JAIIB NITI AAYOG IE&IFS EXAM NOTES | NATIONAL INSTITUTION FOR TRANSFORMING INDIA | JAIIB EXAM 2024

JAIIB IE&IFS EXAM NOTES | IMPORTANT TOPIC NATIONAL INSTITUTION FOR TRANSFORMING INDIA

NITI Aayog is a very important topic of the IE & IFS exams, these notes will help you go through the role of NITI Aayog notes in economic development.

To give relevant technical assistance to the Centre and states in designing strategic and long-term policies and programs, a Think tank to offer both directional and policy suggestions was established.

It came into existence on Jan 1, 2015, replacing the Planning Commission. It serves as GOI’s central platform for bringing states together to work to cater for national interests, fostering cooperative federalism.

JAIIB NITI AAYOG IE&IFS EXAM NOTES

It focuses on two hubs which are as follows:

1. Team India: coordinates state involvement with the central government
2. Knowledge and Innovation hub: strengthens the think tank capabilities

These two hubs reflect two primary responsibilities of NITI Aayog notes.

NITI Aayog is also transforming itself into a cutting-edge resource centre by assisting the Government with the following:

1. The requisite resources
2. Expertise, and ability to move quickly 
3. Promote research and innovation
4. Provide strategic policy vision for the government
5. Cope with unforeseen situations

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Composition of NITI Aayog Notes

Functions of NITI Aayog 

1. To develop strategies in light of national objectives, with the active participation of states and shared vision of national development priorities.
2. Promote programmes, processes and initiatives that encourage cooperative federalism and aid spread awareness that a strong nation makes a strong nation.
3. To guarantee that national security issues are incorporated into economic strategy and policy in areas specifically referencing it; to develop methods for developing workable plans at the village level.
4. To pay particular attention to those groups in our society who could be in danger of not reaping the full benefits of economic growth.
5. Develop long-term, strategic policy and programme frameworks and initiatives, and monitor their progress and effectiveness.
6. On a national level, to provide direction and promote cooperation between significant players and like-minded think tanks.
7. To create a cooperative network of experts, practitioners, and other collaborators on a national and international scale to promote knowledge, entrepreneurship, and innovation.
8. Increase the likelihood of success and the range of delivery by actively monitoring and evaluating the programme and initiative execution, including the determination of necessary resources.
9. To emphasize technology development and capacity building for the execution of programmes and initiatives.
10. To take any extra steps that would be necessary to improve the implementation of the national development strategy and the aforementioned objectives.

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Why was the Planning Commission replaced with NITI Aayog?

Here we’ve stated some primary reasons why the Planning Commission no longer fitted the role.

Planning wasn’t found to be in tune with the new developmental strategy of India

• Planning didn’t sync with the evolving development strategy of India.
• Over the year, it has been found that the following two inconsistencies between the Indian development strategy and the five-year planning model hampered the economic climate.

• First and foremost, the issue was the planning commission’s framework and role in the market.
• Earlier, a planning framework was mandatory to provide low-level investments to needy priority sectors and poor infrastructures.
• The framework didn’t even improve after the advent of the transition state, following the economic reform era of 1991.
• Budgetary restrictions evolved to be more restricting and political economic concerns crowding out infrastructure expenditure with subsidies and transfers diminished the effect of the planning framework.

• The second issue was with the resource allocation

• The dominance of coalition governments and regional parties as members of the central coalition highlighted the conflict between centralised planning in a federal structure.
• The Centre’s authority over resource allocation and the state’s role in the progress and development failed to deliver favourable results.

Other issues with the Planning Commission and How NITI Aayog compensates 

Accountability: The planning commission has been accused quite a time of making discretionary transfers to states to cover non-planned revenue deficiencies leading to violation of the rules of the Finance Committee.

Previously, under a five-year planning approach, the review occurred after the period had concluded. As a result, there was no responsibility, answerability or accountability for it.

NITI Aayog on the other hand had established a development monitoring and evaluation office that collects data on the performance of several ministries in real-time.

Fiscal federalism and Inter-governmental coordination

NITI strategy for New India @75

The comprehensive national Plan for New India, which includes specific goals for 2024–25, was issued by NITI Aayog in December 2018. It is a thorough analysis covering 41 important areas that acknowledges prior successes, identifies legally binding constraints, and suggests a future course of action to meet the clearly stated goals. 

Almost 550 outside experts and approximately 800 government stakeholders from the federal, state, and local levels were contacted while the document was being created. 

Four categories—Drivers, Infrastructure, Inclusion, and Governance—are used to organise the document’s 41 chapters. So, let’s examine these four elements.

Drivers

This section mainly focuses on the engines of economic performance like doubling farmers’ income, upgrading science and technology, innovation and sunrise sectors like tourism and fintech.

Here are some key recommendations in the section for drivers.

