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Niti Aayog 2.0 in the time of global churn

Jan 14, 2025 08:20 PM IST

Niti Aayog’s performance in these 10 years has been underwhelming, stymied by a combination of contextual and structural factors.

Intellectual traditions of the neo-liberal era — open markets, deregulation, globalisation, smaller state — that dominated policymaking in India since the 1991 moment, are losing legitimacy both in India and across the globe. With the rise of populism, the western turn to de-globalisation, rapid technological advancement, and the accelerating climate crisis, the globe has entered a new, turbulent era. Closer to home, the grim realities of our economic trajectory — a stalled structural transformation, persistent unemployment, and growing inequality — are adding to the turbulence. With accepted pathways in contention, the scale of the predicament confronting policymaking is unprecedented. Now more than ever, the craft of policymaking needs to be embedded in ideas and evidence, a transparent and democratic dialogue across stakeholders particularly at the State level, and a culture that welcomes active public contestation and an openness to critique.

New Delhi: A man walks past Niti Aayog, in New Delhi, Wednesday, Oct. 23, 2024. (PTI Photo/Vijay Verma) (PTI10_23_2024_000173B) (PTI) PREMIUM
New Delhi: A man walks past Niti Aayog, in New Delhi, Wednesday, Oct. 23, 2024. (PTI Photo/Vijay Verma) (PTI10_23_2024_000173B) (PTI)

This is the backdrop against which the performance of the government’s think tank, the Niti Aayog, which turned 10 this January, ought to be debated. The January 2015 Cabinet resolution mandating its formation was unusually prescient. It argued that the government needed “a directional and policy dynamo” that would provide a “shared vision of national development… and respond to the changing and integrated world”. Yet, Niti Aayog’s performance in these 10 years has been underwhelming, stymied by a combination of contextual and structural factors.

Consider, first, the political context. Despite the Cabinet resolution’s frequent invocation of research and knowledge systems, the reality is that Niti Aayog emerged in a political culture that is impatient with critique. For policymaking, this has meant that credible, independent research and ideas are increasingly scant. Consider the Mahatma Gandhi National Rural Employment Guarantee Scheme. Its 2006 launch onwards the scheme has been studied by researchers of all hues, creating a vibrant evidence base on what works, what doesn’t, and why. The government accepted what it liked and ignored what it didn’t, and the public debated key ideas.

Today, you will be hard-pressed to find wide-ranging evidence on government schemes. Those that get publicised usually tell good stories and inconvenient data is actively delegitimised. This is also the fate of critical sources of government data. How can a think tank perform its function of offering knowledge-based policy advice when thinking itself is being weaponised? Unsurprisingly, therefore, the Niti Aayog has leaned on the private sector and management consultants, drafting them into the government far more than academics, technical experts and civil society. Partly as a consequence, the Niti Aayog’s strategic visioning exercises have been underwhelming (a vision for India@75 and a three-year action agenda) inviting limited public consultation and having limited policy influence.

But even if the political context were different, the Niti Aayog’s capacity for generative thinking, strategic visioning with the State, and policy influence is constrained, ironically, by the logic of its own creation. By 2015, the Planning Commission had reduced itself to functioning as an outdated tool of centralisation that used its budgetary powers to approve state development plans and advance the Union government’s agenda. Stripping the Commission’s successor of budgetary powers and eliminating the plan/non-plan distinction in public expenditure was a logical step forward, one that technocrats had long argued for. But it created new problems.

Without budgetary powers, the Niti Aayog’s position within the power hierarchy of policymaking has remained ambiguous. Crucially, there emerged an institutional vacuum. A significant percentage of fiscal transfers to State, particularly pertaining to development, falls outside the remit of the Finance Commission. In the days of the Planning Commission, these were part of plan negotiations with States. But with its dismantling, an institutional vacuum emerged. Line ministries (which have a siloed perspective) and the finance ministry (whose logic is to limit expenditure) have taken over this function. Neither is equipped for this role, and they do not have institutionalised mechanisms for Centre-state bargaining. Consequently, the states have been further disempowered and the Niti Aayog’s creation has added to the growing frictions in Centre-state relations.

Without budgetary powers, the Niti Aayog sought a place in the power hierarchy of policymaking through its indices and ranking performance of states and aspirational districts programme directed at promoting competitive federalism. This left it susceptible to the criticism that it lacks the autonomy needed to be a credible think tank for Team India and instead, serves as a vehicle for centralisation promoting policy priorities relevant to the Union government. The charge has stuck because strategic planning/visioning initiated by the Niti Aayog, now with its state-level counterparts, lacks teeth. And without a coordinated development strategy, there is no policy perspective on key challenges. The most critical, as chairman of the 13th Finance Commission, Vijay Kelkar, argued in 2019, is the growing regional disparity between states, a challenge made more acute in recent years as richer states have begun to question the logic of a fiscal devolution formulae designed in favour of poorer states.

Back in 2019, Kelkar and other veteran policymakers batted for a restructured Niti Aayog empowered with financial muscle devoted to devising coherent medium- and long-term development strategies. Kelkar was focussed on inter-state imbalances. Others argued for a 21st-century version of industrial policy, rather than sporadic infusions like PILs, which is making a comeback in this age of uncertainty.

But no restructuring will work if the political culture mitigates against two conditions — open enquiry and federalism — necessary for a Niti Aayog-like body to fulfil its mandate. In their absence, the Niti Aayog will continue to underperform even as global uncertainties make the case for its existence even more pressing in 2025 than it was in 2015.

Yamini Aiyar is a visiting senior fellow at Brown University.The views expressed are personal

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