Overview of Indian Economy

Introduction of NITI Aayog in India

The Planning Commission of India supervised the five-year plan for the economic development of the country. However, in 2014, the 65-year-old Planning Commission was dissolved and a think tank – NITI Aayog (National Institution for Transforming India) took its place. In this article, we will look at the aims and objectives of the NITI Aayog.

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The NITI Aayog

The Prime Minister appoints a CEO and a Vice-Chairperson of the NITI Aayog. Further, it has some full-time as well as part-time members along with four Union Ministers serving as ex-officio members. It also has a governing council which includes all State Chief Ministers and Lt. Governers of the Union Territories.


The council works towards fostering cooperative federalism for providing a national agenda to the Center and the individual States. Additionally, there are specific regional councils and the Prime Minister invites some special invitees who are experts and specialists in various fields too.

Since it serves as a think tank of the government or as a directional and policy dynamo, it provides advice on strategic policy matters to the governments at the Center and the States. Further, it includes economic issues of both domestic and international importance.

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The NITI Aayog never Plans

It primarily formulates policy. The different Ministries of the Central Government prepare projects based on these policies. The Aayog supports a cooperative federal structure where the Center and the States prepare development policies together.

At the same time, it also promotes healthy competition among the developing states. The regional councils focus on the development activities in specific areas. Also, the Aayoog is based on the National Reforms Development Commission, China.

 Here we will look at Five-year Plan of India

No power to Allocate Funds

Unlike its predecessor (The Planning Commission) which had the power to allocate funds to States for regional development, the NITI Aayog has no such powers.

The Finance Ministry’s Department of Expenditure allocates funds now. The Aayog’s primary responsibility is to undertake long-term policy and design frameworks, along with taking necessary initiatives for faster development. Further, the Aayog also monitors these activities.

The Aayog provides direction to the Monitoring and Evaluation (M & E) activities in India. It also pegs importance to the quality standards, ethical procedures and provides appropriate institutional mechanisms. Therefore, NITI Aayog means:

  • A group of people that the Government entrusts for formulating and regulating policies concerning the transformation of India.
  • A Commission assists the Government in both social and economic issues.
  • An institution with experts
  • A body that actively monitors and evaluates the implementation of the Government’s programs and initiatives.

Aims of the NITI Aayog

  1. Provide a critical directional and strategic input to the development process of India.
  2. Serve as a think tank of the Government both at the Center and State-level. Also, provide relevant strategic and technical advice on key policy matters.
  3. Try to replace the center-to-state, one-way flow of policy with an amicably settled policy which a genuine and continued partnership of state frames.
  4. Seek to put an end to the slow and tardy implementation of the policy. This is possible through better Inter-Ministry and state-to-state coordination.
  5. Further, it help to evolve a shared vision of national development priorities and foster cooperative federalism. Work with the view that strong states = a strong nation.
  6. Develop mechanisms to formulate credible plans at the village level. Further, aggregate these plans progressively at the higher levels of the Government. In other words, ensure that special attention is paid to the sections of the society which carry the risk of not benefitting from the overall economic progress of the country.
  7. Create a Knowledge, Innovation, and Entrepreneurial system through a collaborative community of national and international experts and practitioners. Offer a platform for the resolution of inter-sectoral and inter-departmental issues to accelerate the implementation of the development agenda.
  8. Monitor and evaluate the implementation of programs and also focus on upgrading technology and building capacity.

The NITI Aayog tries to accomplish the following objectives and opportunities:

  • Creating an effective administration paradigm in which the Government is an enabler rather than a provider of the first and last resort.
  • Attaining progress from food security. Focusing on a mix of agricultural production and the actual returns that farmers get from their produce.
  • Ensuring that India is an active participant in global debates and deliberations.
  • Ensuring that the economically vibrant middle-class is actively engaged and utilized to its full potential.
  • Leveraging India’s pool of entrepreneurial, scientific, and intellectual human capital.
  • Incorporating the geo-economic and geopolitical strength of the NRI Community.
  • Using urbanization as an opportunity to creating a secure habitat via modern technology.
  • Using technology to reduce opacity and potential for misadventures in governance.

The measures were taken by the NITI Aayog to help India face complex challenges

  • Leverage India’s demographic dividend and realize the potential of young men and women. This is done through imparting education, skill development, the elimination of gender bias and providing employment opportunities.
  • Eliminate poverty and offer Indians a better chance to live a life of dignity and respect.
  • Redress inequalities based on gender bias, caste, and econmic disparities.
  • Integrate villages into the development process of the country.
  • Provide policy support to more than 50 million businesses – a major source of employment generation.
  • Safeguard our environmental and ecological assets.

  Learn Industrial Policies here. 

Solved Question

Q1. What does the NITI Aayog mean?


A policy think tank of the Government, the NITI Aayog means:

  • A group of people that the Government entrusts for formulating and regulating policies concerning the transformation of India.
  • A Commission assists the Government in both social and economic issues.
  • An institution with experts
  • A body that actively monitors and evaluates the implementation of the Government’s programs and initiatives.
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