NATIONAL LAW UNIVERSITY JODHPUR
PROJECT WORK OF CONSTITUTIONAL GOVERNANCE - II
TOPIC:
THE PRACTICALITY AND CONSTITUTIONALITY OF
THE NITI AAYOG
SUBMITTED BY: SUBMITTED TO:
MANOVIRAJSINH K. PARMAR Ms. VINI SINGH
Roll no.: 1393 FACULTY OF LAW
KESHAV KHANDELWAL NATIONAL LAW UNIVERSITY,
Roll no.: 1391 JODHPUR.
U.G. – 2nd SEMESTER
SECTION - A
B.B.A - L.L.B(Hons.)
DATE OF SUBISSION:
FEBRUARY 15TH, 2017
TABLE OF CONTENTS
Cover Page………………………………………………………………………………………...
Acknowledgement...........................................................................................................................4
Research Methodology....................................................................................................................5
Scope Of The Project.......................................................................................................................6
Planning Commission......................................................................................................................7
Legacy Of Anti-Colonial Struggle...................................................................................................7
Constitutional Impact of Planning Commission..............................................................................8
Demise Of The Planning Commission..........................................................................................10
Result Of Neo-Liberalism..............................................................................................................10
Why Institute the Niti Aayog?.......................................................................................................11
Platform For Interface Between The Centre And The States........................................................13
Strategic Planning..........................................................................................................................15
Innovation And Knowledge Hub...................................................................................................15
Cooperative Federalism In the Spectrum......................................................................................16
Niti Aayog: No Quick Fix.............................................................................................................17
Assessing Impact of NITI Aayog Vs Planning Commission:.......................................................18
What Lays Ahead?.........................................................................................................................19
Analysing how the creation of NITI Aayog would affect Centre – State relations.......................21
Bibliography..................................................................................................................................22
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ACKNOWLEDGEMENT
On the completion of this project we find that there are many people to whom we would like to
express our gratitude, since without their help and co-operation the success of this educative
endeavour would not have been possible.
We welcome this opportunity to express our sincere gratitude to our teacher and guide, Ms. Vini
Singh, Faculty of Constitutional Governances, who has been a constant source of encouragement
and guidance throughout the course of this work.
We are grateful to the IT Staff for providing all necessary facilities for carrying out this work.
Thanks are also due to all members of the Library staff for their help and assistance at all times.
We are also grateful to all our friends and colleagues for being helpful in their differences and
for their constant support.
We express our deepest gratitude to my parents who have been the real driving force for this
work.
Keshav Khandelwal
Manovirajsinh K. Parmar
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RESEARCH METHODOLOGY
DISCIPLINE: Constitutional Governance
TOPIC: The practicality and constitutionality of the newly proposed
Niti Aayog: Reconciling differences with the existing Planning
Commission.
The method of research opted by the author to complete this project was
doctrinal research from primary and secondary sources. Major part of the
project has been researched from Articles and reports available in web
databases on the topic by scholars on the subject. Books and Magazines on
NITI Aayog and Planning Commission have also been referred to.
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SCOPE OF THE PROJECT
The project seeks to critically analyze and interpret the formation of NITI Aayog as the
successor of the Planning Commission and to reconcile differences with the Planning
Commission. The loss of ground for the Plan Panel has been studied in an objective manner.
What all are the spectrum of challenges that lie ahead the NITI Aayog have also been effectively
observed. Further it also seeks to analyse the impact of NITI Aayog on the relation between the
Centre and the States under the Federal structure of the country.
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PLANNING COMMISSION
LEGACY OF ANTI-COLONIAL STRUGGLE
The idea of “national planning” had been in the air long before independence. Indeed, the
Planning Commission established in the Nehruvian era was the descendant of the National
Planning Committee that Subhash Chandra Bose had set up at the suggestion of Meghnad Saha
when he was the president of the Congress, with economist K T Shah as its head. A few scholars
view it as a travesty to see the Planning Commission as a relic of the “Soviet era”, a sort of
ideological baggage borrowed from the Soviet Union that has outlasted the Soviet Union. It is
not surprising that such “planning” came into vogue not just in India but in a whole range of
countries that were newly liberated from colonialism.
