Will Rajiv Kumar's exit change the rules of the game in NITI Aayog

Aayog will have third vice-chairperson from the next month, while erstwhile Planning Commission that NITI replaced, Montek Singh Ahluwalia had an unhindered stint of almost 10 years as deputy chairman

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

NITI Aayog was created to give new direction to the economy, but with Rajiv Kumar stepping down as the second vice chairman in just over seven years adds a new chapter to the affairs in the think tank.  

The Aayog will have third vice-chairperson from the next month. Montek Singh Ahluwalia had an unhindered stint of almost 10 years as the deputy chairman of Planning Commission, which NITI replaced, 

The Early Days

In his first Independence Day Speech as Prime Minister, Narendra Modi announced replacing the Planning Commission with a new body called the NITI Aayog (acronym for National Institution of Transforming India).

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

Noted economist Arvind Panagariya was appointed as the first vice chairman of NITI Aayog, while career bureaucrat Amitabh Kant took over as the Chief Executive Officer (CEO).

From the very beginning, policy makers 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 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 demonetization, 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.

However, the fact that the organization was a pale shadow of its illustrious predecessor as far as influencing policy making in India both at the Centre and states and that it was financially handicapped continued to haunt its working.

It was in the middle of 2017, the NITI Aayog suffered perhaps its first big challenge when its first vice chairman Arvind Panagariya demitted office well before his three-year term came to an end to pursue his uncompleted academic work in Columbia University.

Though officially Panagariya excited to pursue his academic interest, conspiracy theorists blamed the resignation on his not-so-warm equation with the Prime Minister’s Office (PMO) and open-opposition to some of his views by some elements of Sangh Parivaar due to his foreign credentials.

Some media reports said Panagariya’s silent disapproval of demonetization announced in November 2016 had also irked people on the top.

Nonetheless, after a few days, former economic advisor in the finance ministry Rajiv Kumar was appointed as the vice chairman of NITI Aayog.

Kumar, it was then said, was perhaps the perfect replacement of Panagariya to settle the debate on foreign-return and domestically bred economists and their outlook on the Indian economy.

Few months after that one of the most prominent members of NITI Aayog, economist Bibek Debroy, was appointed as the Chairman of the Prime Minister’s Economic Advisory Council (PMEAC), which has its office in the Aayog itself.

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 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 adequate price for their produce, and making a national programme on ‘Artificial Intelligence’ (AI), NITI Aayog played an important role in that Budget.

One of the most vital interventions in the field of agriculture that the Aayog has made in the past few years is getting bamboo grown in non-forest areas declassified as the tree found a very prominent mention, along with an allocation in the Budget 2018-19.

Arun Jaitley proposed to launch the restructured National Bamboo Mission with an outlay of Rs 12.9 billion in the Budget to promote the bamboo sector in a holistic manner.

The Aayog’s work in getting states to amend their land lease laws for giving a proper right to tenant farmers also found mention, with the finance minister directing the Aayog to evolve a suitable mechanism to enable access of lessee cultivators to credit without compromising the rights of the land owners, in consultation with states.

“At present, lessee cultivators are not able to avail of crop loans. So, a significant proportion of arable land remains fallow and tenant cultivators are forced to secure credit from usurious money lenders,” Jaitley had said in his speech.

Another big intervention which the NITI Aayog spearheaded and found a very prominent place in Budget 2018-19 was the ‘Ayushman Bharat’ scheme, under which the Centre planned to give Rs 500,000 per year to almost 100 million households for health care. Officials said much of the scheme’s framework was prepared by the Aayog.

Sources said the government’s move to formulate a comprehensive Gold Policy to develop gold as an asset class and revamp the gold monetization scheme for enabling people to open a hassle-free gold deposit account, announced in that Budget, was also a brainchild of the Aayog.

The Second Term

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 August 2019, a few months after the Narendra Modi government took office for the second time, union transport minister Nitin Gadkari chided NITI Aayog saying that it has no authority to take a call on vehicle technology and it was the mandate of his ministry.

In a public function, Gadkari, who is known for not mincing words, said this in the context of the Aayog's rather tough stance regarding stopping registration of vehicles using internal combustion engines (ICE) to promote the use of electric vehicles (EVs).

NITI Aayog has been on 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.

Sources said matters came to a head during a meeting between top automakers and senior Aayog members where the latter took a tough stand on ensuring a timeframe for rollout of EVs both for two-wheelers and four wheelers and also laid out the options that the government could take to ensure that sales of vehicles based in ICE engines could be lowered.

Thereafter, country’s all major automakers had expressed their apprehension on any move to ban registration of ICE-engines, though they had also assured that they would move on the path of a roadmap for EVs.

A few days later, union commerce minister Piyush Goyal in a seminar said that NITI Aayog’s views on various issues do not always reflect the government’s views as it is an independent think tank which comes up with new solutions constantly.

He was speaking in context of RSS-affiliated organizations such as Bharatiya Mazdoor Sangh blaming the Aayog for killing jobs and sale of government assets.

Thereafter, the NITI Aayog and the Ministry of Electronics and Information Technology (MeitY) were engaged in a deadlock over who will take ownership of a government proposed artificial intelligence centre in India.

NITI Aayog had circulated a Cabinet note, asking for Rs 7,500 crore for three years to set up an AI framework. MeitY's plan estimated an expenditure of Rs 470-480 crore.

In 2018, four panels set up by MeitY evaluated the use of AI for citizens, such as setting up a data platform, skilling and reskilling, research and development, and examining the challenges involving legal, regulatory, ethical and cybersecurity aspects. MeitY’s reports have not been made public.

