Good fiscal performance by States should be incentivized to keep the overall fiscal performance

Good fiscal performance by States should be incentivized to keep the overall fiscal performance on track: Economic Survey 2016-17

Centre should take the lead in sound fiscal management suggests Economic Survey

The Economic Survey 2016-17 presented in the Parliament today has highlighted the need for fiscal prudence both by the Centre as well as the States in order to maintain overall fiscal health of the economy. The Economic Survey states that the Centre’s Fiscal Responsibility and Budget Management (FRBM) Act, was mirrored by Fiscal Responsibility Legislations (FRL) adopted in the States.

As per the Economic Survey, there has been an improvement in the financial position of the States over the last few years. The average revenue deficit has been eliminated, while the average fiscal deficit was curbed to less than 3 percent of GSDP. The average debt to GSDP ratio has also fallen.

However, just because fiscal progress followed the introduction of the FRL, it doesn’t mean that the progress can be attributed entirely to FRLs. The following points are important with respect to the improvement in fiscal variables:

       I.            The deficit reduction owes much to favorable exogenous factors (see Figure 1):

·         An acceleration of nominal GDP growth (of 6 percentage points on average after 2005) helped boost States’ revenues by about 1 percent of GSDP;

·         Increased transfers from the centre of about 1 percent of GSDP both because of the 13^th Finance Commission recommendations and the surge in central government revenues;

·         Reduced interest payments of about 0.9 percent of GSDP on account of the debt restructuring package offered by the Centre; and

·         Reduced need for spending by the States—estimated at about 1.2 percent of GDP--as the Centre took on a number of major social sector expenditures under the Centrally Sponsored Schemes (CSS). 

Figure 1: Decomposition of Reduction in Fiscal, Primary and Revenue Deficit before and after States’ FRL

I.            Desisting from splurging rather than belt-tightening was probably the real contribution of the States. Despite the revenue surge, non interest revenue expenditure rose by only 0.4 percent of GSDP.

II.            Off-budget expenditures fell, as measured by the flow of explicit guarantees and loans to public utilities fell.

III.            There was a sharp drop in the magnitude of forecast errors suggesting an improvement in the process of budget formation. The shortfalls between budgeted and actual own tax revenue went from an average of 5.9 percent of actuals (optimistic forecasts) before the FRL to -0.6 percent of actuals after.

IV.            All of these positive indicators show signs of decay in later years; fiscal deficits for example are close the limit of 3 percent on average 10 years after the FRL (see Figure 2). 

Figure 2: Average Fiscal Deficit of States in Years Relative to Adoption of FRL (as percent of GSDP)

 

Economic Survey 2016-17 elaborates that as the fiscal challenges mount for the states because of the Pay Commission recommendations, and mounting payments from the UDAY bonds, there is a need to review how fiscal performance can be kept on track. Greater reliance will need to be placed on incentivizing good fiscal performance, not least because states are gradually repaying their obligations to the Centre, removing its ability to impose a hard budget constraint on them says the Economic Survey. Above all, however, incentivizing good performance by the States will require the Centre to be an exemplar of sound fiscal management itself.

GDP growth in 2017-18 is projected at 6 ¾ to 7 ½ percent Post-demonetisation

GDP growth in 2017-18 is projected at 6 ¾ to 7 ½ percent Post-demonetisation

Middle class to get affordable housing due to fall in Real Estate prices

Remonetisation to eliminate cash squeeze by April 2017.

The Government says that the adverse impact of demonetisation on GDP growth will be transitional. The Economic Survey 2017 presented in Parliament today by
 the union Finance Minister,  Shri Arun Jaitley states that once the cash supply is replenished, which is likely to be achieved by end March 2017, the economy would revert to the normal.  Therefore the real GDP growth in 2017-18 is projected to be in the range of 6¾-7½ percent.

The Economic Survey points out that demonetisation will have both short-term costs and long-term benefits as detailed in the attached table. Briefly, the costs include a contraction in cash money supply and subsequent, albeit temporary, slowdown in GDP growth; and benefits include increased digitalization, greater tax compliance and a reduction in real estate prices, which could increase long-run tax revenue collections and GDP growth.

