Finally, the Planning commission has been dismantled and replaced by a new body named National Institution for Transforming India (NITI) Ayog.

Why did life of this 64 years old body come to an end ? 

The Planning commission was an extra constitutional and extra statutory body which had played a significant role in planning process during Nehruvian era. Before liberalization, centre was supposed to occupy commanding heights of economy. The role of the planning commission had been called into question due to the change in the role of the state after liberalization. A market led economy, with Government as a facilitator, required an institution which could give an equal say to all stakeholders in planning process.

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. Due to presence of the Prime minister as the chairman, and Finance minister as an 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.

The new Government has termed one-size-fits all approach of central planning as a roadblock to cooperative federalism. Thus, the Planning commission has been dismantled to materialize  one of the institutional reforms in governance.

Planning commission is replaced by a new body named NITI Ayog. The membership and associate bodies of the Ayog are similar to Planning Commission to a large extent, except in reduction in number of cabinet ministers. NDC is replaced by a governing council, comprising of chief ministers and other regional councils to address region specific issues. A comparison between membership of these two bodies and their associate bodies is given below.


According to the government, this new body will foster cooperative federalism and will empower all states to find their own paths towards development. It will also act as a think tank and  will provide critical, directional and strategic inputs into the governance process. It would create a shared vision to national development priorities with a special focus on village level planning.

Questions raised by Critics : 

It was often argued that the Planning commission was neither a constitutional body nor a statutory one and hence, was not accountable to the Parliament. Niti Ayog constitution does not address this issue.

The distinction between plan and non plan expenditure has not been diluted yet. The Planning commission used to look after the planned expenditure, but no such role has been assigned to Niti Ayog. Though it is argued that being the constitutional body, Finance commission should be assigned this role, but no such directive has been issued before constitution of the new body.

The formula based and discretionary transfer of funds to the states, changes in these formulas, and giving special status to the states used to be done by the Planning Commission, but these functions have not been assigned to Niti ayog.

The Centrally sponsored schemes were rationalized due to their rigidity so that the fund could be directly transferred to the states, but these CSS funds have now been allocated to the central ministries and departments, rendering their abolition of no use. This makes the fund transfer exercise ambiguous and more discretionary than it was under the Planning commission. There is no mention of this task being assigned to Niti Ayog.