• Target an 8% average growth rate to make it a $4 trillion economy by 2022-23. 
• The gross fixed capital formation will be increased from 29% in 2018 to 36% in 2022.
• Replace CACP (Commission on agriculture costs and prices) with an agricultural tribunal.
• Complete codification of labour laws.
• Threshold effort to upscale and expand apprenticeships.
• Maximise employment creation.
• Revamping minerals exploration and licensing policy (Launch exploration of minerals mission in India).
• Increase the tax-to-GDP ratio to at least 22% of GDP, by 2022-23, from 17% in 2018, to enhance public investment.
• To raise the export of goods and services to $800 billion a year by 2022-23, as against $478 billion in 2018.
• Withdraw continuously from non-strategic public sector units and further liberalize the foreign investment policy.
• Replace ‘The agriculture produce marketing committee act’, with ‘Agricultural Produce and livestock marketing act’ and expand e-National agriculture markets (NAM) to convert farmers into agripreneurs.
• To put environmental carbon back into the land, promote “Zero budget natural farming” techniques that are also beneficial to reduce costs, improve land quality and increase farmers’ income.

Infrastructure

The second section on Infrastructure elaborates on the foundations of growth that are crucial to cultivating and enhancing competitiveness in the market while also ensuring the citizens’ ease of living.

The following are the recommendations under this section:

• Form RDA (Rail development authority) to perform the function of making informed decisions on an integrated, transparent, and dynamic pricing mechanism for the railways.
• Double the freight transport share by coastal shipping and inland waterways. Until the infrastructure is fully developed viability gap funding will be provided.
• Promote multi-modal and digitised mobility by integrating different modes of transport.
• Aim to deliver all government services at the state, district, and Gram Panchayat with the completion of the Bharat Net programme in 2019, all 2.5 lakh Gram Panchayats will level digitally by 2024-25 digitally connected.

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Inclusion

The main themes of this section revolve around: 

• The dimension of health and education
• Planning and mainstreaming of traditionally marginalised sections of populations

Key recommendations for this section are as follows:

150,000 health and wellness centres introduced across the country. 

Successfully implement the Ayushman Bharat programme and the Pradhan Mantri Jan Arogya Abhiyaan (PM-JAY).

Promote centripetal medicine curriculum and create a focal point at the centre with the state as the counterparts.

To make housing in urban areas affordable, ensure equity while not ignoring the requirement of providing a strong impetus to economic growth.

Governance

This section emphasizes the streamlining of the governance structure to achieve better developmental outcomes. 

Here are some key recommendations on governance:

While appointing a successor to design reforms in the changing context of emerging technologies and growing complexities, the recommendations of the Second administrative reforms commission must be implemented.

To pre-empt the need for court intervention, and make the arbitration process cost-effective and speedy an autonomous body, viz., the Arbitration Council of India must be set up.

Shifting part of the workload out of the regular court system.

Expanding the scope of the Swachh Bharat Mission, to cover initiatives for landfills, plastic waste, and municipal waste, and generating wealth from waste.

FINANCIAL RESOURCES FOR ECONOMIC PLANS

In India, there are three key sources of funds available for funding Economic Plans:

1. Domestic Budgetary Sources
2. Deficit Financing 
3. Foreign Assistance

Domestic Budgetary Sources

Taxation is among the most significant domestic budgetary resources for channelizing funds for planning. Aside from revenue, additional domestic fiscal resources such as public borrowing, small savings, and public enterprise surplus also contribute significantly to supporting our programmes. 

This is the amount allocated from the federal and state budgets to fund the programmes involving investments during the plan period.

It is the central share in the five-year plan, as well as assistance provided to states for their five-year plans and additional funding for the national government.

Deficit Financing

Deficit Financing can happen when the total income of the government (revenue account + Capital account) falls below its total expenditure.

Government can order RBI to create fresh currency by choosing to borrow money from the public through the process of issuing securities and bonds. Government can also withdraw funds from the cash balance deposited with RBI.

Financing the deficit can be obtained from the central bank, commercial banks, and even state governments through Ad-hoc Treasury Bills. 

Revenue and borrowing have limits, deficit financing has been viewed as an important source of funding, for planning in our country.

Taxpayers are not bothered by deficit financing because the government borrows their surplus funds.

The different types of deficit financing are:

• Borrowing from Public and Foreign Governments.
• Withdrawing Cash Balances held with the Reserve Bank of India
• Borrowing from RBI

Foreign Assistance

The five sectors receiving the highest Foreign Direct Investment (FDI) equity inflow during FY 2021-22 are computer software and hardware, the services sector automobile industry, trading, and construction activities.

Through IBRD and IDA, India can access the funds for the development of various projects.

IBRD loans through non-concessional are offered relatively on favourable terms compared to commercial sources. 

For infrastructure, and rural development, HRM projects and poverty alleviation mostly IBRD sovereign loans are brought into use.

Thus, IBRD loans promote the reduction of poverty since it supports sustainable development through loans, non-lending services and guarantees.

GOI has also initiated a helping hand to poorer nations across the nation to improve living standards.

India has evolved to become a benevolent donor for her neighbour as it provided foreign assistance, including technical and economic cooperation, and loans to foreign governments in recent years.

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