On the benefits side, early evidence suggests that digitalization has increased since demonetisation. On the cost side, effective cash in circulation fell sharply although by much less than commonly believed – a peak of 35 percent in December, rather than 62 percent in November since many of the old high denomination notes continued to be used for transactions in the weeks after 8^th November  Additionally, remonetisation will ensure that the cash squeeze is eliminated by April 2017. The cash squeeze in the meantime will have significant implications for GDP, reducing 2016-17 growth by ¼ to ½ percentage points compared to the baseline of 7 percent. Recorded GDP will understate impact on informal sector because, for example, informal manufacturing is estimated using formal sector indicators (Index of Industrial Production). These contractionary effects will dissipate by year-end when currency in circulation should once again be in line with estimated demand, which would also allow growth to converge to a trend by FY 2017-18.

The Economic Survey states that the weighted average price of real estate in eight major cities which was already on a declining trend fell further after November 8, 2016 with the announcement of demonetization. It goes on to add that an equilibrium reduction in real estate prices is desirable as it will lead to affordable housing for the middle class and facilitate labour mobility across India currently impeded by high and unaffordable rents.

The Survey suggests a few measures to maximize long-term benefits and minimize short-term costs. One, fast remonetisation and especially, free convertibility of cash to deposits including through early elimination of withdrawal limits. This would reduce the GDP growth deceleration and cash hoarding. Two, continued impetus to digitalization while ensuring that this transition is gradual, inclusive, based on incentives rather than controls and appropriately balancing the costs and benefits of cash versus digitalization. Three, following up demonetisation by bringing land and real estate into the GST. Four, reducing tax rates and stamp duties. And finally, an improved tax system could promote greater income declaration and dispel fears of over-zealous tax administration.

Impact of Demonetisation

Sector	Impact
	Effect through end-December	Likely longer-term effect
Money/interest rates	Cash declined sharply	Cash will recover but settle at a lower level
	Bank deposits increased sharply	Deposits will decline, but probably settle at a slightly higher level
	RBI's balance sheet largely unchanged: return of currency reduced the central bank’s cash liabilities but increased its deposit liabilities to commercial banks	RBI's balance sheet will shrink, after the deadline for redeeming outstanding notes
	Interest rates on deposits, loans, and government securities declined; implicit rate on cash increased	Loan rates could fall further, if much of the deposit increase proves durable
Financial System Savings	Increased	Increase, to the extent that the cash-deposit ratio falls permanently
Corruption (underlying illicit activities)		Could decline, if incentives for compliance improve
Unaccounted income/black money (underlying activity may or may not be illicit)	Stock of black money fell, as some holders came into the tax net	Formalization should reduce the flow of unaccounted income
Private Wealth	Private sector wealth declined, since some high denomination notes were not returned and real estate prices fell	Wealth could fall further, if real estate prices continue to decline
Public Sector Wealth	No effect.	Government/RBI's wealth will increase when unreturned cash is extinguished, reducing liabilities
Formalization/ digitilisation	Digital transactions amongst new users (RuPay/ AEPS) increased sharply; existing users’ transactions increased in line with historical trend	Some return to cash as supply normalises, but the now-launched digital revolution will continue
Real estate	Prices declined, as wealth fell while cash shortages impeded transactions	Prices could fall further as investing undeclared income in real estate becomes more difficult;  but tax component could rise, especially if GST imposed on real estate
Broader economy	Job losses, decline in farm incomes, social disruption, especially in cash-intensive sectors	Should gradually stabilize as the economy is remonetized
GDP	Growth slowed, as demonetisation reduced demand (cash, private wealth), supply (reduced liquidity and working capital, and disrupted supply chains), and increased uncertainty	Could be beneficial in the long run if formalization increases and corruption falls
	Cash-intensive sectors (agriculture, real estate, jewellery) were affected more. Recorded GDP will understate impact on informal sector because informal manufacturing is estimated using formal sector indicators (Index of Industrial Production). But over time as the economy becomes more formalized the underestimation will decline. Recorded GDP will also be overstated because banking sector value added is based (inter alia) on deposits which have surged temporarily	Informal output could decline but recorded GDP would increase as the economy becomes more formalized
Tax collection	Income taxes rose because of increased disclosure Payments to local bodies and discoms increased because demonetised notes remained legal tender for tax payments/clearances of arrears	Indirect and corporate taxes could decline, to the extent growth slows Over long run, taxes should increase as formalization expands and compliance improves
Uncertainty/ Credibility	Uncertainty increased, as firms and households were unsure of the economic impact and implications for future policy Investment decisions and durable goods purchases postponed	Credibility will be strengthened if demonetisation is accompanied by complementary measures. Early and full remonetisation essential. Tax arbitrariness and harassment could attenuate credibility

Economic Survey: The Constitutional Amendment on GST will create a common Indian market,

Economic Survey: The Constitutional Amendment on GST will create a common Indian market, improve tax compliance and governance and boost investment and growth.

