Empower NITI Aayog

It's yet to evolve as an authoritative voice in policy making

While Arvind Panagariya has stepped down after two-and-a-half years as the vice-chairman of the National Institute for Transforming India (NITI) Aayog, to resume his academic career at Columbia University, the body that replaced the Planning Commission is still to establish itself as an authoritative voice in policy-making. The institution, considerably leaner than the sprawling 65-year-old organisation that it replaced, has certainly been active in dispensing sensible advice — Air India’s privatisation, modifying land lease laws, listing public sector units for closure and disinvestment being some of the more prominent ones. While these do not amount to a transformational agenda, the fact is that the authority of an advisory body depends on its receptivity. In this respect, it is fair to say that the government has been equivocal, choosing to cherry-pick NITI Aayog ideas. Indeed, NITI Aayog’s big-ticket agenda, which could have been more game-changing in nature, has been overlooked: China-style coastal economic zones and labour law reform in employment-intensive sectors (only textiles saw a change), for example.

To be sure, two-and-a-half years is too short a time span in which to assess an institution with a mandate as ambitious as the one implicit in the full NITI Aayog title. But the tenor of NITI Aayog’s existence so far suggests that it has a long way to go. Prime Minister Narendra Modi’s efforts to move away from Jawaharlal Nehru’s signature institutional legacy, with all its outdated Soviet connotations of centralised economic decision-making, held a certain logic. As chief minister of Gujarat, he understandably chafed against the Planning Commission’s top-down resource-allocation and economic agenda-setting function and rightly believed that the body had outlived its purpose in India’s globalising market economy, where the government’s role was shrinking. This became marked after the Finance Commission recommendations and the finance ministry significantly reducing the Centre’s discretion in state spending decisions. That left the think tank function, which the prime minister streamlined by whittling the number of full-time members from eight to three, appointing a “Chief Executive” in place of secretary, Planning Commission, in a supervisory role, and a governing council comprising all chief ministers. The functions of the organisation were divided into the Team India Hub, which leads the engagement with the states, and the Knowledge and Innovation Hub, an intellectual and data resource.

Freed from the cumbersome task of planning, NITI Aayog would have been in an ideal position to provide the government with the crucial research heft and intellectual underpinning for its many policy initiatives, making it a genuine and powerful agent of transformation.  But on current form and substance, it is difficult to escape the notion that NITI Aayog is a “skinny” Planning Commission or Planning Commission Lite. Mr Modi may have been better served had he considered replacing the Planning Commission with an impartial policy-assessment unit, somewhat akin to the widely respected US Congressional Budget Office, with a head appointed by a parliamentary selection committee, to advise the Centre and states on the effect of policies they want to introduce. Doing so, however, would require first establishing and then respecting the independence of such an institution, and achieving that would have been a good test of the maturing of Indian democracy.