The Planning Commission was meant to oversee a break of the economy from the inherited
pattern of colonial division of labour, which had entailed the export of a range of raw materials,
and the import of a range of manufactured goods from the metropolis. Not only were the
country’s natural resources to be brought back under national control which was necessary for
mobilising all available means for the nation’s development; and the production pattern altered,
from what had been dictated by the colonial division of labour, but the benefits of all these
measures were to accrue to the people at large by ensuring that wealth and income inequalities
were kept in check. Therefore, the transition from the Planning Commission to the Niti Aayog
reflects the completion of the transition from a state professing anti-imperialism to a neo-liberal
state.
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CONSTITUTIONAL IMPACT OF PLANNING COMMISSION
The Constitution of India enunciates Directive Principles of State Policy, which though not
enforceable by any Court, are “nevertheless fundamental in the governance of the country and it
shall be the duty of the State to apply these principles in making laws”. Two of the Articles in
this part, Article 38 and Article 39(a), (b) and (c) are cited in the resolution of 15th March 1950
by which the Planning Commission was set up. These are:
“The Stale shall strive to promote the welfare of the people by securing and protecting, as
effectively as it may, a social order in which justice. social, economic and political, shall inform
all the institutions of national life.”1
“The State shall, in particular, direct its policy towards ensuring—
that the citizens, men and women, equally, have the right to an adequate means of livelihood;
that the ownership and control of the material resources of the community are so distributed as
best to sub serve the common good;
that the operation of the economic system does not result in the concentration if wealth and
means of production to the common detriment."2
In the context of planning it is useful to draw attention to three other Articles:
“The State shall, within the limits of its economic capacity and development, make effective
provision for securing the right to work, to education and to public assistance in cases of
unemployment, old age, sickness and disablement, and in other cases of undeserved want.”3
“The State shall endeavour to provide, within a period of ten years from the commencement of
this Constitution, for free and compulsory education for all children until they complete the age
of fourteen years.”4
1
Article 38, Constitution of India, 1950
2
Article 39, Constitution of India, 1950
3
Article 41, Constitution of India, 1950
4
Article 45, Constitution of India, 1950
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“The State shall promote with special care the educational and economic interests of the weaker
sections of the people, and, in particular, of the Scheduled Castes and the Scheduled Tribe and
shall protect them from social injustice and all forms of exploitation.”5
Planning in India was intended on the basis of the Government Resolution of March 1950, “to
promote a rapid rise in the standard of living of the people by efficient exploitation of the
resources of the country, increasing production, and offering opportunities to all for employment
in the service of the community the DPSPs are specifically taken into consideration to formulate
policies.”
5
Article 46, Constitution of India, 1950
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DEMISE OF THE PLANNING COMMISSION
RESULT OF NEO-LIBERALISM
The Manmohan Singh government, committed to neo-liberalism but wary of being accused of
deviating from its Nehruvian ancestry, sought an amusing way out of this impasse: it retained a
Planning Commission, but “neo-liberalised” its key personnel. Narendra Modi has gone one step
further and has dismantled it altogether. The fact that the neo-liberal state is qualitatively
different from the postcolonial dirigiste state, underlies the extinction of the old Planning
Commission. Its extinction is linked to the India’s embracement of international capital with
which its domestic corporate-financial economy is closely integrated.6
There have been wide-ranging discussions on the role and remit of the new institution to replace
the Planning Commission ever since the Prime Minister in his 2014 Independence Day address
declared that the Planning Commission would be replaced by a new institution. 7 Since then, the
government has held consultations with various stakeholders—state governments, domain
experts and relevant institutions—to formulate the framework and objectives of the proposed
new institution.8 In the cabinet resolution9 passed on 1 January, the government has come out
with the broad contours of the new institution, National Institution for Transforming India (NITI)
Aayog.
6
Reinventing the Planning Commission – The Great Debate, CUTS International, Jaipur.
7
Shiv Visvanathan, An ode to the Planning Commission, The Hindu, Delhi.
8
Ragini Verma, NITI Aayog replaces Planning Commission; PM to be chairperson, Livemint.
9
Press Information Bureau, Government of India – Cabinet, ‘Government constitutes National
Institution for Transforming India(NITI) Aayog.’
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WHY INSTITUTE THE NITI AAYOG?
