What NITI Aayog does, and how it differs from the Planning Commission

If NITI Aayog replaced the Planning Commission, does it still decide how development money is distributed? That question gets to the main difference between the two institutions. Both have been involved in planning and reviewing development. But NITI did not inherit the Planning Commission's powers to allocate plan resources. Its work centres on policy advice, cooperation with States, and examining how programmes perform.

This distinction makes NITI's reports and meetings easier to follow. Recommendations, discussions with Chief Ministers and rankings of States each serve a purpose. Read them for the advice, discussion or comparison they offer, rather than as decisions allocating money.

What changed in 2015

NITI Aayog was created through a Union Cabinet resolution dated 1 January 2015. NITI stands for National Institution for Transforming India. It replaced the Planning Commission and advises the Union and State governments on policy and development.

The resolution shows how NITI was established: by an executive decision, rather than an Act of Parliament or a constitutional amendment.

The Planning Commission had similar origins. It was established in March 1950 through a Government of India resolution, with the Prime Minister as Chairperson. The Prime Minister also chairs NITI Aayog. Both institutions were created by executive decision and chaired by the Prime Minister.

The difference over money

A historical feature published by the Press Information Bureau describes the Planning Commission's responsibilities as assessing resources, preparing plans, allocating plan resources and reviewing implementation. Between 1950 and 2014, it formulated twelve Five-Year Plans. Those dates cover when the plans were drawn up; 2014 is not the end date for the Twelfth Plan's implementation.

The Indian Economic Service's Arthapedia explainer makes the financial difference clear. NITI did not receive the Planning Commission's plan-allocation powers. The explainer places those allocation functions under the Ministry of Finance's Budget Division and Department of Expenditure.

NITI's advice on development can still include recommendations about funding. What changed was the authority to allocate plan resources. That was a specific power: the Planning Commission's role in plan funding did not cover every rupee of government expenditure.

Who sits within NITI Aayog

The founding resolution provides for a Vice-Chairperson appointed by the Prime Minister, full-time members, part-time members, Union ministers serving as ex-officio members, a chief executive officer and a secretariat. It also provides for special invitees and regional councils to address issues affecting more than one State or region.

The 2015 framework allows up to two rotating part-time members from relevant institutions and up to four ex-officio Union ministers nominated by the Prime Minister. These limits apply to those two categories, rather than to full-time members. The framework sets out possible positions; it does not tell us which are filled at any given time.

The Governing Council brings together the Prime Minister, Chief Ministers of States and Union Territories with legislatures, and Lieutenant Governors or Administrators of other Union Territories. NITI's description also includes its Vice-Chairperson, full-time and ex-officio members, and special invitees. An amendment dated 16 February 2015 expressly included Chief Ministers of Union Territories with legislatures. The Council is a forum across governments and departments, with a membership distinct from NITI's full-time staff.

What cooperative federalism involves

Cooperative federalism means working with States on a shared development agenda. NITI describes several ways it does this: meetings with Chief Ministers, subgroups of Chief Ministers, sharing practices, offering policy support and helping State and Union Territory officials develop their skills.

Its planning objectives also start below the national level. NITI is meant to develop ways to bring credible village-level plans together at progressively higher levels of government. The aim is planning from the local level upwards. Whether this works everywhere is a separate question; the objective does not mean NITI writes every village plan.

Cooperation is an approach to working together. The Centre and States can still disagree, and States need not accept every recommendation.

Advice, monitoring and comparison

NITI's role goes beyond producing policy ideas. The founding resolution directs it to monitor and evaluate programmes and initiatives, and use the feedback to guide corrections. Reviewing how programmes are carried out is a separate task from running them.

Alongside cooperation, NITI promotes competitive federalism. Its rankings are intended to encourage States and Union Territories to improve and learn from one another. The two approaches complement each other. Cooperative federalism emphasises joint work; competitive federalism uses comparison to encourage improvement.

To judge success, look beyond the existence of a monitoring report to the evidence that a programme worked. A State's position in a NITI index tells you how it performed; showing that NITI caused that performance requires further evidence.

What its indices measure

NITI's indices examine different parts of development. Check each index's name, edition and measurement period to understand what it assesses. Each answers a different question about development.

• The SDG India Index tracks progress towards the Sustainable Development Goals across States and Union Territories. The 2023-24 edition, released on 12 July 2024, uses 113 indicators and computes scores for 16 SDGs.
• The State Health Index compares overall performance and improvement over time. Its fourth edition, released on 27 December 2021, covers 2019-20 and compares it with 2018-19. A ranking for improvement is different from a ranking for overall performance.
• The School Education Quality Index was first released in September 2019. It is part of NITI's published portfolio of State rankings.
• The India Innovation Index 2021, released on 21 July 2022, separates inputs from outputs: five Enabler pillars measure inputs and two Performance pillars measure outputs.
• The Export Preparedness Index 2024 was released on 14 January 2026. It assesses export readiness through export infrastructure, the business ecosystem, policy and governance, and export performance.
• The Fiscal Health Index concerns State finances. Its second annual edition, released on 11 March 2026, includes 10 North-Eastern and Himalayan States alongside 18 major States, with the two groups ranked separately.

These examples show NITI's work at particular dates. Check for a new edition rather than assuming each index is updated every year. Read the edition label, release date and period assessed separately. A recent report can describe an earlier period, so use older scores to understand that period rather than current conditions.

How to use this knowledge

When reading about NITI Aayog, first identify what it has done: offered advice, convened governments, evaluated a programme or published a comparison. Then check exactly what the claim covers. For an index, look at what it measures, which places it compares and which period the data describe. For a policy recommendation, distinguish the advice from a decision to allocate funds.

For an educational policy exercise, One Young India's Model NITI Aayog is a simulation of the institution.