the NITI has also set up regional councils ‘to address specific contingencies impacting more than one state or a region, convened and chaired by the PM but made up [of a group of] chief ministers of the state.’15 At its first meeting in February 2015 the NITI Governing Council set up three such regional councils to focus on the restructuring of CSS, skills development and the Swachh Bharat Abhiyan or Clean India Mission. The NITI has also established smaller task forces mainly at the level of the senior civil service (secretary) with the involvement of consultants to focus on poverty elimination and agricultural development. In November 2018, the NITI set up a Himalayan State Regional Council, bringing together the chief secretaries of twelve Himalayan states with a view to monitor the achievement of sustainable development goals and other policy objectives.


From a procedural point of view, Regional Councils could have strengthened the input of the states during an earlier stage in the policy cycle.16 In the Planning Commission, exchanges at the most senior level were confined to NDC meetings or bilateral meetings in the context of approving the annual state plans. However, ahead of the first Governing Council, the PMO in consultation with the NITI prepared a list of items for further in-depth exploration from which the members of the Governing Council could choose.17 Thus, the PM Office and the NITI appear to have had a firm hand in steering which items deserved further consideration. Furthermore, multi-partisan in composition, three regional councils at the chief ministerial level were chaired by then NDA chief ministers (Andhra Pradesh, Punjab and Madhya Pradesh) even though two were intended to be headed by opposition chief ministers.18 There is no clear evidence that the skills development and Clean India reports have informed policy-making in the relevant ministries overseeing these programmes.19

The most important Regional Council report refers to the reform of the centrally sponsored schemes. What prompted this report was not so much the earlier discontent with the functioning of these schemes as highlighted above,20 but rather an urgent need to reconsider their financing in light of the implementation of the 14th Finance Commission recommendations. These increased the state share of the divisible pool of tax revenue from 32 to 42 per cent. As a corollary, the share of revenue that the Centre used to set aside for their financing was considerably reduced.21


This Chauhan Report, so-named after the then chief minister of Madhya Pradesh who chaired the relevant sub-group of chief ministers,22 recommended dividing existing CSS into core schemes (which all states need to opt into and are crucial to further ‘national development’ such as poverty elimination, rural employment, midday meal scheme provision for schoolchildren among others) and optional schemes (which most states will accept for now).23 It did address earlier criticisms in the management of these schemes by putting states in full control of their implementation (rather than delegating some of that to central agencies). However, beyond this, the main changes led to adjustments in the cost sharing arrangements to reflect the reduced financial clout of the Centre.


Hence, the report recommended that for the ‘core schemes; the Centre will assume 100, 90 and 60 per cent of the cost benefiting the union territories, North East and Himalayan states (erstwhile ‘special category states’) and the remaining states respectively; and for the ‘optional schemes’ the central cost sharing ratio will amount to 100, 80 and 50 per cent respectively.

The Ministry of Finance has largely complied with the recommendations of the NITI as far as these amended cost sharing of CSS is concerned, but the broader objective to use the report as the basis for a deeper root and branch reform of CSS has not been taken up. In the view of one informant, the largely ritualistic significance of chief ministerial visits to the Planning Commission in the context of the erstwhile state planning process did not stop the CM from using such visits to appraise their relationship with the Centre more generally across a range of issues.

The influence of the NITI compared with the Planning Commission has weakened: without substantive grant-making powers, final decisions on the monetary allocation of development funds has shifted more squarely to the Ministry of Finance and the affected Union ministries. Consequently, while during the first couple of years after the NITI started operating, CMs still sought to use the NITI as an entry point to express grievances with the central government, they no longer do so now, but seek direct access to central ministries or the Ministry of Finance instead.24 These lack institutionalized structures for intergovernmental mediation.


One of the most significant contributions of the NITI is to build on the erstwhile evaluation office in the Planning Commission to strengthen the monitoring and appraisal of development. Thus, NITI created a number of indices (on health, water, innovation, ease of living, education, sustainable development). The quality of district data has improved. In the context of the backward district programme this involved collaboration with external organizations such as the Tata Trust and the Bill and Melinda Gates Foundation (which provided the skills and financial support to conduct random sample and purposive sampling household surveys across 77 backward districts).25 This also had a bearing on centre-state relations.