The old aphorism “old soldiers never die, they just fade away” might also be a story of the fate of
most institutions. However, it was not true of the Planning Commission, which was terminated
brusquely. Although, the Independent Evaluation Office (IEO) advocating a “bold and radical
step”, had submitted a report10 to the Prime Minister’s Office saying that the current functions of
the Planning Commission be taken over by other bodies “which are better designed to perform
those functions.” Its mandate, as a powerful tool of national integration, was to conduct a major
resource management exercise in order to ensure equitable development through a series of five-
year plans.
The old Planning Commission had two serious failings.
i. In an economy in which the means of production were largely privately owned, there
were no effective mechanisms for the “realization” of the plans formulated by it. Various
instruments were tried, such as a licensing policy, to make the private sector conform to
the overall plan. But these, as is well known from a host of official committees, were
ineffective, which also resulted in a significant trend towards centralization of capital,
and hence an increase in wealth and income inequalities.
ii. The Planning Commission, though it was meant to effect “national economic planning”,
was a central government entity with no representation from the states. It thus went
against the spirit of federalism11.
Also, need was felt to contextualize and exercise state-level ownership on social sector
programmes. Financial decentralisation to the lowest tiers of the government for improved
efficiency in public goods delivery is essential. Yet, given the disparities across states and the
magnitude of development gaps, it is nobody’s case to suggest that there is no place for a federal
entity with some allocative role in the pursuit of balanced regional development in India. The
question is, should this role be kept outside the preview of the Niti Aayog, as has been argued?
10
Interview of Ajay Chhibber, ‘The Planning Commission has become a hindrance’, Frontline.
11
Part XI, Constitution of India, 1950
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The Planning Commission was set up as an advisory body and had no executive responsibility,
but its wide term of reference had turned it into an Economic or Super Cabinet. 12 Due to presence
of the Prime minister as the Chairman, and Finance minister as ex officio members, it further
grew in its importance. The National Development Council, the advisory body to the Planning
commission, was rendered ineffective as chief ministers did not have any effective say in the
planning process. Also, as the NDC was headed by the Prime minister himself, the decisions
taken by the Planning commission were often presented before the NDC as fait accompli.
One common feature of most strategic defeats is the exercise of policy options that may have
worked in the past but have outlived their relevance. 13 At the same time, unnecessary
diversification away from core competence has led many a corporate houses and government
agencies to grief. There is a need to narrow down the choice. India continues to grow with
cooperation between the Centre and states, despite political differences. We are in an era of
competitive federalism. We need to cooperate with each other to fulfill the mandate. 14 The new
commission, right from its nomenclature to its stated objectives, appears to be more in tune with
the times and the overall economic landscape. The Aayog's functioning could make or break the
economic development of India in the future.
12
Share Ideas, Successor of the Planning Commission: Niti Aayog.
13
Shakti Sinha, NITI Aayog: unleashing the substantial potential of the Indian people.
14
NITI Aayog to financially empower States, says Arun Jaitely, indiatoday.in, Kolkata.
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PLATFORM FOR INTERFACE BETWEEN THE CENTRE
AND THE STATES
The most important responsibility of NITI Aayog relates to promoting “…cooperative federalism
through structured support initiatives and mechanisms with the States on a continuous basis”.
The Seventh Schedule to the Constitution demarcates the legislative domains and functional
responsibilities of the union and states in terms of union, state and concurrent subjects. However,
there is considerable overlap in the functions requiring coordination between the union and the
states and among the states inter se. Carrying out stable and sustainable developmental agenda
requires fostering the spirit of cooperation and cementing the federal structure.15
The most important issue which the NITI Aayog will have to deal with is the rationalisation of
CSS(Central Secretariat Service) as there is considerable resentment by the states on them.16 The
views expressed by Chief Ministers at the maiden meeting of NITI Aayog’s Governing Council,
demanding greater freedom to frame their own development plans, vindicate the thought process
that went into conceiving the body. Promoting cooperative federalism and giving States greater
freedom in designing their development plans were two of the key objectives behind the setting
up of the NITI Aayog. Chief Ministers, cutting across party lines, demanded that they be given
such freedom, with Kerala Chief Minister Oommen Chandy pointing out that schemes such as
Jan Dhan Yojana or Beti Bachao were of little relevance to his State which already boasted of
superior metrics in both fields.17 If these demands prove something, it is this: there can be no
one-size-fits-all approach to development in a diverse country like India. And no longer can
development be orchestrated from the Centre alone; it is as much the preserve, prerogative and
responsibility of the States.
