Introduction
India’s unique federal structure demands a delicate balance between cooperation and autonomy. While the Constitution lays out the federal principles, the practical working of Indian federalism has evolved over time.
In 2015, the Government of India replaced the Planning Commission with the National Institution for Transforming India (NITI) Aayog, signaling a shift from centralized planning to bottom-up development. One of NITI Aayog’s core mandates is to promote cooperative and competitive federalism.
Through collaborative frameworks, performance-based rankings, and sectoral reforms, NITI Aayog has emerged as a key enabler of Centre–State relations in the 21st century.
Understanding Federalism in India
Cooperative Federalism
This refers to the collaborative functioning of the Centre and States to achieve shared national goals. It emphasizes joint decision-making, dialogue, and inclusive development strategies.
Competitive Federalism
Competitive federalism is about encouraging states to compete in delivering better governance, ease of doing business, social indicators, and attracting investments — thereby fostering a spirit of performance-based rivalry for the common good.
The Genesis of NITI Aayog
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Formed on 1st January 2015, NITI Aayog replaced the Planning Commission.
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Unlike its predecessor, it does not allocate funds to states; instead, it provides policy advice, fosters innovation, and enables states to shape their own development paths.
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The Prime Minister is the Chairperson, and the Governing Council includes all Chief Ministers and Lt. Governors.
NITI Aayog and Cooperative Federalism
1. Governing Council as a Federal Forum
The Governing Council serves as a platform for inter-governmental dialogue. Through annual meetings, state leaders discuss:
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National development agendas
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Implementation challenges
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Region-specific concerns
This collaborative setting gives all states an equal voice in policymaking.
2. Decentralized Planning
NITI Aayog advocates bottom-up planning, allowing states to design development models based on their regional needs rather than one-size-fits-all directives from the Centre.
3. SDG Localization
The Aayog works closely with states to localize Sustainable Development Goals (SDGs) by offering performance reports, toolkits, and model policies.
4. Joint Task Forces and Sectoral Committees
Whether it’s agriculture, health, or infrastructure, NITI Aayog sets up joint working groups that include state officials and experts to ensure inclusive strategies.
NITI Aayog and Competitive Federalism
1. Index-Based Rankings
To trigger performance-oriented competition, NITI Aayog publishes several ranking indexes:
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Health Index
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School Education Quality Index
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Aspirational Districts Rankings
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Export Preparedness Index
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State Energy & Climate Index
These rankings are based on objective metrics and data, encouraging states to improve services and outcomes.
2. Ease of Doing Business
NITI Aayog collaborates with states to enhance business friendliness by identifying regulatory bottlenecks and encouraging reforms — helping states compete for investments.
3. Aspirational Districts Programme (ADP)
Launched in 2018, ADP encourages 112 backward districts to compete on development parameters like health, education, agriculture, and basic infrastructure. Districts are ranked monthly, and real-time dashboards track progress.
4. Atal Innovation Mission (AIM)
Through AIM, NITI Aayog funds incubators and innovation labs across states and schools — encouraging grassroots innovation and competitive spirit among youth and institutions.
Major Achievements
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Encouraged evidence-based policymaking among states.
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Created non-partisan spaces for collaboration despite political differences.
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Helped improve inter-state benchmarking in critical sectors like health and education.
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Catalyzed reforms in New Education Policy, Digital India, and energy transitions through joint consultations.
Challenges Faced
1. Lack of Statutory Backing
NITI Aayog is not a constitutional body. Its recommendations are advisory in nature, limiting enforceability.
2. Political Friction
States sometimes allege Centre’s bias in rankings or lack of flexibility in national policies, leading to strained relationships.
3. Fund Allocation Gap
Since NITI Aayog doesn’t have financial powers (unlike the Planning Commission), it relies on persuasion rather than incentives to push states toward reforms.
The Road Ahead
Strengthening Fiscal Autonomy
While cooperative federalism thrives on shared agendas, it needs to be backed by adequate fiscal resources. Strengthening the role of Finance Commissions and ensuring predictable transfers is key.
Making Rankings More Inclusive
Index-based performance should be customized for regional contexts to ensure fairness and relevance for all states, including smaller and backward ones.
Enhancing Digital Collaboration Platforms
NITI Aayog can further digitize data-sharing platforms and real-time dashboards for transparency and improved inter-state learning.
Engaging Civil Society and Local Governments
To deepen federalism, the Aayog should actively involve Panchayati Raj Institutions and urban bodies, making cooperative federalism a multi-tiered endeavor.
Conclusion
NITI Aayog has become the engine of India’s evolving federalism, serving as a dynamic bridge between the Centre and the States. Its twin pillars of cooperative and competitive federalism are vital in aligning state priorities with national ambitions.
While it has limitations in terms of statutory power and fiscal control, its influence as a knowledge partner, policy innovator, and performance enabler is undisputed. With better inclusion, transparency, and sustained engagement, NITI Aayog can continue to transform India’s development story through shared vision and healthy rivalry among states.