India’s development planning has evolved significantly since Independence. For over six decades, the Planning Commission played a central role in formulating Five-Year Plans and guiding the country’s economic roadmap. In 2015, the institution was replaced by NITI Aayog (National Institution for Transforming India), reflecting a shift from centralised planning to cooperative federalism, innovation-driven policies, and long-term strategic thinking.
NDA & CDS 1 2026 Exam GK – Economics – Class 3
Planning Commission (1950–2014)
Establishment
- The Planning Commission was set up on 15 March 1950 by an executive resolution of the Government of India.
- It was not a constitutional or statutory body.
- Its primary mandate was to assess resources and create development strategies for India’s economy.
Objectives
- Formulating Five-Year Plans and annual plans.
- Allocation of financial resources to states.
- Coordinating between ministries and state governments.
- Monitoring plan implementation and evaluating outcomes.
- Identifying priorities and setting national development goals.
Structure
- Chairperson: Prime Minister of India.
- Deputy Chairperson: Appointed by the central government, usually an economist or policy expert.
- Consisted of full-time members and representatives from key ministries.
Functions
- Formulation of Five-Year Plans
Prepared India’s major economic plans like the Mahalanobis model-based Second Five-Year Plan. - Resource Allocation
Allocated central funds to states, creating a top-down planning system. - Policy Coordination
Acted as a bridge between centre and states in development programmes. - Monitoring and Evaluation
Assessed progress of schemes and recommended reforms.
Limitations
- Highly centralised and rigid.
- States were often dependent on the Centre for funds.
- Lacked flexibility and modern analytical tools.
- Criticized for delay, inefficiency, and outdated socialist-era planning.
NITI Aayog (National Institution for Transforming India)
Establishment
- Formed on 1 January 2015, replacing the Planning Commission.
- Created to reflect the changing economic landscape of India and promote cooperative federalism.
- Also established by executive resolution, not a constitutional or statutory body.
Objectives
- Promote cooperative and competitive federalism with states.
- Develop long-term strategies, vision documents, and policy frameworks.
- Encourage innovation, entrepreneurship, and evidence-based policymaking.
- Act as a think tank rather than a fund-allocating body.
- Bring global best practices into India’s development model.
Structure
- Chairperson: Prime Minister of India.
- Vice Chairman: Appointed by the PM.
- Governing Council: Chief Ministers & Lieutenant Governors.
- Regional Councils: To address specific regional issues.
- Full-time members, part-time members, and ex-officio members from Union ministries.
Functions
- Policy Think Tank
Provides strategic and technical advice across sectors (health, agriculture, energy, environment). - Vision Documents
Created the ‘Strategy for New India @75’, Three-Year Action Agenda, and 15-year Vision Document. - Promoting Innovation
Manages programmes like Atal Innovation Mission (AIM), Atal Tinkering Labs, and Aspirational Districts Programme. - Data-Driven Governance
Publishes indices like SDG India Index, Health Index, School Education Index. - Cooperative Federalism
Works closely with states instead of controlling their finances.
Key Differences: Planning Commission vs NITI Aayog
| Feature | Planning Commission | NITI Aayog |
|---|---|---|
| Nature | Centralised planning body | Policy think tank |
| Year Established | 1950 | 2015 |
| Role | Formulated Five-Year Plans, allocated funds | Provides strategic advice, no fund allocation |
| Chairman | PM of India | PM of India |
| Type | Top-down model | Bottom-up, consultative |
| Federalism | Limited space for states | Cooperative & competitive federalism |
| Focus | Resource allocation | Innovation, technology, strategy |
Conclusion
The transition from the Planning Commission to NITI Aayog represents a transformation in India’s approach to development. While the Planning Commission guided India through the early decades of planned economic growth, NITI Aayog aims to shape a modern, innovation-driven, and cooperative development framework. Together, they show how India’s planning system has evolved with changing national priorities and global trends.