The Economic Survey states that the world GDP is expected to grow because of a fiscal stimulus in the United States but points out that there are considerable risks.

Economic Survey: Addressing the Twin Balance Sheet problem of over-indebted corporates and bad-loan-encumbered Public Sector Banks will be vital.

The Economic Survey 2016-17 presented in Parliament today states that against the backdrop of robust macro-economic stability, the year was marked by two major domestic policy developments-the passage of the Constitutional Amendment, paving the way for implementing the transformational Goods and Services Tax (GST), and the action to demonetize the two highest denomination notes. The GST will create a common Indian market, improve tax compliance and governance, and boost investment and growth; it is also a bold new experiment in the governance of India’s cooperative federalism.

The Survey Report says that demonetisation has had short-term costs but holds the potential for long-term benefits. Follow-up actions to minimize the costs and maximize the benefits include: fast, demand-driven, remonetisation; further tax reforms, including bringing land and real estate into the GST, reducing tax rates and stamp duties; and acting to allay anxieties about over-zealous tax administration. These actions would allow growth to return to trend in 2017-18, possibly making it the fastest-growing major economy in the world, following a temporary dip in 2016-17.

The Economic Survey 2016-17 states that the year was also marked by some tumultuous external developments. In the short-run, world GDP growth is expected to increase because of a fiscal stimulus in the United States but there are considerable risks. These include higher oil prices, and eruption of trade tensions from sharp currency movements, especially involving the Chinese yuan, and from geo-political factors. Another serious medium-term risk is an upsurge in protectionism that could affect India’s exports.

The Survey states that the year also saw a number of legislative accomplishments in the country. In addition to the GST, the Government:

·          Overhauled the bankruptcy laws so that the “exit” problem that pervades the Indian economy--with deleterious consequences highlighted in last year’s Survey--can be addressed effectively and expeditiously;

·         Codified the institutional arrangements on monetary policy with the Reserve Bank of India (RBI), to consolidate the gains from macroeconomic stability by ensuring that inflation control will be less susceptible to the whims of individuals and the caprice of governments; and

·         Solidified the legal basis for Aadhaar, to realise the long-term gains from the JAM trifecta (Jan Dhan-Aadhaar-Mobile).

Beyond these headline reforms were other less-heralded but nonetheless important actions. The Government enacted a package of measures to assist the clothing sector that by virtue of being export-oriented, labour-intensive could provide a boost to employment, especially female employment. The National Payments Corporation of India (NPCI) successfully finalized the Unified Payments Interface (UPI) platform. By facilitating inter-operability, UPI has the potential to unleash the power of mobile phones in achieving digitalization of payments and financial inclusion, and making the “M” an integral part of “JAM.” Further FDI reform measures were implemented, allowing India to become one of the world’s largest recipients of foreign direct investment. The government has also adhered to a steady and consistent path of fiscal consolidation.

The major short term macro-economic challenge is to re-establish private investment and exports as the major drivers of growth and reduce reliance on Government and private consumption. Addressing the Twin Balance Sheet problem—over-indebted corporates and bad-loan-encumbered public sector banks—a legacy of the years surrounding the Global Financial Crisis will be vital.

Looking further ahead, societal shifts at the level of ideas and narratives will be needed to overcome three long-standing meta-challenges: inefficient redistribution, ambivalence about the private sector and property rights, and improving but still-challenged state capacity. Doing so would lift an economy that is oozing with potential. In the aftermath of demonetisation, and at a time of gathering gloom about globalization, articulating and embracing those ideational shifts will be critical to ensuring that India’s sweet spot is enduring not evanescent.

The report says that India seems to be a demographic sweet spot with its working age population projected to grow by a third over the next three decades providing it a potential the growth boost from the demographic divided which is likely to peak within next five years.

The Survey report also states that the Swachh Bharat which has the objective of ensuring safe and adequate sanitation, water security and hygiene has been a part of serious policy issue which would promote a broader fundamental right to privacy for women in the country.