There is certainly a case for having specific purpose transfers for ensuring minimum standards of
services which are considered to be of national importance. Given the collaborative nature of
such schemes, they should be designed and implemented in the spirit of cooperative federalism.
15
M Govind Rao, Role and Functions of Niti Aayog, 4, EPW.
16
Id.
17
Editorial, For Cooperative Federalism, The Hindu, Delhi.
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The schemes should be holistic with scope for flexibility in implementation depending on the
varying local conditions and they should be limited in number. They should have considerable
scope for flexibility in implementation. The new institution could provide a platform for
designing the schemes, implementation systems, monitoring and evaluating them in a
collaborative framework.
In order to enable NITI Aayog to play a constructive role in fostering cooperation, it is necessary
to place the Inter-State Council,18 in the Aayog. This institution should be the nodal agency for
negotiation, discussion, bargaining and resolution of all major issues. It should have the required
expertise on intergovernmental relations, fiscal federalism and constitutional law.
18
Article 263, The Constitution of India, 1950.
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STRATEGIC PLANNING
INNOVATION AND KNOWLEDGE HUB
One of the major tasks assigned to Niti Aayog is strategic planning at both macro and sectoral
levels. The cabinet resolution also speaks about planning at the grass-roots level which implies
that the exercise of medium-term planning could be continued, but in a different manner. It could
be indicative planning to provide satisfactory levels of social and physical infrastructure for
meeting the growing needs of the economy, with the roles of public and private sectors clearly
defined.
Grass-roots planning entails building up of the plan right from the village level based on the
resource envelop, with each higher level aggregating the plans and adding the investment
requirements for the category.19 In other words, the planning should be built right from the
village, block and district levels and these should be harmonised with planning at the state level.
Similarly, national planning should be the consolidation of state-level plans along with the
planning infrastructure and service requirements for the country as a whole worked out at the
union level. NITI can provide a framework for preparing the plans to the states and the latter, in
turn, to the lower levels of government. It should also have a unit to advise and guide if any state
is in need of such assistance.
The Niti Aayog's focus on India's middle class, including the neo-middle class, is also a
recognition of the policy-makers' continuing challenge to ensure that this economically vibrant
group remains engaged and its potential is fully realised.20 Rising demand from a new aspiring
class is likely to stimulate growth for industries like cement, low-cost housing, pharmaceuticals,
fast-moving consumer goods, two-wheelers, apparel and footwear.
19
M. Shabad, Yojana Aayog to Niti Aayog: What changes beyond name? IndiaTomorrow.net.
20
NITI Aayog gives a thumbs up to Cooperative Federalism, Hindustan Times, Delhi.
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COOPERATIVE FEDERALISM IN THE SPECTRUM
The term co-operative federalism denotes a two-way relationship between the Centre and state
governments in matters related to economic policy and development. NITI Aayog is expected to
"help evolve a shared vision of national development priorities", in keeping with the spirit of
such a federal structure. Also, Instead of Planning Commission formulating a plan and then
asking the states whether they agree with this or not, this is going to be something where states
would have much more input at the earlier level of plan formulation.
Now, the question is whether the new set-up will bring about a seminal change in developmental
policy making by decentralising the process altogether? The true spirit of decentralisation lies in
giving away the power to plan and implement developmental programmes to local bodies. The
central and state governments should remain as enablers. 21 However, in this matter the press
release says - "The NITI Aayog will develop mechanisms to formulate credible plans to the
village level and aggregate these progressively at higher levels of government." This implies that
the new body will develop plans for the village level development, which will amount to
centralisation.
Among the key objectives of Niti Aayog will be evolving a shared vision of national
development priorities, sectors and strategies with the active involvement of states, fostering
cooperative federalism through structured support initiatives and mechanisms with the states on a
continuous basis and to design strategic and long-term policy and programme frameworks and
initiatives, and monitor their progress. The new body will also develop mechanisms to formulate
plans at the village level and aggregate these progressively at higher levels of government as
well as offer a platform for resolution of inter-sectoral and inter-departmental issues in order to
accelerate implementation of the development agenda. It will be mandated to actively monitor
and evaluate the implementation of programmes and initiatives, including the identification of
the resources needed to strengthen the probability of success and scope of delivery.
