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Modi's honeymoon with NITI Aayog is over: Is an overhaul on the cards?

Sameer Chougaonkar | Updated on: 14 February 2017, 5:27 IST

The tussle

  • PM Narendra Modi is dissatisfied with the NITI Aayog\'s functioning
  • The latest flashpoint is a report on the farm sector by the Aayog\'s task force

The solution

  • In its defence, the Aayog says that it has no executive powers
  • There is a chance that it might be restructured

More in the story

  • What are Modi\'s complaints against the Aayog?
  • What are the Aayog\'s plans for this year?

On his first Independence Day as the Prime Minister of India, Narendra Modi buried the 64 year old Planning Commission and replaced it with National Institution of Transforming India (NITI) Aayog.

The NITI Aayog was envisaged as an institution catering to the changed developmental paradigm of the country in line with Modi's stated idea of co-operative federalism. The Aayog is headed by the Prime Minister himself. All the chief ministers were made part of its governing council.

The Aayog was meant to provide states a better forum to represent their economic interests, something that the previous Planning Commission lacked.

Also read: Despite war of words between Modi-Nitish, Niti Aayog lauds Bihar government's initiatives

However, things haven't moved at the pace Modi desired. The Aayog has spent much of its first year in setting its house in order.

Why is the PM upset?

According to a PMO official, Modi is dissatisfied with a report submitted by Aayog's task force on the farm sector.

It suggested scrapping the procurement of crops at the minimum support price (MSP) and replacing the system with a 'price deficiency payment' mechanism. This involves fixing the price of crops based on their average market prices in previous three years and compensating farmers for any shortfalls in realising these rates.

Sources say Modi is dissatisfied with the report submitted by Aayog's task force on the farm sector

Some of the other recommendations of the Aayog included direct transfer of urea subsidy to the farmers' accounts and liberalising the land-leasing market to allow landholders to exit farming. It also suggested use of genetic modification technology in pulses and oil seeds and better use of Essential Commodities Act to encourage private investment in storage.

According to sources, because of Modi's vexation, the PMO has not given a green signal to NITI Aayog to present its report on poverty alleviation. The task force formed by Aayog was to submit this report by August 2015. It was subsequently granted an extension.

News reports suggest that the task force may pitch for a single poverty line for better resource allocation. However, there is no consensus on who should determine the parameters for the poverty line. The Aayog is now reportedly planning more broad-based regional consultations on how poverty should be defined.

Apparently, the Prime Minister is also miffed at the Aayog's failure to get states to prioritise his pet projects like Digital India and Skill India. The PMO feels that NITI Aayog has not done enough to promote initiatives like Make in India, Swachh Bharat Mission and the smart cities project among the states. It also feels that the Aayog hasn't done enough to help states integrate these schemes.

Sources claim that the Prime Minister had asked NITI Aayog to prepare a road map for better governance in the states.

Also read: Modi government invites public comments for #Budget2016

This was supposed to be a perfect way of implementing Modi's idea of co-opearative federalism. However, it is believed that the Aayog has failed to deliver on this count as well.

Restructuring on the cards?

Experts stress the need to re-invent NITI Aayog's mandate, if it is to emerge as an effective body. Currently, it is essentially a think-tank that can make recommendations and has no power to allocate funds. The funding part has been vested with the finance ministry, unlike the Planning Commission. Tax devolution has already been increased to an unprecedented level by the 14th Finance Commission. It has mandated that 42% share of taxes collected by the union government must go to the states. This means that the Aayog has no teeth to force states to follow its policies.

It lacks the capacity to act as the point of interface between states and the centre for implementation of central schemes. It also does not have the power to evaluate the performance of states on various government schemes.

This has necessitated the revamping of the NITI Aayog structure. There is speculation that Modi might consider restructuring the Aayog after the meeting of its governing council at the end of this month.

The parliamentary committee on finance, headed by Congress leader Veerappa Moily, has already suggested giving executive rights to the NITI Aayog. The central government is seriously mulling the option of giving it more rights.

There are rumours that the government might scrap the National Development Council (NDC) and transfer its powers to the NITI Aayog.

There are rumours that govt may scrap National Development Council and transfer its powers to NITI Aayog

The signs of this overhaul are palpable with Aayog recently surrendering 56 posts of Indian Economic Service (IES) officers who have been redeployed in different ministries and departments. The Aayog is also planning to set up regional centers across the country, starting with the four metropolitan cities.

This might assuage several NITI Aayog members who feel that the body is merely an advisory council whose recommendations aren't taken seriously by either central ministers or bureaucrats.

One member bluntly stated that the government should not expect much from the Aayog as it has no authority like Planning Commission.

NITI Aayog's plan for the year

Notwithstanding the criticism, the Aayog has already chalked out their plan for this year. It has been assigned the task of preparing an agenda for reforming health and education sectors. It will review existing government schemes in these sectors and categorise states according to their performance.

One Aayog official has confirmed that these plans would be discussed in the governing council meeting at the end of this month. Suggestions would be taken from states which have fared better in these sectors and a comprehensive report would be prepared.

Edited by Aditya Menon

Also read: Cong CMs, Akhilesh Yadav not to attend NITI Ayog meeting

First published: 21 January 2016, 10:16 IST