Economic Survey 2016-17 in the Parliament

Finance Minister Shri Arun Jaitley Presented Economic Survey 2016-17 in the Parliament today

Economic Survey says economic growth to return to normal as new currency notes in required quantities come back into circulation and follow-up action on demonetisation is taken.

The CPI based core inflation remained stable in the current fiscal year averaging around 5 per cent.

The Economic Survey says that the rupee performed better than most of the other emerging market economies.

The total area coverage under Rabi crops as on 13.01.2017 for 2016-17 is 616.2 lakh hectares which is 5.9 per cent higher than that in the corresponding week of last year.

The area coverage under Gram (Channa Dal) as on 13.01.2017 for 2016-17 is 10.6 percent higher than that in the corresponding week of last year.

The Indian Economy has sustained a macro-economic environment of relatively lower inflation, fiscal discipline and moderate current account deficit coupled with broadly stable rupee-dollar exchange rate. The Economic Survey 2016-17 presented in the Parliament today by the Union Finance Minister Shri Arun Jaitley states that such a sustenance is despite continuing global sluggishness. It says :

·         As per the advance estimates released by the Central Statistics Office, the growth rate of GDP at constant market prices for the year 2016-17 is placed at 7.1 per cent, as against 7.6 per cent in 2015-16.This estimate is based mainly on information for the first seven to eight months of the financial year. Government final consumption expenditure is the major driver of GDP growth in the current year.

·         Fixed investment (gross fixed capital formation) to GDP ratio (at current prices) is estimated to be 26.6 per cent in 2016-17, vis-à-vis 29.3 per cent in 2015-16.

·         For 2017-18, it is expected that the growth would return to normal as the new currency notes in required quantities come back into circulation and as follow-up actions to demonetisation are taken. On balance, there is a likelihood that Indian economy may recover back to 6 ¾ per cent to 7 ½ per cent in 2017-18.

Fiscal

·         Indirect taxes grew by 26.9 per cent during April-November 2016.

·         The strong growth in revenue expenditure during April-November 2016 was boosted mainly by a 23.2 per cent increase in salaries due to the implementation of the Seventh Pay Commission and a 39.5 per cent increase in the grants for creation of capital assets.

Prices

·         The headline inflation as measured by Consumer Price Index (CPI) remained under control for the third successive financial year. The average CPI inflation declined to 4.9 per cent in 2015-16 from 5.9 per cent in 2014-15 and stood at 4.8 per cent during April-December 2015.

·         Inflation based on Wholesale Price Index (WPI) declined to (-) 2.5 per cent in 2015-16 from 2.0 per cent in 2014-15 and averaged 2.9 per cent during April-December 2016.

·         Inflation is repeatedly being driven by narrow group of food items, of these pulses continued to be the major contributor of food inflation.

·         The CPI based core inflation has remained sticky in the current fiscal year averaging around 5 per cent.

Trade

·         The trend of negative export growth was reversed somewhat during 2016-17 (April-December), with exports growing at 0.7 per cent to US$ 198.8 billion. During 2016-17 (April-December) imports declined by 7.4 per cent to US$ 275.4 billion.

·         Trade deficit declined to US$ 76.5 billion in 2016-17 (April-December) as compared to US$ 100.1 billion in the corresponding period of the previous year.

·         The current account deficit (CAD) narrowed in the first half (H1) of 2016-17 to 0.3 per cent of GDP from 1.5 per cent in H1 of 2015-16 and 1.1 per cent in 2015-16 full year.

·         Robust inflows of foreign direct investment and net positive inflow of foreign portfolio investment were sufficient to finance CAD leading to an accretion in foreign exchange reserves in H1 of 2016-17.

·         In H1 of 2016-17, India’s foreign exchange reserves increased by US$ 15.5 billion on BoP basis.

·         During 2016-17 so far, the rupee has performed better than most of the other emerging market economies.

External Debt

·         At end-September 2016, India’s external debt stock stood at US$ 484.3 billion, recording a decline of US$ 0.8 billion over the level at end-March 2016.

·         Most of the key external debt indicators showed an improvement in September 2016 vis-à-vis March 2016. The share of short-term debt in total external debt declined to 16.8 per cent at end-September 2016 and foreign exchange reserves provided a cover of 76.8 per cent to the total external debt stock.

·         India’s key debt indicators compare well with other indebted developing countries and India continues to be among the less vulnerable countries.

