NITI Aayog: Promoting Co-Operative, Competitive Federalism

It’s easy to say change is constant. But is change easy? When the Yojana Aayog, a sixty four year old institution was scrapped with the help of an executive order, was it easy? The Aayog, or the Planning Commission was created in 1951 to show our nation’s commitment towards centralised planning. Today, we have a NITI Aayog, created by the present NDA government under PM Narendra Modi. The institute, known as the National Institution for Transforming India Aayog is certainly symbolic of the PM’s general theme and doesn’t fail to raise a few eyebrows.

It is well known that our current PM was at logger heads with the erstwhile Yojana Aayog when he was CM of Gujarat-a leading industrialised state of India. He has always criticised the role of Yojana Aayog for its high-handedness in disbursing the grants to the states and its one size fits all policy for the states. This is evident from his tweet on 1st January, 2015 which said “Through the NITI Aayog, we bid farewell to one-size -fits all approach towards development. The body celebrates India’s diversity and plurality”. His dissent has also been echoed by CMs of other states from time to time, largely from the opposition ruled states of the time.

Interestingly, the new structure of the NITI Aayog may be criticised as old wine in a new bottle. The NITI Aayog has retained the earlier member secretary as the current CEO. Its members (Bibek Debroy and V K Saraswat) and the Deputy Chairperson (Arvind Panagariya, a follower of Jagdish Bhagwati, an economist who praised the Gujarat model of development) are close to the ruling political parties.

However, if the recent meetings held on 6th and 8th February under the chairmanship of the PM are any indication, there appears to be a silver lining in the functioning of the Aayog in enabling states competing with each other to promote governance initiatives in the spirit of “co-operative, competitive federalism”.

On 6th February, in his first Aayog meeting with top economists of the country, the PM set the agenda in the backdrop of the sharp fall in crude prices and a favourable global sentiment towards India. He asked the economists to share their candid views on making the ensuing budget growth oriented and bringing investors back to the country.

Specifically, he asked for suggestions to perk up revenue mobilisation and ways to put India back on a high growth path. He further highlighted that an important objective of NITI Aayog was to establish a dynamic institutional mechanisms where ‘eminent individuals outside the government system’ could contribute to policy making. Economists known for their candid opinions stressed the need for giving importance to the agriculture sector, rural infrastructure and fiscal prudence with the overall objective of poverty alleviation.

The Governing Council meeting is scheduled to be on 8th February, where the PM, CMs and Lt. Governors will meet at the PM’s residence. Although it might appear to be similar to the National Development Council (NDC) meet under the aegis of the erstwhile Yojana Aayog, it is different in the way it is conducted. Unlike earlier, this time the PM, CMs and Lt Governors will be equal partners, with the ensuing discussions with minimal bureaucracy. One might recall the meeting on 7th December, when the PM met the CMs at his residence, which was highly appreciated for its non-formal yet highly productive outcome.

“Forgetting all our differences, let us focus on the cycle of investment, growth, job creation and prosperity,” is the statement he made in his meeting on 8th February where Chief Ministers and representatives of 31 states and Union Territories were present. Such a statement only reassures the likely nature of cooperative federalism that we may see in the future.

The priorities for the Aayog are evident with the suggestions for rationalisation of 66 central schemes on skill development and making Clean India a continuous program leading to the formation of three CM sub-committees. In addition, the PM also noted that projects are often held up for want of timely decisions and has asked chief ministers “to give personal attention” to factors that slow down projects. In a subtle manner, this not only puts the onus on CMs to hasten implementation of projects for betterment of the state, but also make the state an attractive investment destination – a kind of competitive federalism.

He further asked states to set up two task forces to help the country solve the poverty issue and increase the agricultural production-overarching development paradigm of the country. This meeting further emphasised the intention of the Centre towards empowering the states with finances, technology and knowledge to enhance planning and execution. Further, the provisions in the Cabinet Resolution in setting up NITI Aayog do provide some scope for the appointment of Regional Councils with specific mandates for specific time periods, with the objective that these councils could help forge cooperation among two or more states facing a common set of problems or amicably settle disputes that delay progress. Also, these councils could catalyse joint projects involving travel, transportation and tourism across member states.

Given the greater scope for states to work together and learn from each other, it is obvious that for federalism to work well, these states must also fulfil their role in promoting the shared national objectives. It is true that India cannot advance without all its states advancing in tandem but it may so happen that by not granting the statutory status for the NITI Aayog, PM Modi has made it vulnerable to future ambush under a different political dispensation and pre-text, not unlike what he did in killing an epitome of the Nehruvian legacy- the Yojana Aayog.

written by

Prof. Rasananda Panda, Ph.D.,Professor of Economics, MICA.

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