TNPSC MAINS

INDIAN ECONOMY
NITI Aayog
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NITI Aayog
NITI Aayog, constituted on 1 January 2015, is India’s premier public policy think tank.
It succeeded the Planning Commission, marking a shift from centralized planning to
a model emphasizing strategic guidance, cooperative federalism, and innovation-
driven governance.
It acts as a collaborative platform where the Union and State governments jointly
frame strategies for inclusive and sustainable growth.

Why NITI Aayog Was Established

The transition from the Planning Commission to NITI Aayog was driven by several
structural and contextual factors:

A. Need for Institutional Modernization

• The Planning Commission’s top-down approach had become outdated.

• A globally connected and rapidly evolving economy required a more flexible
and knowledge-driven institution.

B. Governance Reforms

• Policy-making demanded advanced research, technical support, and long-

term strategic thinking.

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• India’s diverse states needed a system enabling bottom-up planning, not

merely central directives.

C. Strengthening Federal Partnership

• The new body was designed to encourage genuine collaboration between the
Centre and States, enabling shared ownership of national goals.

D. Think-Tank Orientation

• NITI Aayog was envisioned as a professional advisory body capable of

offering domain expertise, international best practices, and real-time policy
guidance.

Core Objectives of NITI Aayog

Sl. Vision / Principle Core Description

No.
1 National Development Create a shared development agenda by involving
Vision states in national policy formulation.
2 Cooperative Federalism Encourage constructive Centre–State engagement,
acknowledging that national growth is strengthened
when states prosper.
3 Grassroots-Based Promote planning that originates at village-level
Planning institutions and scales upward.
4 Integration of National Ensure that economic and developmental policies
Security incorporate national security considerations.
5 Inclusive and Equitable Address the developmental needs of vulnerable and
Growth marginalized social groups.
6 Policy Design, Review & Prepare long-term strategies, monitor outcomes, and
Mid-Course Correction adjust programs based on evidence.
7 Stakeholder Partnerships Facilitate collaboration with global and domestic
research bodies, universities, and experts.
8 Innovation Ecosystem Promote knowledge-sharing, entrepreneurship, and
technological advancement.
9 Conflict Resolution Act as a neutral platform for resolving inter-ministerial
Mechanism or inter-departmental differences.

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10 Knowledge Repository Maintain a library of best governance practices, research

outputs, and sustainable development benchmarks.
11 Program Oversight Track progress of government initiatives and enable
timely resource use.
12 Capacity Building & Accelerate adoption of new technologies and
Technology Support strengthen institutional capacities.

Institutional Architecture of NITI Aayog

A. Leadership

• Chairperson: Prime Minister of India.

B. Governing Council

• Includes all Chief Ministers, Lieutenant Governors of UTs; serves as the

primary platform for Centre–State policy dialogue.

C. Regional Councils

• Created for specific geographic or thematic issues; led by the Chairperson or a

delegated authority.

D. Special Invitees

• Eminent experts
appointed by the Prime
Minister for domain-
specific insights.

E. Full-Time Framework

• Vice-Chairperson:
Appointed by the PM.
• Full-Time Members:
Lead major policy

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domains and strategic initiatives.

• Part-Time Members: Up to two scholars from reputed research bodies
(rotational).
• Ex-Officio Members: Up to four Union Ministers nominated by the PM.
• CEO: Senior bureaucrat appointed for a fixed tenure (rank equivalent to
Secretary to the Government of India).
• Secretariat: Administrative support structure.

Major Flagship Initiatives of NITI Aayog

1. Aspirational Districts Programme (ADP)

Develops 112 backward districts using convergence, collaboration, and competition

focusing on health, education, agriculture, water resources, and infrastructure.

2. Atal Innovation Mission (AIM)

Promotes innovation culture through Atal Tinkering Labs, incubation centers, and
start-up ecosystem development.

3. LiFE Movement (Lifestyle for Environment)

Encourages environment-friendly behavioral shifts among individuals and

communities; emphasizes "pro-planet living."

4. Shoonya Initiative

A zero-emission mobility campaign supporting electric vehicles for urban deliveries

and transport services.

5. Women Entrepreneurship Platform (WEP)

A digital platform offering mentorship, networking, and incubator support for

women-led enterprises.

