Decentralising planning PDF Print E-mail
Tuesday, 09 December 2014 00:00
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Santosh's edit

More Finance Commission funds is a better idea


Given how, over a period of time, state governments had begun to see the Planning Commission (PC) as an instrument of Central government oppression—state budgets couldn’t be finalised without the PC’s inputs and states allied with the Centre got more transfers than others—it is not surprising the new-look PC is to have the states on board. The core team of the PC will be the prime minister and the state chief ministers, and they will meet regularly to decide on what development priorities should be, even design different scheme for different groups of states. The PC’s secretariat’s role will be to help states and central ministries to achieve identified outcomes as well as to strategise over 10–20 year time horizons. And since the new-look PC will have ties with local and global think tanks, presumably this will end the view held by some that the government is not interested in strategic thinking. Appropriately, the PC will have an independent Development Monitoring and Evaluation Office (DMEO), though it is not clear how this will be different from the UPA’s Independent Evaluation Office (IEO). The new-look PC, at least so far, is not going to have a US-style Congressional Budget Office whose job is to evaluate the impact of every major government tax/non-tax policy—perhaps this needs to be built in.

While the idea is, admirably, to give the states more flexibility in their spending—so that their plans will suit their needs and not just Delhi’s—it has to be acknowledged the PC has been much maligned. While states get around half of the total central transfers by way of tax devolutions and are free to spend it as they choose, the bulk of the rest flows through central ministries—so, the rigidity in such funding and the designs of the schemes is more ministry-driven than PC-driven. Making PC-driven funding more flexible is undoubtedly a good thing, but states will never be fully-freed up unless the central ministries loosen their controls or unless the Finance Commission transfers more funds through the automatic tax devolution manner.



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