NITI Aayog: Cooperative Federalism Fillip or Failure?

As part of the ongoing flurry of discussions about India@75, the Deccan Herald asked me for my views on whether NITI Aayog was a good idea and how it is doing.?

I told them I do not have enough information to answer the second question responsibly. They asked me to focus on the first--the need to change the Planning Commission, and the purpose of NITI Aayog and, in that light only, also comment?a bit about the second with information that is available?publicly.?

Here is a link to the article they?have published today. Full text?also below.

https://www.deccanherald.com/specials/niti-aayog-cooperative-federalism-fillip-or-failure-1142020.html

NITI Aayog: Cooperative Federalism Fillip or Failure??

Dr. Manmohan Singh returned as Prime Minister of India (also Chairman of the Planning Commission) in 2009—this time without the support of the Left parties. The clamor to reform the Planning Commission had become very loud. The government’s opponents as well as supporters were unhappy with the Planning Commission: states’ chief ministers (from diverse political parties), leaders of businesses and civil society organizations, and the government’s own ministries, all complained. The Planning Commission’s domain experts, in agriculture, industry, urban development, etc. published detailed plans every five years supported with volumes of data. Though GDP growth rates were increasing, gaps between the Plans’ goals, of “faster, AND more inclusive and more sustainable growth”, and results on the ground, especially in inclusion and environmental sustainability, were becoming larger with every plan cycle.

?All institutions must evolve with changes in the world around them. India had changed substantially since the Planning Commission was formed in 1950. For many years one political party, the Congress, had ruled at the center and in the states. Its hegemony was broken from the 1990s. An era of coalition governments began at the center and many states were ruled by regional parties. With economic liberalization in 1991, the private sector was released from government controls. With these fundamental changes in the structure of the economy and the country’s politics, the Indian ship of state became a flotilla of boats, each with its own crew, that had to be induced to follow the same plan for the country without a dictatorial center.

?Top-down control, with “one-size fits all” national schemes, the paradigm of planning followed until then, would not work in the new political and economic realities. What the country needed was a center which was like a radar, providing a map of the weather to all states and enterprises, so they can sense what is going on in the wider world around and prepare for forces that will cross the paths they must have freedom to choose.

?Dr. Manmohan Singh summarized the requirements for transforming the Planning Commission to make it an effective catalyst for changing a large and diverse, entrepreneurial and democratic country. The Planning Commission must change itself, he said, from “a budget making body to a systems reforms commission”, and from a “maker of long, detailed plans to an essay (a force) of persuasion”. This would require transformative changes in the ways the Planning Commission worked, and in the outlooks and skills of its?leaders and staff.

?States’ chief ministers would come every year to the Planning Commission to have their plans approved. The Planning Commission’s experts, many of whom had never worked in the field, vetted their plans and also evaluated the schemes of central ministries, to determine how much money should be allotted. The Planning Commission’s staff had power over the rest of government and the states which, according to the states and ministries, was not backed by requisite knowledge. Chief Ministers of faster progressing states resented the condescending attitude of the Planning Commission. “Why should I come to the Planning Commission to be told how to spend our own money!” one Chief Minister said. “I come every year expecting to get good ideas that will help me to improve my state”, said another. “All I get is academic lectures from so-called experts who have no knowledge of realities.”

?For performing its catalytic role and support state governments who are directly accountable to citizens, the Planning Commission would have to create forums for states, cities, and districts, to learn from each other, rather than trying to direct them from an expert center.?What the Planning Commission would need to transform itself would be not more “domain” expertise, nor more budgetary powers to control the ministries and states’ plans. It?would have to become a learning organization—learning how to help states and ministries to also learn.

?The writing on the wall was before the Planning Commission. However, it is always difficult for old institutions to unlearn the ways they mastered in the past; moreover, their leaders don ‘t want to step off the societal pedestals their institutional positions have put them on. That is why more drastic measures are often necessary to reform institutions.?Mr. Modi, then Chief Minister of Gujarat, was one of the fiercest critics of the Planning Commission. The first major reform he announced as Prime Minister, in his first address to the nation from the Red Fort on 15th?August 2014, was the disbanding of the Planning Commission.

?There was consternation in the country. Even those who had been demanding drastic reforms of the Planning Commission, and blamed Manmohan Singh for not reforming it in his ten years at its helm, turned on Mr. Modi for not consulting them before making the announcement! When Mr. Modi announced, on 1st?January 2015, the charter of a new institution, the NITI Aayog, to replace the Planning Commission, I was invited as the first expert witness by the Joint Parliamentary Committee on Finance and Planning. Parties of Left and Right, government and opposition, were represented on the Committee, which was chaired by a leader of the Congress Party.

?They asked me to explain what reforms of the Planning Commission had been found necessary, and why. When I presented what we had learned from stakeholders and outlined the reforms deemed necessary, all on the committee agreed they were essential. They asked me whether the new NITI Aayog would fulfil the requirement. They had not read its charter yet, so I presented a summary. They were surprised to see it matched the requirements!

?The objectives of the new institution were: “…to evolve a shared vision of national development priorities with the active participation of states….to foster cooperative federalism….encourage partnerships between key stakeholders…offer a platform for resolution of inter-sectoral issues…develop mechanisms to formulate credible plans at the village level….”. Clearly NITI Aayog was to be a catalyst and facilitator, not a controller.

?The new institution would not have any financial powers. In fact, a high-level independent committee commissioned by the erstwhile Planning Commission had already recommended that the Planning Commission should be stripped of its financial powers. Therefore, the new charter announced by Mr. Modi was consistent in all respects with the vision of Dr. Manmohan Singh.

?They asked me whether NITI Aayog would perform as required. I answered it would depend on whether the government would merely replace the economists and planners in charge with its own loyalists and then dictate its agenda through them, or whether it would be bold enough to put leaders at NITI’s helm with the new orientations and skills required.

?The NITI Aayog has implemented the federal, facilitative, spirit of its charter in many ways. It introduced an “ease of doing business” framework for states to compare their progress with each other and it recognizes the best performers. The ‘aspirational districts’ program implemented the vision of mechanisms for sustainable, and inclusive, village level development in 112 of the poorest districts of the country. It has created a multi-sectoral coordination platform for stakeholders and sectors at the village level with the local administration at its center.

?The NITI’s unique role is essential wherever systems change must be brought about. District plans must cover all aspects of the Sustainable Development Goals, and ease of doing business requires all round improvements in administration and infrastructure. National health and education plans, wherever required, are the responsibilities of their own ministries, but NITI must help them align their plans with other sectors across government silos.

?Institutional reform is a process of learning in action—of redesigning an airplane in which the reformer is himself flying. The NITI Aayog must learn and change faster to fulfil its catalytic role. It does not need more “domain experts” within it, nor more budgetary powers. Evidence from around the world reveals that theories of liberal economics, that spread around the world since the 1990s, harm inclusive and sustainable development. Experts in only “economics” do not have the knowledge required to understand complex socio-ecological systems.

?Leaders of a catalytic institution to guide a flotilla of boats democratically must be good systems thinkers. Also, they must be very good listeners to people who have different views, so that all can learn together and persuade each other.??

?Arun Maira, Former Member Planning Commission of India

Author of?An Upstart in Government: Journeys of Change and Learning

September 3, 2022