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Saturday, 03 January 2015 04:48
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Good place to discuss tricky Centre-state issues

The replacement of the Planning Commission with the NITI Aayog—National Institution for Transforming India—is,  prima facie, quite pragmatic at a time when we need to resolve several issues between the Centre and states. While we do have institutions like the Finance Commission to channel funds by statute—there is also the finance ministry—there needs to be constant dialogue between states and the Centre to ensure smooth functioning, given the federal structure of our government. In this case, there is an institutional representation of all states through their chief ministers, with specialists also serving full-time or part-time, and that should help get important dialogue started. While there is already a GST Council to discuss issues pertaining to GST, there are several issues that go beyond GST that could be of interest to all states and need to be resolved by discussion—states pulling back on VAT credits or high rates of VAT on aviation turbine fuel (ATF) are some current examples. Of course, if the chief ministers don’t attend these meetings, a large part of NITI Aayog’s USP will disappear.

Whether NITI Aayog delivers on its other promise—to help decentralise decision-making and to help states find the solutions best for them—remains to be seen. In a sense, NITI Aayog is supposed to be a repository of best practices in all manner of sectors. To a certain extent, this is replicating the role of think tanks such as NIPFP, NCAER, ICRIER and CPR, but the fact of having a full-time secretariat implies there will be a history of institutionalised knowledge-building that is critical. The big danger here, of course, is that we like to create new structures even if it means duplicating efforts. While it is always good to have more ideas from more people, in this case, we are creating a new structure which entails a huge cost and we are dismantling an institution with a track-record, even if patchy. The travails encountered by the prime minister when he was the chief minister of Gujarat was one of the ostensible reasons for doing away with the Planning Commission. But for the new edifice to succeed, we need to be clear about its mandate and we need to have a buy-in from all the states, which will ensure that the charter laid down is followed. And, as FE has pointed out on various occasions, the rigid and top-down nature of central schemes has more to do with line ministries than it has to do with the Planning Commission.



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