From Planning Commission to NITI Aayog

The Planning Commission was set up in 1950 as an extra-constitutional advisory body responsible for formulating India's Five Year Plans, allocating plan funds to states and central ministries, and evaluating plan progress. It was headed by the Prime Minister as ex-officio Chairman, with a Deputy Chairman holding cabinet rank and a team of full-time members and part-time members drawn from various fields.

Over time, the Planning Commission drew criticism on several grounds that the BIEAP Intermediate Economics curriculum expects students to be able to explain: it was seen as too centralised, allocating plan funds to states in a largely top-down manner that gave states limited say in their own development priorities; it continued a command-and-control, target-based approach even as the economy after 1991 was becoming increasingly market-driven and private-sector led; and its one-size-fits-all Five Year Plan framework struggled to accommodate the very different needs of India's diverse states, including states like Andhra Pradesh with their own regional priorities.

To address these concerns, the Government of India replaced the Planning Commission with the National Institution for Transforming India (NITI Aayog) with effect from 1 January 2015. NITI Aayog was conceived as a policy think tank rather than a fund-allocating authority, built around the principle of "cooperative and competitive federalism" — involving state governments as active partners in shaping national development strategy rather than only as recipients of central plan allocations. …