Wednesday, December 10, 2014

New PlanCom may alter structure, focus of Central schemes / Sanjeeb Mukherjee

The new body to replace the five-decade-old  is expected to be structurally different from the existing one. It could bring about a fundamental change in the manner central are devised and implemented in India.

If the presentation made by the Commission to the chief ministers is followed in letter and spirit, central sector and sponsored schemes will no longer be the domain of central ministries alone. Instead, these would be an amalgam of priorities laid down by state governments, which, in turn, would also have the powers to tinker with the schemes according to their local needs. Whether or not this would signal death of central schemes remains to be seen.
How schemes will be conceptualised and implemented in the new set-up, according to a presentation made by Planning Commission Secretary Sindhushree Khullar:
  • Overall scheme priorities may be agreed by consensus in a meeting between the Prime Minister and Council of chief ministers
  • Based on the agreed priorities, a basket of schemes may be finalised in consultation with the ministries
  • States may decide to seek assistance under selected schemes that are relevant to their strengths, potential and needs
  • In partnership with the ministries concerned, scheme design to be tailored to the state’s requirement to achieve the agreed outcomes

Simply put, a Grameen Sadak Yojana or a rural drinking water programme, for instance, might either get scrapped or reformed, if state governments unanimously say such a focus is no longer required.

So far, central schemes were primarily designed by the Planning Commission in consultation with line ministries and in keeping with the priorities of the ruling party of the time. So, a National Rural Employment Guarantee Scheme (NREGS), for instance, came to reflect the priorities of the Congress-led government at the Centre then, irrespective of whether or not all states benefited from it.

If the proposed changes are implemented, it will be the state governments that will decide if the current model of is uniformly suitable for all states.

Problems between the Centre and states over Central schemes, first identified in 1998, got further entrenched into the system over subsequent years. It was felt transferring funds to state treasuries for implementing central schemes was not yielding the desired result, as the treasuries were in a mess in most states and the transferred funds more often met only the salary needs.

Around 10 years ago, a mechanism was devised for Central schemes through which funds from the central government flowed directly to societies or panchayats, under overall supervision of the local administration, bypassing state treasuries. After state governments repeatedly raised concerns over this, it was decided at one of the meetings that funds allocated for central schemes would be transferred to state treasuries. The plan finally got implemented in the interim Budget for the current financial year.

Another set of problems in Central schemes arose with states complaining the schemes were too rigid and their priorities were not in tune with the needs of the state concerned, and reflected only the vision of the central government. For instance, Gujarat complained it had built adequate number of rural roads, so the funds allocated to it under the Gram Sadak Yojana was of no use it; instead, it required funds for drinking water projects.

However, because of the rigid nature of central schemes, funds allocated for rural roads were not allowed to be spent on drinking water. Also, there was little operational flexibility within the schemes, which states resisted. “If we take the example of the Gram Sadak Yojana, it says funds will be allocated if roads of certain width are built. Now, states in the Northeast have always complained this has little relevance for them as they cannot build wide roads because of the terrain,” a senior official said.

Former member-secretary of the Planning Commission, Sudha Pillai, said the mechanism for consultation with the states has been grossly inadequate.

“The Planning Commission  also remained a central government organisation. This will change  for the better. One important difference  among  states is the presence or absence of a healthy resource base. This aspect has to be factored in while discussing a differentiated approach. The new body should structurally be able to do so,” she told Business Standard.

The existing Planning Commission had tried to solve some of these issues by providing 10 per cent flexible funding in centrally sponsored schemes, as recommended by a committee headed by former Cabinet secretary and Planning Commission member B K Chaturvedi, but that was not seen as sufficient.

But the new mechanism for devaluation of Plan funds, some experts point out, might face some big challenges. The first could be in arranging for funds. Any scheme or programme or broad outlook devised in consultation with states is most likely to overshoot its budgetary allocation.

In the current mechanism, the schemes and their funding are devised in consultation with Central ministries, so managing with low funds is not a big problem. As soon as states get involved and a broad priority is decided, the budget will jump.

“Evolving a consensus among states for identifying a common priority could be tricky affair,” said the official quoted earlier. The central ministries need to be in tune with the changed format.

Former Planning Commission member Saumitra Chaudhuri, however, said: “Taking the power of Central ministries in fund allocation for Central schemes is challenging, but involving state governments in designing schemes and programmes is a good idea.” said.

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