In 2015, India’s central government formally replaced the Planning Commission, established in 1950 with NITI Aayog (National Institution for Transforming India), reframing national development through a bottom-up, consultative model. Unlike the centralized, rigid five‑year plans and fund allocations of its predecessor, NITI Aayog functions as an advisory policy think tank.

NITI’s structure encourages cooperative federalism : its Governing Council includes all state Chief Ministers and Union Territory Lt. Governors, chaired by the Prime Minister embedding states directly into national planning. Conversely, the Planning Commission offered states limited input, mainly through the defunct National Development Council.

Bound by its advisory mandate, NITI Aayog does not allocate funds; that role now lies with the Finance Ministry. This reform boosts flexibility, enabling real-time adjustments and innovation through stakeholder input and expert feedback.

NITI Aayog promotes long-term strategic frameworks from a 15‑year vision to sector-specific missions like Atal Innovation and SDG indices. It also monitors scheme implementation across ministries and states, injecting accountability through data-driven evaluation.

The shift was prompted by criticism that the erstwhile Planning Commission's top-down planning, fixed timelines, and bureaucratic clout were outdated for a rapidly modernizing, diverse economy. NITI's inclusive, evidence-based model aligns India’s policy architecture with 21st-century realities.

Replacing the Planning Commission with NITI Aayog marked a transformative shift from centralized resource control to consultative, adaptive governance, designed to empower states, inspire innovation, and steer India toward inclusive developme.