Agriculture

·         Agriculture sector is estimated to grow at 4.1 per cent in 2016-17 as opposed to 1.2 per cent in 2015-16; the higher growth in agriculture sector is not surprising as the monsoon rains were much better in the current year than the previous two years.

·         The total area coverage under Rabi crops as on 13.01.2017 for 2016-17 is 616.2 lakh hectares which is 5.9 per cent higher than that in the corresponding week of last year.

·         The area coverage under wheat as on 13.01.2017 for 2016-17 is 7.1 percent higher than that in the corresponding week of last year. The area coverage under gram as on 13.01.2017 for 2016-17 is 10.6 percent higher than that in the corresponding week of last year.

Industry

·         Growth rate of the industrial sector is estimated to moderate to 5.2 per cent in 2016-17 from 7.4 per cent in 2015-16.During April-November 2016-17, a modest growth of 0.4 per cent has been observed in the Index of Industrial Production (IIP).

·         The eight core infrastructure supportive industries, viz. coal, crude oil, natural gas, refinery products, fertilizers, steel, cement and electricity registered a cumulative growth of 4.9 per cent during April-November 2016-17 as compared to 2.5 per cent during April-November 2015-16. The production of refinery products, fertilizers, steel, electricity and cement increased substantially, while the production of crude oil, natural gas fell during April-November 2016-17. Coal production attained lower growth during the same period.

·         The performance of corporate sector (Reserve Bank of India, January 2017) highlighted that the growth of sales grew by 1.9 per cent in Q2 of 2016-17 as compared to near stagnant growth of 0.1 per cent in Q1 of 2016-17. Growth in net profit registered a remarkable growth of 16.0 per cent in Q2 of 2016-17 as compared to 11.2 per cent in Q1 of 2016-17.

Services

·         Service sector is estimated to grow at 8.9 per cent in 2016-17, almost the same as in 2015-16. It is the significant pick-up in public administration, defence and other services, boosted by the payouts of the Seventh Pay Commission that is estimated to push up the growth in services.

Social Infrastructure, Employment and Human Development

·         The Parliament has passed the “Rights of Persons with Disabilities Act, 2016”. The Act aims at securing and enhancing the rights and entitlements of Persons with Disabilities. The Act has proposed to increase the reservation in vacancies in government establishments from 3 per cent to 4 per cent for those persons with benchmark disability and high support needs.

two year of niti ayog

NITI Ayog

The National Institution for Transforming India is a policy body serving as ‘think tank’ tasked with a role of formulating policies and directions for the government. It replaced Planning Commission which had been preparing five year plans for India for last 60 years.

According to the resolution of the cabinet to set up NITI Ayog, the body is responsible to recommend a national agenda including strategic and technical advice on elements of policy and economic matters. It also develops mechanisms for village level plans and aggregates these progressively at higher levels of government.

While the NITI Ayog has been set up with an aim to foster and enhance the centre-state cooperation, the opposition parties criticised saying that the replacement of Planning Commission can be best viewed as a ‘cosmetic change’.

The change

The main role of Planning Commission was to decide inter-ministerial allocation. If a government allocates Rs. 5 lakh crores as planned fund, how to decide how much for industry, for education, for health etc. was being done by finance ministry in other countries. In India, this role has traditionally been done by Planning Commission. Now this role has been deleted and they are no longer deciding the allocation. It is now directly decided by the finance ministry just as done in state governments and other countries.

Planning Commission was not doing well because:

1. Generally members of Planning Commission were defeated politicians and rarely had interest in academic knowledge or finding out why things are not working well.
2. Most of officers posted in Planning Commission were due to its becoming a dumping ground for unwanted officers.

Earlier, the Planning Commission had been restricted with assimilating the demands of various ministries, state governments and allocating the resources. This was needing a change and hence from NITI Ayog, the role of assimilating and allocation of resources to the state has now been taken over by 14^th FC.

Two years of NITI Ayog

NITI Ayog is still in infancy and trying to find out its role and how things should be done. The role of think tank is not an easy one. The members have to be aware of all the constraints, be in touch with professional organisations and give suggestions to state governments and central government. This role has still not been performed by NITI Ayog and thus they need some more time to carve out their responsibilities.

Any ‘Think tank’ has to be slightly distant from government. It has been however observed that members, vice-chairman of NITI Ayog have been defending government on all issues. That is the role of ministry of information, visual publicity or PMO. If this role is being performed by a ‘Think tank’ then there is a conflict between justifying government and giving advice to government on right kind of issues. Thus, it is not apt by NITI Ayog to justify the government on all issues, especially controversial issues.