21
Rajesh Pandathil, Spot the difference: Modi's NITI Aayog looks like the Planning
Commission, Firstpost.
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NITI AAYOG: NO QUICK FIX
As an institution, Niti Aayog will have to emerge as a credible lean knowledge body or a think
tank. In doing so, it needs to be equipped to think through sound policy initiatives for the
medium term and beyond to grow the pie. In order to do that, it must have the ability to envision
future scenario and suggest corrective steps when required. Secondly, it must also revive the
Independent Evaluation Office22 (IEO) rather than depend upon an in-house body that has so far
proved to be ineffective. In doing all this effectively, it will have to build up sustainable
partnerships with the private sector, trade unions, media, think tanks and civil society
organisations.
In its second role, it needs to deliver directional and strategic recommendations to the
governments on the developmental process. With no clarity on the fate of five-year and annual
plans, it remains uncertain how Niti Aayog will achieve this.
But at the same time it would be a fallacy to assume that Niti Aayog has altogether jettisoned
planning from its mandate. While it eschews the word planning in its nomenclature, the
objectives of Niti Aayog are unequivocal about ushering in village-level planning and
aggregation of plans at progressively higher levels. This means linking up six lakh-plus villages
with state governments and, in turn, the Central government. This is indeed a mammoth task and
one that is likely to throw up fresh and competing demands.
Niti Aayog also plans to be a platform for fostering cooperative federalism in the area of
economy and development. A plain reading of this objective suggests that Niti Aayog would be
capable of bringing states to consensus and make them partners in the shared vision but just how
it will be done is not clear. Having a representation of all state heads in an overarching council
may not be the best way forward as we have seen in the case of the National Development
Council. The least that can be done in this regard is to find ways to integrate constitutionally
empowered and rejuvenating the Inter-State Council (ISC). Not doing so will be to risk having
multiple bodies trying to achieve the same goal. A restructured ISC to suit the objective of the
new planning body will provide adequate clarity on how Niti Aayog plans to foster cooperative
federalism.
22
Pradeep S. Mehta, NITI Aayog : No Quick Fix, The Asian Age.
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ASSESSING IMPACT OF NITI AAYOG VS PLANNING
COMMISSION:
Good or bad, Planning Commission’s influence and impact were perceived, felt and measured
through annual plan allocations, acceptance of utilization certificates, discretionary grants in the
form of Additional Central Assistance to states23 , autonomous organisations, Zilla Panchayats
and municipalities24. Be it rationale or not, the influence of Planning Commission was also
reflected in the accounting protocol where budget lines are shown separately for Plan Non-Plan,
discussed in the C& AG Reports and in several proposals by Budget Division, where Plan funds
are referred as proxy for development expenditure. But, sans the ability to influence the annual
allocations, and influence on the annual budget proposals, the NITI Aayog needs to have a
framework to prepare its own annual business plans, to define its outputs and to put in place a
framework to assess impact of its outputs and institute an accountability mechanism.
23
Article 275, Constitution of India, 1950
24
The Constitution (Seventy-Fourth Amendment Act, 1992
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WHAT LAYS AHEAD?
Niti Aayog will be a body where the prime minister and state chief ministers will be thinking
together, working together on shaping a strategy. However, the success of this proposed structure
lies in its implementation. It will need people who are good at designing participative processes
and practicing them, else we will be back to square one. Also, it is necessary to reflect on the
lessons learnt from the Yojana Aayog’s recent work and focus on some other concerns vital for
transforming India.
The immediate challenge, however, for the NITI Aayog is to marry the 12th five-year plan goals
with the new thought process since finance minister Arun Jaitley has made it clear that the
government is not chucking the plan for now,25 as was being sought by many, and the scheduled
mid-year review would continue. The Niti Aayog will now get a few years more to make the
shift from the current five-year plan model to a perspective plan framework—one with active
participation of the states.
Planning cannot be reduced to a mechanical exercise of earmarking public expenditure across
competing needs. It has to respond to the evolving needs and concerns, especially for a society in
transition. By divorcing the allocative role from the agency’s policy advisory functions will
make that agency a toothless tiger.
