It is fallacious to depict NITI Aayog as successor to the Planning Commission of India. Though the government think tank initially drew its manpower from the planning body and is still housed in the erstwhile Yojana Bhawan of Lutyens’ Delhi, it can at best be introduced as a distant cousin of the Soviet era behemoth.
One striking distinction between the two is that unlike the Planning Commission, the National Institution for Transforming India, popularly called NITI, was conceived in 2015 as a commission (aayog) with no power to allocate funds to Union ministries or craft schemes for states. Some state governments, particularly those belonging to the Opposition parties, have at times even snubbed it as they feel they have nothing to gain from a central agency with no resources in its kitty.
To put it simply, NITI is no more than a plain vanilla think-tank. But despite being designed as such, NITI has been able to create a niche, thanks to its regular manoeuvring in the policy space, intervening in areas such as asset monetisation, divestment, electric mobility, hydrogen fuel, start-up ecosystem, innovation labs et al. Some questions remain though.
Will this young sarkari think-tank ever be a bridge between the Centre and states unless it has its own resources to dole out? Does that mean, the Government of India (GoI) should arm NITI with funds to help it exert some influence on states? Another question that crops up is whether NITI’s mandate is so wide and vague that it ends up formulating policies on electric vehicles, a domain under the Department of Heavy Industries, or handles asset monetisation, a subject that comes under the Department of Investment and Public Asset Management? These are not new questions.
Yet they have resurfaced as the GoI has recently reshuffled NITI’s top leadership — it first brought in policy economist Suman Bery as vice chairman in place of Rajiv Kumar and then appointed former IAS and sanitation specialist Parameswaran Iyer as CEO, replacing Amitabh Kant. Kumar, also an economist, helmed the think-tank for nearly five years and Kant, a retired IAS officer, served as CEO for six and half years.
NITI is structured in a way that its vice chairman holds the rank of a Cabinet minister whereas the CEO, a secretary-level officer, draws power from an arrangement that all heads of 27 verticals, for instance, education, agriculture, water and land resources, industry, infrastructure, rural development, public private partnership etc., report to the officer.
There are three full-time members. Then there is a governing council comprising CMs and Lt governors, a mechanism tasked with evolving a shared vision by the Centre and states. Its gamut of activities, according to its annual report 2021-22, is divided into four broad segments — policy and programme framework, cooperative federalism, monitoring and evaluation and finally, think-tank, knowledge and innovation hub. As the mandate is wide, it at times ends up infringing on other departments’ turf.
But several policies are directed by the Prime Minister’s Office (PMO). The annual report, for instance, refers to one such instance. “As per a directive of the PMO, NITI is undertaking efforts towards the development of a hydrogen economy,” it said. As this directive comes straight from the PMO, the question of the petroleum ministry objecting to NITI’s overreach won’t arise.
It is too premature to forecast how the BeryIyer duo will take this think-tank forward. ET has talked to eight serving and retired civil servants connected to NITI and the erstwhile Planning Commission to understand the new dynamics that could alter the course of NITI’s future action. Early indicators suggest the new vice chairman will likely focus on coordination with states. After assuming charge on May 1, Bery said,
“NITI’s challenge is to develop a vision of the way ahead based on deep analysis and wide debate, and to work with states, which is where economic development ultimately happens.” Kumar, Bery’s predecessor, tells ET that during the last few years, the thank-tank has become relevant by its sheer power of ideas.
“Yes, it has been somewhat difficult to coordinate with states but we have succeeded in taking them on board,” he adds. For Kant, the Planning Commission was a master of resources but not a master of ideas. “NITI, on the other hand, has demonstrated how the power of ideas can be driven without much resources,” he says.
He then lists a series of initiatives such as the production-linked incentive scheme, asset monetisation pipeline, electric mobility, etc as the ones driven by the think-tank. “Asset monetisation pipeline, for example, was totally driven by NITI. In the last fiscal year, our target was `80,000 crore but we achieved `1,10,000 crore,” he adds.
Both Kumar and Kant say several of their highly innovative projects thrived because those were conceived and driven by domain experts. The think-tank has recruited a large number of young professionals, popularly called YPs, apart from some director-level talent, thanks to its liberal recruitment policy. As against 1,500 employees of the Planning Commission, NITI has a manpower of just 714, according to the annual report. Of those, 229 were outsourced whereas 68 were inducted laterally.
