NITI - An uphill task for PM

When Prime Minister Narendra Modi announced from the ramparts of Delhi’s Red Fort on the Independence Day that he planned to scrap the Planning Commission, there was surprise, followed by sniggers when nothing concrete followed for months.

Critics said he had gone public on an issue without taking his colleagues into confidence and without a concrete alternative. It was seen – and not without other examples to talk about – as part of the new government’s campaign to undo institutions connected with Jawaharlal Nehru.

The government took over four months to establish the National Institution for Transforming India (NITI) Aayog. To be fair, such tasks do take time. Extensive consultations were held before it was announced. In the Union Cabinet Resolution passed on January 7, the government finally announced the broad contours of the NITI, detailing its role in India’s policymaking ecosystem, adopting a ‘Bharatiya’ approach (a hint that the Planning Commission was on the Soviet style), that it would be different from that of the Planning Commission.

India needs an administration paradigm in which the government is an enabler rather than a provider of first and last resort, it states. It reaffirms that India is a diverse country with distinct languages, faiths and cultural ecosystems. “This diversity has enriched the totality of the Indian experience,” the resolution says.

The word “Yojana’ is now passé. No more Five-year Plans. The new word is “growth” – although growth was very much a part of the planning process for nearly seven decades. But, let us now acknowledge, the whole approach and the emphasis have to change with the contexts altered by 25 years of economic reforms.
Even before Modi came to power, predecessor Prime Minister Manmohan Singh had called for Planning Commission’s role to be redefined to suit changing realities. Only, he did not have the mandate and the political support of the Congress Party – which was but natural, since the party was the creator of the Planning Commission and the planning process, driven by Nehru’s Fabian vision.

Let us also acknowledge that India cannot have a centrally planned economy that is also market-friendly, when the emphasis is not on government and state sector, but on entrepreneurship and on public-private participation. We need to acknowledge the growing role of the states, more often than not governed by parties with differing ideologies and programmes. A country of India’s size has got to be increasingly federal as we unshackle our polity. The Planning Commission served the needs and aspirations of a different era that no longer exists.

The buzzword is “cooperative federalism,” more in keeping with the changed times. Politically, India has embraced a greater measure of pluralism which has reshaped the federal consensus. As the Resolution affirms, “States do not want to be mere appendages of the Centre… They seek a decisive say in determining the architecture of economic growth and development.”

Expectedly, there are teething troubles that cannot be wished away and will a long take time to smoothen out. It is clear that the process has to evolve. The first meeting of NITI was held last week. It is clear that nobody has yet got a clear idea about what would be the role of the new institution in development planning. It reflected divergence of views. There is no unanimity of any kind and political approach to planning and development process differs vastly.

There still are lots of reservations and there is that reluctance to shed old ideas. Differences in the approach were discernible from the way each Chief Minister spoke at the meeting.

Driven by old habits and growing demands in their states, there was unanimity in what each Chief Minister wanted – more central funds, writing off of expenditure on central schemes and greater flexibility in disbursement of funds.

The idea of “cooperative federalism” is yet to sink into the minds of the Chief Ministers who are seeking it. Their views ranged from seeking special packages for being ‘backward’, reducing the state’s contribution to centrally-sponsored schemes from a half to a quarter, and so on. Akhilesh Yadav, Chief Minister of the largest state, Uttar Pradesh, wanted planning and Five Year Plans to continue and West Bengal’s Mamata Banerjee simply skipped the meeting.

Modi has a tough task ahead of carrying everyone along – which he must do. He has announced that the Aayog would constitute three sub-groups of Chief Ministers. One, for making recommendations on whether the 66 Centrally Sponsored Schemes should be continued, transferred to States or shelved altogether. The second group would suggest means for the Aayog to promote skill development in the States, and the third would evolve a proposal on institutional mechanisms needed to ensure the success of “Swachh Bharat.”

The Prime Minister asked each State to set up two task forces under the aegis of the Aayog: one on poverty alleviation and the other on agricultural development with the Centre’s assistance.

Writing for East Asia Forum, M Govinda Rao, ex-Director of the National Institute of Public Finance and Policy, New Delhi, says NITI Aayog “will require structured, continuous support to States through streamlining overlapping state and federal government functions, involving States in designing and implementing nationally important schemes, coordinating reform policies, and fostering healthy intergovernmental competition, bargaining and conflict resolution. “The second role is related to the first: to pursue a more strategic, long-term vision, as well as policies and program frameworks both for macro economy and for different sectors, from the village to the national level.

“The third role is to become a knowledge and innovation hub, providing state-of-the-art research to support the development and realisation of the strategic vision. As a major government think-tank formulating national developmental policies, it should access, undertake and outsource research globally, collecting comprehensive data on the economic, demographic, geographic and social variables relevant for policymaking in India.

“The institution should also provide a platform for sharing knowledge and experience among states, in order to build capacity and upgrade technology. The fourth and final role of NITI is to provide a platform for inter-departmental and inter-state coordination.”

The success in fostering co-operative federalism will depend on the trust of and co-operation from the States. There is also the danger that the institution will be overtaken by its own bureaucracy, Govinda Rao warns. NITI Aayog has a tremendous task ahead to carve out its niche in the Indian federal polity, in order to become an important institution capable of transforming India.

By: Mahendra Ved