The NITI Aayog (National Institution for Transforming India) is the premier public policy think tank of the Government of India, established as an executive body by a Cabinet resolution on January 1, 2015. It is neither a constitutional nor a statutory body. Its origin lies in the decision to replace the Planning Commission, which was established in 1950 and followed a centralized, top-down planning model. The problem it solved was the need to move away from this rigid, command-economy structure to one that fosters cooperative federalism and a bottom-up approach, involving state governments in the economic policy-making process.
The mechanism of the NITI Aayog centers on its role as a directional and strategic advisory body. It works through its Governing Council, which includes the Prime Minister as the Chairperson, all state Chief Ministers, and Lieutenant Governors of Union Territories, ensuring state participation. Its key functions include formulating long-term policy and program frameworks, acting as a Knowledge and Innovation Hub, and monitoring the implementation of initiatives. Unlike the Planning Commission, the NITI Aayog does not have the power to allocate funds, which remains with the Finance Ministry.
The concept connects directly to cooperative federalism and competitive federalism, as it provides a platform for states to collaborate and compete through indices like the SDG India Index and the Composite Water Management Index. The major change was the replacement of the Planning Commission in 2015, which shifted the focus from a centralized planning body with financial powers to a policy think tank that provides strategic and technical advice. What stayed the same is that the Prime Minister remains the head of the institution, as he was the Chairman of the erstwhile Planning Commission.