As the world navigates a stormy era marked by de-globalization, rapid technological shifts, rising populism, and a looming climate crisis, India's policymaking apparatus stands at an inflection point. The intellectual orthodoxy of neoliberalism—rooted in open markets, deregulation, and a minimal state—faces a legitimacy crisis globally and domestically. Meanwhile, India grapples with its own set of pressing challenges: sluggish structural transformation, persistent unemployment, and mounting inequality. It is within this turbulent context that the performance of NITI Aayog, the government's premier think tank, must be assessed as it completes a decade of existence.
The Vision and Initial Promise of NITI Aayog
Envisioned in 2015 as a “directional and policy dynamo” to offer a shared national vision and adapt to a rapidly changing world, NITI Aayog’s creation marked a departure from the centralized planning model of the erstwhile Planning Commission. The cabinet resolution that established it underscored the need for an institution capable of responding dynamically to the demands of a globalized and integrated world. Unlike its predecessor, NITI Aayog was tasked with promoting cooperative federalism, facilitating dialogue among stakeholders, and fostering evidence-based policymaking.
However, a decade later, the journey has been fraught with challenges. While the Aayog has made strides in areas such as competitive federalism through its indices and rankings, its overall impact remains a subject of debate. Structural limitations and a constrained political culture have hampered its ability to fully realize its potential.
The Erosion of Evidence-Based Policymaking
One of the fundamental pillars of NITI Aayog’s mandate is to foster research-driven policy development. Yet, this objective has been undermined by a political environment that often sidelines independent critique and data-driven insights. The absence of comprehensive evaluations for major government schemes underscores this trend. For instance, while flagship programs such as the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) have historically benefitted from extensive research and public debate, more recent initiatives have seen limited scrutiny. The selective dissemination of favorable data and the active delegitimization of inconvenient findings have eroded the credibility of evidence-based governance.
This aversion to critique has forced NITI Aayog to lean heavily on private-sector consultants and management experts rather than engaging with academics, technical specialists, and civil society organizations. As a result, its strategic visioning exercises, including the India@75 vision document and the three-year action agenda, have lacked depth and broad-based consultation, reducing their policy impact.
Structural Challenges and Ambiguous Role
Unlike the Planning Commission, which wielded significant influence through its control over budgetary allocations, NITI Aayog lacks financial authority. This structural limitation has rendered it a peripheral player in Centre-state fiscal negotiations and policymaking. The dismantling of the Planning Commission created an institutional vacuum in managing development funding, particularly for states. While the Finance Commission handles statutory transfers, a substantial portion of fiscal flows for development now falls under the purview of line ministries and the finance ministry—neither of which is equipped to address Centre-state bargaining comprehensively.
The lack of budgetary powers has also left NITI Aayog’s initiatives open to criticism. Its indices and performance rankings, aimed at promoting competitive federalism, have often been perceived as tools for centralization, aligning states’ priorities with those of the Union government rather than fostering genuine collaboration. Moreover, the absence of coordinated development strategies has exacerbated regional disparities, with richer states increasingly questioning the equity of fiscal devolution.
Regional Disparities and the Case for Restructuring
The growing economic divergence between states is one of India’s most pressing challenges. Economists and policymakers, including Vijay Kelkar, have highlighted the need for a restructured NITI Aayog empowered with financial muscle to address inter-state imbalances. Kelkar’s call for a medium- and long-term development strategy resonates in an era where short-term fixes, such as the Production-Linked Incentive (PLI) schemes, dominate the policy landscape. A coherent industrial policy, designed to leverage India’s comparative advantages while addressing regional disparities, remains a glaring omission.
However, restructuring NITI Aayog is only part of the solution. For it to fulfill its mandate, India must cultivate a political culture that values transparency, open inquiry, and robust dialogue. Without these conditions, even the most well-designed institutional reforms are likely to falter.
The Imperative for Reform
As global uncertainties intensify, the need for a visionary and empowered think tank has never been more urgent. NITI Aayog’s underperformance reflects deeper systemic issues, including the interplay of political will, institutional design, and governance ethos. Addressing these challenges requires a multipronged approach:
- Restoring Evidence-Based Policymaking: Rebuilding trust in data and research is crucial. This involves creating mechanisms for independent evaluations of government schemes and fostering a culture of transparency and accountability.
- Enhancing Institutional Capacity: Empowering NITI Aayog with financial authority and a clearer mandate can help bridge the institutional vacuum left by the Planning Commission. This includes equipping it to play a central role in Centre-state fiscal negotiations and development planning.
- Fostering Cooperative Federalism: Genuine collaboration between the Centre and states is essential for addressing regional disparities and ensuring balanced development. This requires institutionalized mechanisms for dialogue and negotiation.
- Prioritizing Long-Term Strategies: In an era of rapid change, short-term fixes are insufficient. NITI Aayog must focus on formulating and implementing medium- and long-term strategies, particularly in areas such as industrial policy, climate resilience, and technological innovation.
A Critical Juncture
As NITI Aayog enters its second decade, the stakes are higher than ever. The turbulent global landscape, coupled with India’s complex socio-economic challenges, demands a think tank that is both dynamic and deeply rooted in evidence-based policymaking. Reimagining its role and scope is not just a matter of institutional reform but a necessity for navigating an uncertain future. Whether NITI Aayog can rise to the occasion will depend on its ability to adapt, innovate, and inspire trust among stakeholders. For India, the time to act is now.