An informed NITI

The think tank should fill policy gaps

The government announced last week that Rajiv Kumar would step down as vice-chairman of the NITI Aayog and economist Suman Bery would succeed him. A change of the guard is always a good opportunity for an institution to review its position and make necessary adjustments to become more relevant. This is true of both private enterprises and government departments. This is particularly relevant in the context of the NITI Aayog because it is still a relatively new institution. Prime Minister Narendra Modi in his first Independence Day speech from the ramparts of the Red Fort had announced replacing the Planning Commission with the NITI Aayog. Its establishment marked the end of the planning era and India moved away from five-year plans.

There was scepticism among experts as to what this new institution, which is essentially a government think tank, would achieve. After seven years it is fair to say that having taken several initiatives it has made a place for itself in the government ecosystem. However, it should be expected to do more in a rapidly changing economic environment. Among its basic objectives, as the NITI Aayog itself notes, is “to evolve a shared vision of national development priorities, sectors and strategies with the active involvement of States”. It is expected to promote cooperative federalism with the view that strong states will make a strong nation. It has worked in this area and produced several policy documents and rankings, which help promote competitive federalism. States can see where they are lagging and adopt best practices from other states. Several of its recommendations have been adopted by the Union government. The NITI Aayog, for instance, was instrumental in preparing the national monetisation pipeline.
 

As the think tank moves forward under the new leadership, it would do well to focus on some broad areas, aside from what it has been doing. India has abandoned planning, but it does need a medium-term policy road map. This has become particularly vital after the Covid shock. It is important to have a sense of the kind of damage the pandemic has caused to India’s productive capacity. Growth projections suggest as the base effect wanes, India will revert to the pre-pandemic level of growth, which was low by any standards. Therefore, it is important to know what it will take to attain higher sustainable growth over the medium term. Medium-term policy analysis and a road map will help in this context. The NITI Aayog can revive the “Three Year Action Agenda”, for example, which was published in 2017. In fact, it can work on such a document annually and account for the progress made during the year. This would not only give a broad direction to policy but also lead to better implementation.

Further, while it’s working on cooperative federalism, more needs to be done. It should become a platform where all developmental issues among states are discussed and resolved. Continuous dialogue among states with the NITI Aayog at the centre, for instance, would help implement the climate change agenda more effectively. Finally, it should develop the capacity to understand international economics. The global economic environment is changing rapidly and India needs a better understanding to respond coherently. Although India is now signing limited trade agreements, the overall trade policy is out of sync with global reality. Thus, broadly, the NITI Aayog needs to build more capacity to be able to help the government make the right policy interventions.