The NITI has used this data gathering exercise to build up a performance based ranking of states, which feeds into its idea of ‘cooperative-competitive federalism’. However, the NITI has few financial inducements to reward the best performing states or districts, leaving aside some minor grants which it can still allocate in the context of its ‘aspiration district’ or ‘Atul Innovation’ programmes. Therefore, at most, comparative rankings can be used to ‘share best practices’ or engage in ‘comparative state bench-marking.’ Furthermore, there is a danger that the NITI can only rank states on the basis of targets or policies initiated and declared from within the PMO. As one informant put it, ‘you cannot say what has to be done, all you can say is how best it can be done.’26

Finally, especially in a context where the NITI is perceived as a think thank supporting the central government, there is a risk that its activities may undermine the authority of other data gathering centres. A case in point is the NITI’s attempt in January 2019 to delay the publication of the National Statistical Commissions’ NSSO report on unemployment. This report documented a 40-year high unemployment rate in 2017-18. Two prominent members of the commission resigned in protest, claiming that ‘the commission is the final authority on the NSSO report’ and ‘once the report is approved by the commission, it is known as the final report.’27


This article provides a short overview of the NITI Aayog, its mandate in comparison with the Planning Commission which preceded it and its ability to serve as a hub in which the Centre and the states can pursue collaboration or sort out policy differences. The NITI has not been able to address ‘the federal’ critique of the Planning Commission as set out in the introduction to this article.

By and large the NITI has neither the appropriate resources nor the internal organizational structure to drive forward cooperative federalism. It has improved the capacity of the Centre to engage in policy evaluation but it has done little to upload state preferences on central policy issues which affect their short or long-term autonomy (as evidenced by the lack of state input in the action, strategy or vision paper). The agenda of the NITI is largely set by the PMO under which it is subsumed. It is also not clear to what extent central ministries take up its policy recommendations responsible for overseeing the delivery and funding of national development programmes. Arguably, for the NITI to perform this role, it requires a different organizational structure, more autonomy from the PMO and more power.


Indeed, some authors are of the view that the NITIs role in centre-state issues can only be strengthened if it acquires considerable discretionary grant-making authority. Such a NITI Aayog 2.0 as Vijay Kelkar asserts in this special issue of Seminar, could address regional development imbalances which the Finance Commission cannot, given its focus on per capita consumption of basic goods and services instead of infrastructural development.28 To vest such interests in the NITI would be preferable to the Ministry of Finance, given the latter’s traditional focus on inflation, balance of payments and short-term macro-economic stability.29

Furthermore, to function as a genuine intergovernmental body, the internal structure of the NITI would have to be changed (there should be provision for state representation in its composition) and it would have to operate more independently from the PMO or even the central government (perhaps more like the Election Commission). Indeed, India’s rather centralized federation provides few alternative avenues in which ‘cooperative’ federalism can be pursued.

As Rekha Saxena shows in this issue, the Rajya Sabha falls short in its objective of representing the interests of the states. The Inter-State Council, which is the only statutory body aimed at coordinating centre-state relations, has only met once since the Modi government came to power (July 2016), and just once in the decade before. More generally, although memorandums of understanding between central and state governments and bureaucracies exist, these remain fairly ad hoc and are little institutionalized.

India, for long a one-party dominant state, has lacked the highly institutionalized intergovernmental framework which is found in federal states such as Switzerland and Germany. As Nicole Bolleyer has argued in her comparative study of intergovernmental arrangements, the presence of broad-based coalition governments at the federal and state levels in these two countries has been conducive to recurrent vertical and horizontal exchanges. This has generated intergovernmental institutions with a distinctive autonomy and an internally differentiated structure (separated by sector) marked by decision-making rules in which both levels (individually and collectively) can be outvoted.30

Arguably, the GST Council is the only such ‘intergovernmental body’ in India. It is difficult to see how the two Indian polity-wide parties, both of which have a more centralized outlook (especially the BJP), could be committed to the setting up of such an institution, which would certainly undermine their central authority.


* This paper draws from two earlier publications: Wilfried Swenden and Rekha Saxena, ‘Rethinking Central Planning: A Federal Critique of the Planning Commission’, India Review 16(1), pp. 42-65; and Chanchal Kumar Sharma and Wilfried Swenden, ‘Modifying Indian Federalism? Centre-State Relations Under Modi’s Tenure as Prime Minister’, Indian Politics & Policy 1(1), pp. 51-83. I am grateful to a number of individuals who have been interviewed as part of these studies or research undertaken since. Unless explicit consent was given, their views are reported anonymously. I take full responsibility for the content of this article.


1. BJP Manifesto, Lok Sabha Elections 2014, ‘Ek Bharat Shreshtha Bharat – Sabka Saath, Sabka Vikas’ (‘One India, Excellent India – Development with All, Development for All.’ Accessible via http://www.bjp.org

2. Address to the Nation by PM Modi from the Red Fort, Delhi, 15 August 2014.

3. For instance, the 13th (or last) plan (2012-2017) involved state and urban authorities alongside the World Bank, consultancy firm McKinsey and 70 to 80 NGOs in the drafting of the 50 page urban planning section of the plan. Interview with a PC/NITI Aayog senior official, 4 March 2015.