“The selection procedure of lateral entrants in NITI is so rigorous that it is better than that of UPSC (main government recruiter). And these lateral entrants are the ones who pushed major policy changes,” Kant says. There are several instances of a stellar role of private sector honchos in spearheading innovative sarkari policies.
For example Ramanan Ramanathan, who joined as mission director of Atal Innovation Mission in 2017 at the rank of an additional secretary in NITI Aayog, was hired from TCS. During his tenure (between 2017 and 2021), this flagship innovation and entrepreneurship initiative created some 10,000 tinkering labs with over 8 million students in about 650 districts getting access to tech such as 3D printers, robotics, electronics et al.
Another domain expert who put his imprint on the functioning of the think-tank is Sekhar Bonu, an old Asian Development Bank hand, who till recently served as director general of the development monitoring and evaluation office (DMEO), an attached section of NITI with a responsibility of crafting outcome-based reviews of central schemes.
Though NITI has no direct say on funding of any scheme, the Union Department of Expenditure weighs in DMEO’s assessments before adding or truncating a scheme. Private sector executives joining NITI often have to sacrifice their salaries. They join the think-tank mainly on two counts. One, they wish to spare a few years for crafting government schemes and making a change in the lives of have-nots.
Second, working in an organisation like NITI with so many interfaces with central ministries and states also acts as a springboard for career growth. Hamant Maini, 33, quit his job at Goldman Sachs in 2016 to join NITI as a YP. He worked there till 2019. “A drive to serve my country and be part of India’s growth story drew me to NITI,” he says, currently living in London with his wife Simi Maini, a climate economist and also a former YP at NITI.
“Since 2019, I have been part of three fintech businesses in the Middle East and Africa, which have cumulatively raised more than $200 million.” In this backdrop, no one will deny NITI’s innovative approach within the straitjacketed sarkari work culture. Yet many within the government strongly feel that NITI’s relationship with state governments requires fresh thinking. “Proposals for arming NITI with some resources did land up at the PMO.
But the PM is not keen on bestowing any funding power to NITI, the very reason why he shut down the Planning Commission in 2014,” says an officer privy to the matter. As the erstwhile planning body had some discretionary fund for disbursal, several CMs literally queued up at Yojana Bhawan for a raised grant. Narendra Modi, the then Gujarat CM, often saw the practice as a humiliation for a state.
Several economists and former policy makers still argue NITI should have been allowed to retain some resources. In a 2019 paper, noted economist and a former finance commission chairman Vijay Kelkar argued: “My preliminary study suggests that NITI Aayog 2.0 will annually need the resources of around 1.5% to 2% of GDP to provide suitable grants to states for mitigating the development imbalance,” while clarifying that he did not want NITI to return to the Planning Commission mode.
With the pandemic ushering in uncertainties, there have been talks in some quarters that India should return to the era of five-year planning, which ended with the shutting down of the Planning Commission. Kumar rules that out, insisting that NITI also looks at the future. “NITI builds future scenarios and recommends reform measures to the government,” he adds. Currently, the Aspirational Districts Programme, a scheme devised to induce competition among 112 underdeveloped districts, is the only programme for which NITI directly pays a small amount of money in the form of rewards to best performers.
West Bengal is one of the states that refused to be a part of the scheme. According to an officer who is aware of the inside dynamics of NITI versus states, only two Opposition-ruled states — Odisha and Andhra Pradesh — have been working closely with the think-tank whereas Karnataka, at least till recently, did not get along well with it even as it happens to be with the ruling party. NITI also ranks states on parameters such as health, education etc.
As the ranking is publicly displayed, several states are, however, forced to take them seriously. Pronab Sen, former chief statistician of India who also had an innings at Planning Commission, says ranking is okay only up to a point. “The problem is most states don’t consider the ranking as anything more than a naming and shaming exercise,” he says, adding NITI needs to be remodelled as a body that integrates states and Union ministries.
Kant does not want to buy any theory that asks for NITI makeover, or creating a NITI 2.0. “Is anyone missing the Planning Commission? No one. That’s because of the good works of NITI,” he retorts.