The Planning Commission was set up in 1950. It was an advisory body. The Prime Minister was its ex-officio Chairman. It made plans for the Union as well as the States. The Planning economy in India was based on the Mixed Economy system.

The first Five-year Plan was launched in 1951.

Objective of Planning: The chief objective of Planning was defined as initiating “a process of development which will raise living standards and open out to the people new opportunities for a richer and more varied life”. Another objective in view was to stabilise the growth of population over a reasonable period. Yet another main objective before the Planning Commission was to ensure that the economy could, after a period of ten years or so, reduce substantially dependence on assistance from abroad.

Planning in India derived its objectives from Directive Principles of State Policy.

Functions of Planning Commission: The main functions of the Planning Commission were:

  1. Assessment of the material, capital and human resources of the country, including technical personnel, and formulation of proposals for augmenting such of these resources as are found to be deficient.
  2. Formulation of Plans for the most effective and balanced utilisation of the country’s resources.
  3. Definition of stages in which the Plan should be carried out or a determination of priorities and allocation of resources for completion of each stage.
  4. Determination of the nature of the machinery necessary for the implementation of the Plan in all its aspects.
  5. Appraisal from time to time of the progress achieved in the execution of each stage of the Plan.
  6. Public co-operation in national development.
  7. Perspective planning.


From 1 January 2015, the Planning Commission was replaced by National Institution for Transforming India (NITI Ayog), as part of a plan to restructure the institution.  The institution will serve as ‘Think Tank’ of the government—a directional and policy dynamo. NITI Aayog will provide governments at the central and State levels with relevant strategic and technical advice across the spectrum of key elements of policy, including matters of national and international import on the economic front, dissemination of best practices from within the country as well as from other nations, the infusion of new policy ideas and specific issue-based support. The objectives of NITI Aayog are:

  • To evolve a shared vision of national development priorities, sectors and strategies with the active involvement of States in the light of national objectives. The vision of the NITI Aayog will then provide a framework ‘national agenda’ for the Prime Minister and the Chief Ministers to provide impetus to.
  • To foster cooperative federalism through structured support initiatives and mechanisms with the States on a continuous basis, recognizing that strong States make a strong nation.
  • To develop mechanisms to formulate credible plans at the village level and aggregate these progressively at higher levels of government.
  • To ensure, on areas that are specifically referred to it, that the interests of national security are incorporated in economic strategy and policy.
  • To pay special attention to the sections of our society that may be at risk of not benefitting adequately from economic progress.
  • To design strategic and long term policy and programme frameworks and initiatives, and monitor their progress and their efficacy. The lessons learnt through monitoring and feedback will be used for making innovative improvements, including necessary mid-course corrections.
  • To provide advice and encourage partnerships between key stakeholders and national and international like-minded Think Tanks, as well as educational and policy research institutions.
  • To create a knowledge, innovation and entrepreneurial support system through a collaborative community of national and international experts, practitioners and other partners.
  • To offer a platform for resolution of inter-sectoral and interdepartmental issues in order to accelerate the implementation of the development agenda.
  • To maintain a state-of-the-art Resource Centre, be a repository of research on good governance and best practices in sustainable and equitable development as well as help their dissemination to stake-holders.
  • To actively monitor and evaluate the implementation of programmes and initiatives, including the identification of the needed resources so as to strengthen the probability of success and scope of delivery.
  • To focus on technology upgradation and capacity building for implementation of programmes and initiatives.
  • To undertake other activities as may be necessary in order to further the execution of the national development agenda, and the objectives mentioned above.
  • The NITI Aayog will comprise the following: Prime Minister of India as the Chairperson and a governing Council comprising the Chief Ministers of all the States and Lt. Governors of Union Territories.

Regional Councils are to be formed, for a specified tenure, to address specific issues and contingencies impacting more than one State or a region.  The Regional Councils are convened by the Prime Minister and comprise of the Chief Ministers of States and Lt. Governors of Union Territories in the region and are chaired by the Chairperson of the NITI Aayog or his nominee.

Experts, specialists and practitioners with relevant domain knowledge are invited as special invitees nominated by the Prime Minister.

The full-time organizational framework comprises of, in addition to the Prime Minister as the Chairperson: (i) Vice-Chairperson: To be appointed by the Prime Minister; (ii) Full-time Members; (iii) Part-time members— maximum of 2 from leading universities, research organizations and other relevant institutions in an ex-officio capacity.  Part time members will be on a rotational basis; (iv) Ex Officio members—maximum 4 members of the Union Council of Ministers to be nominated by the Prime Minister; (v) Chief Executive Officer—To be appointed by the Prime Minister for a fixed tenure, in the rank of Secretary to the Government of India, (vi) Secretariat as deemed necessary.

Renowned Columbia University professor Arvind Panagariya was appointed as the first vice-chairman of NITI Aayog.

Dr. Rajiv Kumar, a  leading  Indian economist took over as the vice-chairman of NITI Aayog with effect from 1 September 2017. He is a widely recognised economic columnist and a leading speaker on issues in Indian political economy.