The NITI Aayog released a discussion paper in June 2020 on the “National Strategy for Artificial Intelligence.”

New age technologies like AI fall under the purview of the MeitY but NITI Aayog has spearheaded several discussions on the subject.

That apart, there also have been other issues where the Aayog has held views which are diagrammatically opposite to that of the government.

Even within the organization too there have been divergent views on several critical issues.

One case in point is the government’s push for natural farming through Subhash Palekar’s Zero Budget Natural Farming Technique.

While, now outgoing vice chairman Rajiv Kumar was a known votary of the method, its senior member Ramesh Chand felt that natural farming is not the only solution to avoid chemicals in food products.

Several experts opine that  NITI Aayog is an independent think-tank and as such may hold opinions on various matters which could be in variance to the government's stand, but things look ugly if these had grown into  confrontations.

One thing, which several experts said has remained constant over the last several years of NITI Aayog has been its steadfast criticism from several affiliates of Rashtriya SwayamSevak Sangh (RSS), the ideological fountainhead of ruling BJP.

“To me despite all the changes and alterations here and there, NITI Aayog isn’t playing the role for which it was created to the best of its abilities-- be it in fostering a spirit of cooperative federalism between states, or giving sound policy advice when it comes to economic decisions. I mean, it seems that Aayog has become too dependent on outside consultants and advisors in its decision making which it clouding its views,” Ashwini Mahajan, national co-convener of RSS-affiliated Swadeshi Jagran Manch (SJM) had told Business Standard a few years back.

Citing the example of BPCL disinvestment, Mahajan had then said that Aayog’s report to the Central government has reportedly favoured disinvesting BPCL, but has it taken into considerations all the factors such as what price will such disinvestment fetch for the government?

“I mean how can you deliver something without looking into the Indian context,” Mahajan had said.

The Work

Despite all the hiccups and sometimes pinpricks from the RSS-affiliate organizations, the NITI Aayog has been steadfastly pursuing its goals and works.

In the second term of the Modi government, the Aayog had 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.

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 conceptualization stage is the Aspirational Districts Programme (ADP) that 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.

Asset Monetization

One of the greatest success stories of the NITI Aayog in the second tenure has been putting on track the much-delayed asset monetization programme of the government and developing an inter-ministerial coordination framework which is helping in faster monetization 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 monetized over a four-year period, from FY 2022–25.

The NMP plans to raise Rs 6 trillion through core assets of the Central Government.

It will unlock value from brownfield infrastructure assets and serve as a medium-term roadmap for identifying potential monetisation-ready projects across various infrastructure sectors, including roads, railways, aviation, power, oil and gas, and warehousing.

According to the Aayog, asset monetization is not just a funding mechanism but a paradigm shift in infrastructure operations, augmentation and maintenance by tapping into the private sector’s resource efficiencies and ability to dynamically adapt to the evolving global and economic realities.

New models, such as Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs), will also enable the public to participate in this asset class, thereby opening new avenues for investment.

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

Production-Linked Incentive Scheme

Another major impactful intervention that the Aayog made in the last few years, is developing the framework for the production linked incentive scheme.

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 a Production-Linked Incentive (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.

The PLI scheme is designed to incentivize incremental production for a limited number of eligible anchor entities in the selected sectors.

These entities are required to invest in technology, plant and machinery, as well as R&D. The scheme will also have beneficial spillover effects by creating a wide supplier base for the anchor units established under the scheme.

The key feature of the PLI scheme is that it can be implemented in a targeted manner to attract investments and strategically enter certain segments of the global value chain.

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 60 lakh new jobs and an additional production of Rs 30 lakh crore in the next five years.

Rice Fortification and POSHAN Abhiyan

Distributing fortified rice through the PDS and Other Welfare Schemes has been one of the big ideas of the Modi government in the second term to address the issue of chronic malnutrition and nutrition-deficiency.

The Aayog held a big meeting under the Chairmanship of Union Consumer Affairs Ministry, health officials and its own experts on the importance of rice fortification and its benefits.

Subsequently, on 15 August 2021, Prime Minister Narendra Modi announced the universalization of rice fortification in social safety net schemes by 2023.

NITI Aayog has been tasked to conduct an audit study on the preparedness of the ecosystem of rice fortification.  

The Aayog is working jointly with states to develop a Central sector scheme on building ‘500 Healthy Cities in the next five years.

NITI Aayog and Covid

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% during 2020–21.

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 has been playing 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 organizations, the private sector, and multilateral institutions.

NITI’s involvement ranges 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.

Dr VK Paul, Member (Health), NITI Aayog, is heading the Empowered Groups on emergency management plan and vaccination, and the National Expert Group on Vaccination Administration for Covid (NEGVAC).

Under Dr Paul, NITI Aayog also participated in the activities of the National Task Force on Covid-19.

In addition, NITI’s Health Vertical also contributed to the proceedings of the Empowered Groups on the augmentation of manpower (EG 3) and oxygen (EG 4).

There are empowered groups that have been coordinating with state governments and key stakeholders such as the National Technical Advisory Group on Immunization (NTAGI), to plan the roll-out of vaccinations.

The list of the work being done by NITI Aayog and its big interventions in various fields is fairly long, particularly in the second term of the current government starting from 2019.

New V-C

But, will it be enough to ensure a smooth and eventful tenure for the new incumbent Suman Bery as the vice chairman of NITI Aayog? Only time will tell.

The tenures of previous two vice-chairman of NITI Aayog and also the last deputy chairman of the Planning Commission Montek Singh Ahluwalia proves that one needs more than just hard work and world class credentials to survive long in this high powered job.