The Niti Aayog should be given a specific time-bound mandate and direction for economic,
social and political transformation of the country over the next two decades. It has to facilitate
India’s transition into a developed nation, while strengthening her federal structure, her unique
socio-cultural diversity and setting a global example of sustainable resource-use strategy. This
calls for not just one Five Year Plan, but several strategic plans for a period of five years at a
time, on each issue that needs to be addressed. The most suitable state-level (political) leadership
should be entrusted with the task of devising these plans using the best available talent, including
from industry and abroad, with the secretarial support of the Niti Aayog. It would strengthen the
federal structure of the policy-making process. This requires a non-hierarchic, flexible and a lean
25
Editorial, New Niti, The Financial Express.
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Aayog that works with other specialised think tanks in addressing India’s policy challenges. The
Aayog would need to deploy knowledge in the planned transformation of the country, improve
governance effectiveness and capacity for independent monitoring and evaluation. A core staff
of motivated professionals, who consider it to be a badge of honour to be posted at the Aayog,
will have to work in tandem with experts engaged on a fixed tenure to address specific issues.
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ANALYSING HOW THE CREATION OF NITI AAYOG
WOULD AFFECT CENTRE – STATE RELATIONS
Centralised planning in our country with federal political structure has brought in issues that
have led to suboptimal exploitation of the resources present with the nation. National Institution
for Transforming India(NITI) Aayog replaced Planning Commission with the vision of “Team
India” and is expected to affect the Centre-State relations26 in the following manner:
State Chief Ministers(CMs) have been given a place in the executive body of NITI Aayog
which will give them an active voice in the body, bringing in varied views and will
reduce the mistrust on planning between the centre and the states.
Planning in India was on the lines of “Systems Type of Planning” which ignores factors
like caste, religion, culture, regional differences etc. but this has not been very effective
in our country. NITI has been given the job of planning on the lines of “Normative Type
of Planning” taking these factors into account.
Centrally Sponsored Scheme’s restructuring and Increased tax devolution as
recommended by 14th Finance commission is expected to complement the efforts of
NITI Aayog in enabling decentralised planning in India
Hence, it is believed that by increasing the role of states in planning, NITI Aayog will
greatly improve the Centre-State relations and will lead to “Federal Planning” in a federal
country.
26
Articles 245 to 293, Part XI, Constitution of India, 1950
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BIBLIOGRAPHY
Treatises:
1. The Constitution of India, 1950.
2. Amiya Kumar Bagchi, Private Investment and Partial Planning in India 1951-60, (1963)
(Doctoral Dissertion, Cambridge University)
Magazines:
1. M Govind Rao, Role and Functions of Niti Aayog, 4, EPW.
2. Prabhat Patnaik, From the Planning Commission to the Niti Aayog.
Articles:
1. Editorial, New Niti, The Financial Express.
2. Pradeep S. Mehta, NITI Aayog : No Quick Fix, The Asian Age, January 20, 2015.
3. Rajesh Pandathil, Spot the difference: Modi's NITI Aayog looks like the Planning
Commission, Firstpost.
4. NITI Aayog gives a thumbs up to Cooperative Federalism, Hindustan Times, Delhi
5. M. Shabad, Yojana Aayog to Niti Aayog: What changes beyond name?
IndiaTomorrow.net.
6. Editorial, For Cooperative Federalism, The Hindu, Delhi.
7. Shakti Sinha, NITI Aayog: unleashing the substantial potential of the Indian people.
8. NITI Aayog to financially empower States, says Jaitely, indiatoday.in, Kolkata.
9. Amitendu Palit, Similarities and Dis-similarities, The Financial Express.
10. Ragini Verma, NITI Aayog replaces Planning Commission; PM to be chairperson,
Livemint.
11. Rajeev Malhotra, The Niyati of NITI Aayog, The Financial Express.
12. Share Ideas, Successor of the Planning Commission: Niti Aayog.
13. Reshma Sehgal, Can NITI Aayog transform India? Rediff.com.
14. Interview of Ajay Chhibber, ‘The Planning Commission has become a hindrance’,
Frontline.
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15. Press Information Bureau, Government of India – Cabinet, ‘Government constitutes
National Institution for Transforming India(NITI) Aayog.’
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