4. Government of India, Report of the High Level Expert Committee on the Efficient Management of Public Expenditure – ‘Rangarajan Report’. Planning Commission, New Delhi, India, 2011.

5. For instance, Tamil Nadu could be forced to implement a scheme to strengthen road connectivity between rural villages rather than devote these funds to health – a higher priority since villages in Tamil Nadu are already relatively well connected. See Jay Chaudhuri, ‘Going to the Operating Room Without a Diagnostic – Reforming Centrally Sponsored Schemes’, India Review 9(2), 2010.

6. Poorer states further lamented the territorially regressive allocation of these schemes. Richer states often have more financial or infrastructural capacity to match the central grant component of these schemes. For instance, in 2013, the per capita central release to MGNREGA, the rural employment guarantee scheme, was half the national average for Bihar, even though the 2011 census identified Bihar as India’s most rural state. See Subrat Das and Sona Mitra, ‘Restructuring Centrally Sponsored Schemes. A Brief Note on the Recent Policy Measures’. Centre for Budget and Governance Accountability, New Delhi, 2013, p.10.

7. Cabinet Resolution (1 January 2015), The Gazette of India, Regd no L.-33004/99, 7 January 2015, p. 9.

8. Interview with a senior NITI official, 6 March 2019.

9. Interview with Bibek Debroy, 18 February 2016; and the Economic Times, ‘After PC, Programme Evaluation Organization Under NITI Aayog Expected to Undergo Revamp’, 23 February 2015.

10. Interview with a senior NITI official, 6 March 2019.

11. Interview with a senior NITI official, 6 March 2019.

12. Y.V. Reddy and G.R. Reddy, ‘NITI Aayog: Promise and Performance’, in Y.V. Reddy and G.R. Reddy, Indian Fiscal Federalism. Oxford University Press, Delhi, 2019, p. 214.

13. Interview with Bibek Debroy, 16 March 2015.

14. Chanchal Kumar Sharma and Wilfried Swenden, op. cit.

15. Cabinet Resolution, 1 January 2015.

16. Interview with Indira Rajaraman, 9 March 2015; with M. Govinda Rao, 11 March 2015, with Amitabha Pande, 16 March 2015, with Arun Maira, former member of the PC, Delhi, 22 February 2016.

17. Interview with former senior staff member NITI, 30 March 2015.

18. Louise Tillin, ‘Federal Faultlines’, India Today; 4 January 2017: https://www.india today.in/magazine/opinion/story/20170116-narendra-modi-centre-state-relations-reformations-985512-2017-01-04

19. Interview with a senior staff member NITI, 6 March 2019.

20. See for instance, the Chaturvedi Report (2011), or Government of India (2011), ‘Report of the Committee on the Restructuring of Centrally Sponsored Schemes’. Planning Commission, New Delhi.

21. Budget estimates for central assistance to state plans were reduced from Rs 3.38 trillion in 2014-2015 to Rs 2.05 trillion in 2015-16 and budget estimates for CSS dropped from Rs 2.52 trillion to about Rs 1.69 trillion (excluding CSS benefiting UTs); see NITI, ‘Chauhan Report’ or Report of the Sub-Group of Chief Ministers on Centrally Sponsored Schemes. GoI, New Delhi, October 2015.

22. NITI, Report of the Sub-Group of Chief Ministers on CSS.

23. Interview with Bibek Debroy, member NITI Aayog, 18 February 2016.

24. Interview with a senior NITI official, 6 March 2019.

25. Interview with a senior NITI official, 6 March 2019.

26. Interview with a senior NITI official, 6 March 2019.

27. ‘NITI Aayog has no role in Statistics’, 9 February 2019, https://www.newsclick.in/niti-aayog-has-no-role-statistics. On this point see also, ‘Montek Singh Ahluwalia, Pronab Sen refute NITI Aayog’s allegation on data release under UPA regime. https://www.businesstoday.in/top-story/montek-singh-ahluwalia-pronab-sen-refute-niti-aayog-allegation-on-data-release-under-upa-regime/story/318552.html

28. Vijay Kelkar, ‘Towards India’s New Fiscal Federalism’, National Institute of Public Finance and Policy, No 252, 25 January 2019.

29. Ibid., p. 9.

30. The conceptualization of intergovernmental frameworks and the role of party relations therein is developed in great detail by Nicole Bolleyer in her Intergovernmental Cooperation: Rational Choices in Federal Systems and Beyond. Oxford University Press, Oxford, 2009.