How are the principles followed by the NITI Aayog different from those followed by the erstwhile Planning…

Question

How are the principles followed by the NITI Aayog different from those followed by the erstwhile Planning Commission in India?

Ghissu Editorial · Accepted Answer

The Planning Commission followed top-down, centralised planning with control over plan grants, while NITI Aayog is an advisory think tank built on cooperative and competitive federalism and outcome monitoring. Its Governing Council seats every Chief Minister, and devolution passed to the Finance Commission.

**Introduction**

In 2015 NITI Aayog replaced the Planning Commission (1950), which had run twelve Five Year Plans on a centralised model. The change was one of principle, not merely of name: from a body that commanded to one that advises and convenes.

**Principles of the Planning Commission**

1. **Top-down Planning**: Plans were drafted in Delhi on models like the Mahalanobis strategy and passed down uniformly to diverse states.
2. **Financial Control**: It allocated plan grants through the Gadgil-Mukherjee formula, so states depended on its approval of their annual plans.
3. **State-led Command Economy**: Targets centred on public investment and outlays, with states consulted only through the National Development Council.

**How NITI Aayog's Principles Differ**

SKETCH: comparison | Planning Commission vs NITI Aayog
a: Planning Commission
b: NITI Aayog
- Top-down plans :: Bottom-up, village to national
- Allocated plan funds :: Advisory, no funds
- One-size-fits-all :: State-specific strategies
- Five Year Plans :: Vision and 3-year agenda
- Outlay targets :: Outcome monitoring

1. **Cooperative Federalism**: Its Governing Council includes all Chief Ministers, and 26 State Institutions for Transformation were notified by 2024.
2. **Competitive Federalism**: Indices such as the SDG India Index and the Fiscal Health Index 2025 rank states on outcomes.
3. **Advice, not Allocation**: Devolution passed to the Finance Commission, whose 14th award raised the states' share to 42%.
4. **Outcome Monitoring**: The Aspirational Districts Programme tracks 112 districts on 49 indicators.

**Way Forward**

1. **Stronger Footing**: Statutory backing and regular Governing Council meetings would protect its independence.
2. **State Capacity**: Funded State Institutions for Transformation linked to district planning would make bottom-up planning real.

**Conclusion**

NITI Aayog moves India from planning for states to planning with them, and its success will rest on credible data and state capacity on the road to Viksit Bharat 2047.

How are the principles followed by the NITI Aayog different from those followed by the erstwhile Planning Commission in India?

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