Though it is true that it may not have accomplished the full work for which the transformation of NITI Ayog was done. But it is moving towards the same as its full term is not yet over.

Areas where NITI Ayog intervened

Land acquisition was a complicated issue where NITI Ayog set up its task force and explored area such as digitisation, land leasing. It has formulated a model land-leasing law, which Madhya Pradesh has adopted and Uttar Pradesh has substantially incorporated into a pre-existing law. Several other states are actively considering adopting the model law.

The Aayog has taken the initiative to identify numerous sick Public Sector units for closure. Action on 17 such units is under way. The Aayog has also identified several functioning units for strategic disinvestment.

It has also proposed replacement of the Indian Medical Council Act, 1956, by a Medical Education Commission Act to overhaul medical education in India.

The Aayog is also leading a campaign to bring about major reforms in agricultural marketing.

However, in the biggest policy decision impacting economic, political and social life had no role of NITI Ayog in terms of providing either the conceptual inputs or in implementation. They belatedly took up the idea of popularising digital payment system and innovating some lottery schemes.

Time needed

Two years is a short period of time for any institution to evolve. Even the Planning Commission evolved for over 60 years and ultimately rendered itself useless. Thus, in institutional life, two years is very less.

Truly independent?

The new ‘think tank’ has been called as National Institute for Transforming India thereby giving it a big name. But the work has not been concretized as yet. From the beginning, the terms of conceptualising this institute has been flawed. There was a body that was required to replace Planning Commission and hence something was set up without much thinking. The job of Planning Commission of allocation of resources for planned schemes among the states had been taken over by finance ministry. After that, NITI Ayog was conceived as a think tank. Now NITI Ayog is called a part of government where except for few external consultants, it functions within the same bureaucratic set up as the government. Hence, to think that it will come out with out of the box ideas will be very difficult or sending false signals.

Also, NITI Ayog has become a toothless organisation which has no power to implement or voice its decisions. The states also don’t turn up for meeting which they did during Planning Commission, which had allocating functions.

Role of Planning Commission vis-a-vis states

Planning Commission had no big role in funding the states, but rather had a very big role in deciding the funds for ministries of GoI. The states got funding from 3 sources: 50% from Finance Commission, 45% central ministries as CSS and only 5% from the Planning Commission. So Planning Commission’s role vis-a-vis states had been diluted in 1991 after liberalisation. The Planning Commission no longer decided what state schemes should run and that function was given to respective ministries. These ministries are still running programmes such as SSA, PMGSY, NREGA.

Analytical role

Job creation is a major concern. Unemployment leads to faltering of economy as well. The government had promised 100 million jobs by 2019. It is very well established that during 2004-14, it was a period of jobless growth. Hardly any jobs were created in that period.

In last two years, the government has given lot of importance to it. But what has happened in last two years should be studied by NITI Ayog.  Until two years, NITI Ayog has not fared expectedly in this process. The industry expects from NITI Ayog to create avenues of jobs through its findings and analysis. For example, the MSME sector can create jobs but how and how much is not categorically known.

Unfortunately, World Bank came out with a study recently showing that progress is dismal. Programmes like Ajeevika have not rendered any new jobs and hence a failed programme.

Government very rightly asked NITI Ayog to monitor sustainable development goals. For one year and half, they have not produced a sigle report as to why MDGs were not achieved by India in respect to gender, health, hunger, education, sanitation. They should analyse it and make a report else all these flaws will remain and sustainable development goals will also not be achieved.

Way forward

Any criticism which leads to improvement or desired transformation is welcome. More studies need to be done by NITI Ayog to establish itself as a critical institution in fora of planning. Also, there should be some accountability, more information given to public and road map of future course of action given by NITI Ayog.

There is a need for an institution to serve the concept of cooperative federalism. The highest decision making on development and planning which used to be NDC, NITI Ayog should serve a similar Team India concept.

It would be useful if NITI ayog could make evaluation of government policies and programmes given that it is not able to come up with out of the box ideas by itself. It can give tips which could help to deliver those programmes on ground- Make in India etc.

NITI Ayog is disintegrating its planning into three areas. 15 years long term vision document. 7 years implementation plan and 3 years short term action plan. It is expected to come out with the action plan shortly which will expectedly take into account the impact of demonetisation on the economy, especially on informal sector.