Haryana Government on Sunday sought devolution of funds in a manner that leaves space for local initiatives and puts premium on efficient and fast-growing States.
At a conference of Chief Ministers called by Prime Minister Narendra Modi in New Delhi on Sunday, Haryana Chief Minister Manohar lal Khattar said the annual central plan assistance (CPA) should be made automatic for identified national goals, greater liberty should be given to States opting for the strategy to achieve them within the given time-frame, and the ritual of annual plan approval should be buried.
The Chief Minister said that the classification of public expenditure into plan and non-plan should be modified; the CPA should continue as automatic general transfer; and funds for the Centrally Sponsored Schemes (CSS) should be released as sector-specific grants.
Manohar lal also proposed that CPA should be made automatic and on an annual basis for identified national goals. Individual states should be given the freedom to choose the path/strategy/eligibility criteria for achieving the national objectives within the time-frame defined by the national forum. The freedom to formulate need-based strategies will not only encourage innovation in governance but will also allow space for path-breaking initiatives, especially in the social sectors, and in long-gestation project implementation, he contended.
Micro planning and strategizing for individual schemes should be left to States and the broad parameters for spending should be provided at the time of sectoral allocation of funds.
The expected annual and long-term outcomes must also be defined. Thereafter, the national forum should hold state-wise sectoral reviews of the progress as indicated in the schematic design of States, he added.
Referring to the now defunct Planning Commission, he said that it had been set up in 1950 as a forum to set economic growth targets, goals and strategies for the country, and for formulating five-year plans to achieve these goals. After about 64 years, it has not been able to fully assist India in attaining its true growth potential.
He said, “Even though it operates as the secretariat of the National Development Council, the voice of states in general and of individual states in particular in the growth context have hardly been heard over the years by the Commission.
“As you are aware, about 15 per cent of the Union Budget is allocated to the States by the Planning Commission on the basis of what is known as the Gadgil-Mukherjee formula. This works out to about 59 per cent of the central plan funds, the balance 41 per cent is allocated for CSS. The conditionalities that go with the CSS provide hardly any flexibility to meet the local needs. This results in states either confirming to a uniform eligibility and strategic posture or losing the resource allocation. This mechanism of the CSS does not allow the possibility of different strategies for social and economic growth, especially for states that are at different benchmark levels. Also such allocation hinders growth in areas which are ripe for it, and expects a common and very average performance from all states,” he added.
Manohar lal stressed the need for a forum which would be able to represent the States, while not treating them as homogenous, but by recognising the different levels of economic and social growth they are at, and by allowing them to be represented and heard in this forum. He also proposed that states be classified into homogeneous groups on the basis of their socio-economic indicators, future needs and available resources.