Need to relook Niti Aayog functioning, give fund allocation powers: Ex-RBI Dy Guv

Former RBI Deputy Governor Rakesh Mohan has stressed the need for relooking at the structure and functions of the government think tank Niti Aayog and also giving it fund allocation powers analogous to that of the Planning Commission.

The socialist-era Planning Commission was replaced by the Niti Aayog on January 1, 2015, by the Narendra Modi government.

"The Niti Aayog must be technically strengthened and reorganised so that it can develop long-term integrated programmes for investment and management of key interconnected sectors," Mohan said at event organised by the Brookings India.

He also said the Aayog's function to coordinate public investment programmes between ministries at the central level and across states must be restored, but within the framework of new cooperative federalism.

Advocating necessary changes in the think tank, Mohan said its function can only be effective if it is given fund allocation powers analogous to that of the Planning Commission.

"Its ability to perform these functions effectively depend on the respect that it earns," he noted.

Mohan, also a former executive director at the International Monetary Fund (IMF), said as the prime minister is reported to have instructed each ministry to develop five-year plans in their respective domains, hence a relook at the structure and functions of the Niti Aayog becomes obvious.

He said that an examination of a handful of countries that have achieved sustainable high growth suggests that this is not possible unless there is an overarching strategic focus on high growth.

Countries like Japan, South Korea and China had set up strong technically competent organisations to oversee and implement their development strategies, the former RBI deputy governor said added.

Recently, former Finance Commission chairman Vijay Kelkar had also pitched for setting up of a 'new Niti Aayog' and giving it responsibility for allocating capital and revenue grants to the states.

Talking about the economy, Mohan emphasises the need to turn focus to growth.

India has excessive focus on MSMEs, not large businesses, he said adding that "bold labour reforms are long overdue".

The eminent economist also stressed on the need for setting up government related organisation for trade promotion and trade facilitation on the lines of Japan External Trade Organization (JETRO) and Korea Trade-Investment Promotion Agency (KOTRA).

He also suggested that the government should avoid giving subsidies and invest more money on industrial research and development.

Mohan also noted that India must focus on promoting export-oriented labour-intensive manufacturing sector.