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Issues plaguing the AYOG and measures to resolve these issues

Issues plaguing the AYOG

The dismantling of the Planning Commission without consulting the states has raised concerns about the non-constitutional nature of the NITI Aayog, which, like its predecessor, is not accountable to Parliament. The representation of Union Territories by Lieutenant Governors instead of Chief Ministers is viewed as a departure from federal principles. There are worries about the impact on fund allocation to welfare schemes, with a noticeable 20% reduction in gender budgeting. To establish credibility in policy formulation, NITI Aayog must prioritize its 13 objectives and clearly understand the distinctions between policy, planning, and strategy.


Trust-building requires providing the organization with autonomy, encompassing both expenditure and revenue decisions. Critics express reservations about NITI Aayog’s limited power in imposing policies and allocating funds, mainly vested in the Finance Minister. The organization’s effectiveness in transforming societal inequalities and its influence on long-term policies, such as demonetization and the Goods and Services Tax, face scrutiny.

As a think-tank, NITI Aayog faces calls to maintain intellectual independence from the government, offering constructive criticism rather than unconditional support for government initiatives. Critics argue that despite its mandate to address states’ needs, the organization falls short in promoting public engagement and analyzing government scheme performance, as acknowledged by the Prime Minister.

Changes required in NITI Aayog

  • There is a pressing need for NITI Aayog to evolve into a more robust organization given the void left by the dissolution of the Planning Commission.
  • It should play a key role in allocating “transformational” capital in a structured manner, complete with incentive-compatible conditions. Currently, its role as a think tank without dispensable resources limits its ability to make significant interventions.
  • Planning must remain a central function of the state in India, considering its late entry into the league of industrial economies, to steer the economy towards long-term equilibrium.
  • Despite the dissolution of the Planning Commission, there is a need for organized planning to guide the country’s economic development.
  • NITI Aayog should undergo reforms, drawing insights from neighboring countries such as China, which successfully transformed into an industrial powerhouse.
  • Learning from China’s experience, India can enhance its special economic zones by providing better incentives, infrastructure, and investor-friendly policies.
  • Emulating China’s example, India can shift towards green energy, reducing its dependence on coal and oil. China’s success in becoming a major solar energy producer serves as a model for India to follow.
  • By promoting green energy, India can diversify its energy sources and contribute to global efforts in combating climate change.
  • The State Planning Commission should focus on growth and poverty reduction, gaining inspiration from China’s success in becoming the “factory of the world” through effective implementation of strategies.
  • Emphasizing a strong industrial policy, similar to those in Southeast Asian and East Asian countries, can guide India towards a more systematic and planned approach to economic development.
  • Their success can be attributed to integrating export-oriented manufacturing strategies into their long-term plans in Southeast Asian and East Asian countries.
  • India’s planning should incorporate similar strategies, focusing on the productive use of its abundant labor force to drive economic growth through export-oriented manufacturing.


NITI Aayog should focus on the implementation rather than only focusing upon the recommendations of the policies. It should also be focussing upon the reforms and informing the government as to where it will have to face the consequences for non-implementation of its policies and where it is falling short. The establishment of NITI Aayog gave positive results but there is a need to change and focus on areas that have been discussed in this article.

Read more: Performance of the AYOG since its inception

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