Typically, the post of a chief executive officer (CEO) is associated with a corporate entity. But, that’s not how it is in the case of NITI Aayog, a think-tank set up by the NDA government scrapping the erstwhile Planning Commission. Even as this one-year-old body is still searching for its destiny, the government has brought in Amitabh Kant, one of the top bureaucrats (former secretary of Department of Industrial Policy and Promotion (DIPP), as its new chief executive officer (CEO). This is a post-retirement job for Kant, who has played a crucial role in his capacity to promote Naredndra Modi government’s investment campaigns.
Can Kant, the second person to take up this job after Sidhushree Khullar, reinvent the role of Aayog, is something only time can tell, but it is unlikely to be a very promising job for the 1980 batch Kerala-cadre IAS officer. The simple reason is that there are serious doubts over the scope and relevance of the very establishment with respect to its mandate and efficacy in dealing with state governments’ development plans. That is especially so in the context of fourteenth finance commission promising more power to the states to decide their expenditure plans and the Aayog lacking any special powers.
By the very design, NITI Aayog is a weaker body compared with the planning commission. It doesn’t have the power to allocate funds but can only make recommendations. The funding part will be decided by the finance ministry unlike Planning Commission which had the power to allocate funds. Second, the Aayog cannot impose policies that state governments should follow, again something where the Planning Commission had a strong say. In short, the Planning Commission was a body that had an independent stature and character of its own, whereas the NITI Aayog is a powerless institution.
To be sure, this was a good step since the states didn’t need to go to the government or Planning Commission with begging bowls. But, there is another side to it too.
As Bibek Debroy pointed in this piece (before he was inducted to the Aayog as a member), the Planning Commission also acted as a body that could nudge the finance ministry to protect the plan expenditure for the sake of meeting deficit targets. In the case of NITI Aayog, even this power to intervene is practically nil.
Secondly, the Planning Commission was the point of interface between the union government and state governments for Centrally Sponsored Schemes (CSS). The NITI Aayog doesn’t have this mandate. More critically, the Planning Commission used to have a performance evaluation exercise on various government schemes after a specific period of the roll out. It is unlikely that the Aayog will do any such performance review. Hence, the question of what is its relevance arises.
“There is a need for the NITI Aayog to reinvent its mandate,” said Devendra Kumar Pant, Chief Economist and Senior Director - Public Finance, India Ratings . Planning Commission’s rebirth as a considerably weaker body should be noted in the context of the country is well short of targets in terms of performance.
In a seminar organised by the New Delhi-based Research and Information Systems economic think-tank on the Sustainable Development Goals (SDG), Khullar highlighted this aspect.
“We have now in the NITI Aayog completed the mid-term appraisal of the 12th plan (2012-2017), we are now in its fourth year. We find that until the 11th plan, the achievements were maybe 10-15 per cent short of target, financing was 10-15 per cent short of target. But in the 12th plan we find both in terms of financing and in terms of goals, we are way off the mark, we are close to 20-25 per cent off what we thought we would be able to do,” Khullar said. But, here again, the very relevance of five-year plans needs to be seen in the context of more funds flowing to state governments.
Since its inception, the NITI Aayog has been mandated to promote Prime Minister Narendra Modi’s idea of cooperative federalism with a bottom-up approach unlike Planning Commission, which had a top-down approach. But, this, anyway, is happening when the 14th Finance Commission proposed a higher share of tax revenues to states. As per this, 42 percent of the taxes collected by the Centre will go to the states as against the 32 percent earlier -- the largest increase in tax devolution since the 7th Finance Commission doubled the states’ share of excise duties from 20 percent to 40 percent in the mid-eighties.
But the other side of it is the very relevance of bodies like Planning Commission diminished to a great extent. “(In this context), one would expect a body such as NITI Aayog to come with some path-breaking ideas that facilitate policy implementation eventually,” said Pant of Inddia Ratings.
“As far as allocation of resources goes, the very existence of NITI Aayog may not be too relevant now since the Finance Commission has given more capital allocation power to state governments,” Madan Sabnavis, chief economist at Care Ratings. “Also, most of the government ministries now have their own policy formulation divisions, not necessarily need to go to Aayog. In this backdrop, the Aayog has to reinvent its purpose," Sabnavis said.
The good part is that the Aayog, which has top economists Arvind Panagariya as Vice Chairman and Bibek Debroy as it member, could get a leg-up with a top bureaucrat like Kant, who has significant experience in policy implementation coming on board. The Aayog, so far, hasn’t done anything extraordinary and there are more voices questioning its existence now. The challenge for Kant lies in reinventing its role.