The Government of India has established NITI Aayog to replace the

Updated 11 Apr 2026 · From UPSC Prelims GS Paper I 2015, Q54

Contents12
UPSC Prelims GS2015Indian Economy
  1. AHuman Rights Commission
  2. BFinance Commission
  3. CLaw Commission
  4. DPlanning Commission
Show answer

Answer: (D) Planning Commission

NITI Aayog (National Institution for Transforming India) was established on January 1, 2015 by the Narendra Modi government to replace the Planning Commission, which had been in existence since 1950.

Why was the change made?

The Planning Commission was a centralized body that prepared Five Year Plans and allocated resources to states in a top-down manner. Critics argued it was outdated, overly centralized, and treated states as subordinates rather than partners.

NITI Aayog was designed as a think tank that works with states as equal partners in a 'cooperative federalism' model, providing policy inputs and fostering innovation rather than allocating funds.

Key differences:

  • Planning Commission allocated funds to states and ministries;
  • NITI Aayog does not have fund-allocation powers.
  • The PM chairs NITI Aayog (as he did the Planning Commission).
  • NITI Aayog has a Governing Council with all Chief Ministers, emphasizing cooperative federalism.

The other three options are clearly wrong:

  • The Human Rights Commission (NHRC) deals with human rights violations,
  • The Finance Commission (a constitutional body under Article 280) recommends tax devolution to states,
  • The Law Commission recommends legal reforms — all three continue to exist independently.
Why this was asked

NITI Aayog replaced the Planning Commission on January 1, 2015, ending 65 years of centralized Five Year Planning that began in 1950.

The change happened because Modi government wanted cooperative federalism instead of the top-down approach where Planning Commission allocated funds to states as subordinates.

Unlike Planning Commission which had fund allocation powers, NITI Aayog works only as a policy think tank and does not control state finances.

NITI Aayog Establishment & Mandate

Indian Economy NITI Aayog National Institution for Transforming India

NITI Aayog: India's Premier Policy Think Tank

Must know

Established January 1, 2015 to replace Planning Commission

Prime Minister is the Chairperson

Works on cooperative federalism model with states

Does not allocate funds - only provides policy inputs

What is NITI Aayog

NITI Aayog (National Institution for Transforming India) is India's premier policy think tank established by the Modi government. Unlike its predecessor, it focuses on cooperative federalism - treating states as equal partners rather than subordinates in development planning.

NITI Aayog Structure

Position

Who

Role

Chairperson

Prime Minister

Provides overall direction

Vice-Chairperson

Appointed by PM

Day-to-day operations

Governing Council

All Chief Ministers + Lt. Governors

Platform for cooperative federalism

Full-time Members

Maximum 2

Sectoral expertise

Part-time Members

Maximum 2

Domain knowledge

Ex-officio Members

Union Ministers

As nominated by PM

CEO

Appointed by PM

Administrative head

Key Functions

Strategy & Policy: Long-term vision, strategic plans for government

Cooperative Federalism: Platform for Centre-State collaboration

Innovation & Technology: Promote tech adoption and innovation

Monitoring & Evaluation: Track progress of government schemes

Research & Advocacy: Policy research and evidence-based recommendations

Exam traps

Trap: NITI Aayog cannot allocate funds - Planning Commission could

Trap: All Chief Ministers are members of Governing Council automatically

Trap: PM is Chairperson (not President or a separate appointee)

Trap: Established 2015 under Modi, not UPA government

Planning Commission Legacy

Indian Economy Planning Commission

Planning Commission: India's First Planning Body (1950-2015)

Must know

Established March 15, 1950 by Cabinet Resolution

Prepared 12 Five Year Plans from 1951-2017

Had fund allocation powers to states and ministries

Abolished on January 1, 2015 and replaced by NITI Aayog

Historical Context

The Planning Commission was India's apex planning body for 65 years. Inspired by Soviet-style centralized planning, it aimed to promote rapid economic growth through systematic resource allocation and Five Year Plans.

Planning Commission vs NITI Aayog

Aspect

Planning Commission

NITI Aayog

Establishment

1950 (Cabinet Resolution)

2015 (Cabinet Resolution)

Nature

Constitutional body

Policy think tank

Fund Allocation

Yes - allocated to states

No - only advisory

Centre-State Relations

Top-down approach

Cooperative federalism

Five Year Plans

Prepared and monitored

Replaced with Strategy documents

State Participation

Limited consultation

All CMs in Governing Council

Focus

Resource allocation

Policy innovation & strategy

Why Planning Commission was Replaced

Over-centralization: Treated states as subordinates, not partners

Outdated Model: Soviet-style planning unsuitable for modern economy

Limited Innovation: Focus on allocation, not policy innovation

Federal Imbalance: Insufficient state participation in planning process

Changed Economic Reality: Market economy needed different approach

Exam traps

Trap: Planning Commission was not a constitutional body - created by Cabinet Resolution

Trap: 12th Five Year Plan (2012-17) was the last under Planning Commission

Trap: Planning Commission allocated funds - NITI Aayog does not

Trap: Both had PM as Chairperson - structure similarity often confuses

Constitutional Commissions of India

Indian Polity Human Rights Commission Finance Commission Law Commission

Constitutional & Statutory Commissions: Key Bodies in Indian Governance

Must know

Finance Commission is constitutional body under Article 280

NHRC established under Protection of Human Rights Act, 1993

All three continue to exist alongside NITI Aayog

Good to know

Law Commission is statutory body for legal reforms

Major Commissions Comparison

Commission

Constitutional Status

Key Function

Appointment Authority

Finance Commission

Constitutional (Article 280)

Tax devolution to states

President every 5 years

NHRC

Statutory (PHRA 1993)

Human rights protection

President on PM's advice

Law Commission

Statutory

Legal reforms & law review

Government of India

Election Commission

Constitutional (Article 324)

Free & fair elections

President

UPSC

Constitutional (Article 315)

Civil services recruitment

President

Finance Commission Specifics

15th Finance Commission (2020-26) headed by N.K. Singh

Recommends tax sharing formula between Centre and States

Suggests grants-in-aid for states in need

5-year tenure with specific terms of reference

Constitutional mandate - cannot be abolished

NHRC Key Features

Chairperson must be retired Chief Justice of India

Investigates human rights violations by public servants

Can summon officials and visit jails

5-year tenure for Chairperson and Members

Has state-level counterparts (SHRCs)

Exam traps

Trap: Finance Commission recommends tax devolution - does not allocate funds directly

Trap: NHRC Chairperson must be retired CJI - not serving judge

Trap: Law Commission is not permanent - reconstituted periodically

Trap: Only Finance & Election Commission have constitutional status among the options