NITI Aayog and the Evolution of Federalism in India

Background

The replacement of the Planning Commission with NITI Aayog in 2015 signified a major shift in governance—moving from a centralized planning model to a more cooperative and inclusive framework.

Understanding Federalism

Federalism refers to a governance structure where authority is distributed between a central government and regional entities. While the Indian Constitution does not explicitly use the term “federalism,” its principles are embedded in the power-sharing mechanism between the Union and the states.

Forms of Federalism in India
  1. Cooperative Federalism: Emphasizes collaboration between the Centre and states, with the Union playing a supportive role. Examples include NITI Aayog’s regional forums and the principle of collective progress (“Sabka Sath, Sabka Vikas”).
  2. Competitive Federalism: Encourages states to compete in governance by offering better policies and services, fostering innovation. NITI Aayog’s performance rankings (e.g., Aspirational Districts Program) exemplify this approach.
  3. Fiscal Federalism: Focuses on equitable distribution of financial resources, such as the 41% devolution of central taxes to states.
NITI Aayog’s Role in Strengthening Federalism
  • Enhancing Centre-State Coordination: By promoting state-led development strategies, it fosters greater collaboration.
  • Promoting Healthy Competition: Through performance-based rankings, it motivates underperforming states to improve governance.
  • Advocating Fiscal Decentralization: Recommends greater financial autonomy for states in implementing central schemes.
  • Building Administrative Capacity: Focuses on training officials and improving monitoring mechanisms to ensure effective delivery of welfare programs.
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