NITI Aayog reflects Modi’s transformative thinking

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January 8, 2015 12:44 AM

The National Institution for Transforming India (NITI) Aayog, which replaces...

The National Institution for Transforming India (NITI) Aayog, which replaces the post-Independence Planning Commission, has been announced, its objective being to involve states in economic policy-making. It is proposed that the new body will be headed by the Prime Minister, assisted by a vice-chairperson and other members.

As per the erstwhile Planning Commission’s now archived website, its function was to “make an assessment of the material, capital and human resources of the country, including technical personnel, and investigate the possibilities of augmenting such of these resources as are found to be deficient in relation to the nation’s requirement, formulate a Plan for the most effective and balanced utilisation of country’s resources, define the stages in which the Plan should be carried out and propose the allocation of resources for the due completion of each stage…” and so forth.

With the liberalisation of the economy in 1991, the private sector has played a major role in contributing resources—physical, financial and technological—to the development priorities of the country. Modi’s mantra is that “India needs implementation, and not just planning and vision,” recognising that the plan panel had become an ineffective body with no control over the diversion of Plan funds, non-utilisation of funds and non-implementation of Plan schemes. The panel had two important fiscal responsibilities. First, to allocate funds to the states to finance their Plan expenditures. Second, to provide a five-year framework for the central plan within which the states could plan their expenditure. However, with their financial position improving sharply, the Plan dimension became more an irritant than a necessity for most states—except for the special-category ones.

The second responsibility was based on the assumption that the central Plan would be the driver of public investment. This is not valid any more, given the Centre is no longer a major provider of budgetary resources for public investment.

The replacement of the Planning Commission with the NITI Aayog demonstrates that the PM does not want Delhi-driven policies or resource allocations for states but state-specific solutions, especially since he has been on the state-side of the table before.

Modi is similar to Nehru in terms of the context they had to deal with, to bring about change. While the two belong to two diametrically opposite political parties, the similarities between Nehru and Modi, and the contexts they were/are faced with, are startling. Nehru had to develop a post-colonial poor country, while Modi must manage economic growth, poverty and inequality in one of the fastest-growing economies of the world today. Nehru made Herculean efforts to make India a manufacturing base by initiating a heavy machinery-based industrialisation through collaboration with Russia and other countries—setting up steel plants in Bokaro, Rourkela, Durgapur, shipbuilding in Vizag and so forth. Modi’s Make in India call, and the friendship with neighbouring countries and Japan—which will hopefully lead to a surge in manufacturing output, productivity and its share in the GDP—is towards a similar end. Nehru, through his thrust on heavy industrialisation, encouraged the development of urban areas while Modi has sought to create 100 smart cities, recognising the importance of such cities in the today’s globalising India.

His out-of-the-box thinking is best summarised by his Swachh Bharat initiative, probably the first time a local issue was flagged by a PM. While the significance of the clean-up drives signifies solid waste management at the micro level as a short-run initiative, sanitation is a longer-run component of Swachh Bharat. Hence, research should be encouraged in the short- to medium-term to ensure an open-defecation-free India. In the absence of research, attempts to ensure public sanitation are shots in the dark, since we seem to know that many persons defecate in the open. In order to make Swachh Bharat more targeted, evidence-based research regarding the magnitude and concentrations of open defecation would be necessary.

Initiatives such as Swachh Bharat, Make in India, and efforts to boost investment and economic growth show radical thinking to transform India for the better. While most consider the government actions incremental at best, the thoughts behind the programmes have been out-of-the-box, and the initiatives, radical. Action and policies take time to take shape and are always incremental, as Charles Lindblom pointed out.

The new incarnation of the Planning Commission is facing the criticism that a governing body of CMs will pretty much be like the National Development Council, and a CEO instead of a member-secretary does not make much of a difference. But based on the seven-month-old government’s initiatives, Modi’s biggest contribution has been his thinking on transforming the country for the better, even from a local perspective. Hope this passion trickles to the grassroots as well to promote inclusive growth and an inclusive society.

The author is professor, Centre for Research in Urban Affairs, Institute for Social and Economic Change. Views are personal

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