Researching NITI Aayog: Drunken Risibility

I am raising the issue of trying to bring NITI Aayog under the purview of fiscal governance. Unlike the Soviet-era Planning Commission of India, this so-called think tank is supposedly to look at a synergistic relation with the Finance Commission. Under the former, Finance Commission was relegated to determining revenue gaps of states and filled up these by means of devolution of taxes and grants in aids. Such constraints elevated Planning Commission’s job to planning capital expenditure. Interestingly, NITI is stripped off what never really was Planning Commission’s mandate, and vested with monitoring progress of programmes. This is where the screw turns, and the role of Finance Commission gets back to the Finance Ministry’s acquiescing to its recommendations. This means that not only NITI acts as a pulley to lift up Finance Commission to its constitutional agenda, but also stays away from influencing Finance Ministry in that the Ministry could work in tandem with Commission in determining capital, grant requirements the states would either fall short of, or enjoy a surplus with. NITI’s creation is politico-financial with the polity deciding on quantum of finance to be disbursed through a blue print that wouldn’t have any autonomy left. So, while targeting mechanisms and instruments to bring constitutional financial institutions under scanner, one should, as a researcher not lose sight of why NITI is an ingenious lubricant to bring forth growth-led development model to fruition…….
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2 thoughts on “Researching NITI Aayog: Drunken Risibility

  1. I find the statement “Finance Commission was relegated to determining revenue gaps of states and filled up these by means of devolution of taxes and grants in aids” to be rather problematic as such activities or duties were clearly what the FC was established, to iron out vertical and horizontal imbalances arising out of India’s fairly federal structure. To claim that such was caused by the existence of a soviet era style planning commission is, in my humble opinion, incorrect. Furthermore, as the Planning commission’s aim was to guide economic development on a long term basis and sectorally, CAPEX and the planning of such would necessarily fall within its purview. Lastly, to argue that the FC should, as a constitutional body, take precedence over the PC, as a partisan body, would be tantamount to claiming that the tilt of economic development should be constrained by the constitution, read socialist (at least in ideals if not practice), rather than by a popularly elected government.

    • Dear Sir,
      I find your comment highly crucial as the statement consisting of the word ‘relegated’ is likely to lead to a sense of impropriety for the concerned institutions, of which the PCI has ceased to exist. But, as the concern is between the FC and the PCI, it is an obligation to set things straight here, assuming for a while that somehow PCI has risen like a phoenix from its ashes. To define the relationship between Planning Commission and Finance Commission, the only difference one needs to take into account is that Planning Commission does not (did not actually for the present tense) enjoy constitutional status.
      But still 70 percent of tax allocation was done by the Planning Commission. On the political scale, many opposition parties were totally against the Planning Commission because it violated the principle of strict federalism. Because of the Planning Commission, the Union Government did not give much importance to Finance Commission, as within the Planning Commission there was monarchy of Prime Minister and its council. Even though the Planning Commission was an extra-constitutional body, it enjoyed almost parallel authority to the Cabinet. Planning Commission made five-year plans, but Finance commission decided how to allocate the funds. In other words, The Constitution of India envisaged the Finance Commission as the balancing wheel of fiscal federalism in India. However, its role in the centre-state relation was weakened by the formation of Planning Commission, a non constitutional and non statutory body. Both policy and programme came under the purview of the Planning Commission and the assistance to be given by the centre for projects on the recommendation of the Planning Commission made it impossible for FC to carry out its duties. The main function of the FC was thus left to determining the revenue gap between the centre and the states and provide ways for filling up these gaps, and thats the reason for the word ‘relegated’.

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