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6. E-AMRIT Portal

One-stop information hub for electric mobility; part of the India–UK Roadmap 2030.

7. Methanol Economy Programme

Aims to utilize municipal waste and coal reserves to produce methanol, reducing
import dependence and emissions.

Key Indices Developed by NITI Aayog

1. Composite Water Management Index

Evaluates state performance in water conservation, infrastructure, and management.

2. District Hospital Index

Monitors hospital efficiency using

WHO and MoHFW benchmarks.

3. Export Preparedness Index

Assesses states on export policy,

business environment, infrastructure,
and performance.

4. India Innovation Index

Reviews innovation capacity,

ecosystem readiness, and
performance of states/UTs.

5. School Education Quality Index (SEQI)

Focuses on learning outcomes, governance indicators, and education quality.

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6. SDG India Index

Measures progress toward UN SDGs across 115 indicators.

7. State Energy Index

Rates states on energy access, clean energy adoption, efficiency, and discom viability.

Functional Design of NITI Aayog

Category Component Description / Key Features

A. Dual-Hub 1. Team India Enables cooperative federalism. Coordinates with states
Structure Hub on policy formulation and implementation.
2. Knowledge & Acts as the research and analytical arm. Builds
Innovation Hub partnerships with academia, think tanks, and NGOs.
B. Subject-Specific The organization is divided into units such as:
Functional Units Agriculture & Allied Sectors, Administrative & Support
Verticals Units, Aspirational Districts Programme Cell,
Infrastructure, Health, Environment, Education, etc.
C. Core 1. Designing Guides developmental strategies in line with national
Functions National & State priorities.
Policy
Frameworks
2. Cooperative + Promotes collaboration. Also fosters healthy state-level
Competitive competition through rankings and indices.
Federalism
3. Monitoring & Provides real-time progress tracking, independent
Evaluation evaluation, and reform suggestions.
4. Think-Tank Generates new ideas, best practices, and forward-
Role looking strategies.
D. Guiding Antyodaya Prioritizing the upliftment of the poorest and most
Philosophies marginalized.
Inclusion Ensuring equity across gender, caste, and regional lines.
Village-Centric Integrating rural communities into mainstream
Development economic progress.

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Leveraging Investing in skills, education, and capabilities of India’s

Demographic youth.
Dividend
Participatory Encouraging citizen involvement in policy and
Governance development.
Good Governance Emphasis on transparency, accountability, and efficiency.
Environmental Integrating ecological protection into planning.
Sustainability

Significance and Role of NITI Aayog

A. Strategic Visioning

Moves India toward long-term development pathways beyond traditional five-year

plans.

B. Strengthening Federal Relations

Acts as a facilitator of consensus between Centre and States.

C. Driving Competition

Uses indices and rankings to encourage states to improve performance.

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D. Expert Advisory

Provides high-level policy inputs to ministries and governments.

E. Oversight & Monitoring

Carries out independent assessments of government schemes.

F. Innovation-Led Development

Nurtures entrepreneurship and start-up ecosystems.

G. Inclusive Transformation

Ensures that growth reaches weaker and marginalized groups.

Cooperative Federalism Through NITI Aayog

Primary Aim

Build a unified "Team India" with States

and Centre working jointly.

Key Measures

• Regular PM–CM meetings.

• Chief Minister subgroups on
national issues.
• Sharing best practices across
states.
• Capacity-building programs for
state institutions.
• Aspirational Districts Programme
for backward regions.
• Tailored initiatives for NE states,
Himalayan regions, and islands.

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• Technical advice for infrastructure and PPP projects.

Competitive Federalism Through NITI Aayog

Objective

Use competition to push states toward better governance and faster development.

Methods

• State-wise sectoral rankings (education, innovation, SDGs).

• Support to low-performing states.
• Standardized monitoring and review frameworks.

Limitations and Concerns

• Advisory Nature: Lacks authority to allocate funds, reducing enforcement

power.
• Regional Variations: Differing state capacities affect the uniform success of
policies.
• Implementation Challenges: Dependent on state cooperation.
• Accountability Issues: Recommendations are not binding, weakening
outcomes.
• Structural Constraints: Some argue that it remains centrally oriented despite
decentralized goals.

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