The shift is both in name and objective. The government on Thursday signaled the birth of NITI Aayog, replacing the planning commission . With this the new organisation will focus on policy, which is even more basic than planning.

An official statement said: "The Government has replaced planning commission with a new institution named NITI (National Institution for Transforming India) Aayog. 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, this includes 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 end of the planning commission that we know of came 64 years after it was established in March, 1950. The centralized planning mode of Jawaharlal Nehru has become outdated in modern tech era where changes take place at micro points, and at nano speed.

Through NITI Aayog, we bid farewell to a 'one size fits all' approach towards development. The body celebrates India's diversity & plurality

— Narendra Modi (@narendramodi) January 1, 2015

In his Independence Day speech, prime minister Narendra Modi had indicated that the commission had lost its relevance. Later, he tweeted asking for public feedback on what shape the institution should take.

Subsequently, Modi had held discussions with the chief ministers as the new India has become more federalist than it was six decades ago. [Read more on that meeting here]

The states have become revenue generation savvy even while politically they turn populist, draining the exchequer. Under this changed scenario, the states need to be given greater role in policy formulations, which will be the task of the new Neeti Ayog.

Its members would be the prime minister, cabinet ministers, chief ministers and experts in various sectors.

Why planning commission had to go?

Delighted to introduce NITI (National Institution for Transforming India) Aayog. It will provide key inputs on various policy matters.

— Narendra Modi (@narendramodi) January 1, 2015

It was conceived as the think tank to formulate and provide a long-time vision for the country. But the commission had become a tool of the central government both in allocation of funds and the policy choices of state governments.

Nehru admired the Soviet Union’s planning process for the industrialization the communist country and tried to replicate that model with the planning commission in 1950 for the development India's agrarian economy. However, India is now a different country and the world’s third largest economy. It calls for new thinking and new path.

    
Also read: Planning is dead, long live strategic thinking