Q.Why was the Planning Commission replaced by NITI Aayog? Explain the structure and functions of NITI Aayog.

A shorter variant of this question asks only for NITI Aayog's structure and functions, omitting the reasons for replacement.

Reasons for replacement: The Planning Commission, functioning since 1950, was criticised for being excessively centralised — it allocated plan funds to states largely top-down, giving them limited say over their own development priorities. Its rigid, target-driven Five Year Plan framework, suited to an earlier command-style economy, sat uneasily with the increasingly market-driven, private-sector-led economy that had emerged after the 1991 reforms. It was also seen as insufficiently responsive to the widely differing needs of India's states — a single national plan struggled to reflect the distinct priorities of, for instance, an industrially advanced state versus a largely agrarian one, including states like Andhra Pradesh with their own developmental priorities. These concerns led the government to replace it with NITI Aayog with effect from 1 January 2015.

Structure: NITI Aayog is chaired by the Prime Minister, supported by a Vice-Chairperson (appointed by the Prime Minister), a Chief Executive Officer, and full-time as well as part-time members drawn from various fields. Its distinctive feature is the Governing Council, comprising the Chief Ministers of all states and the Lieutenant Governors of Union Territories, which gives states direct, institutionalised participation in shaping national policy — the core expression of 'cooperative federalism'. …

A frequent essay-writing error is describing NITI Aayog's functions as identical to the Planning Commission's except for the name change; examiners specifically look for the fund-allocation-vs-advis …