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New PlanCom may alter structure, focus of Central schemes

The new body that is will replace the Planning Commission soon is not only expected to be structurally different from the existing one, but could also bring about a fundamental change in the manner in which central government schemes are devised and implemented in the country.

If the presentation made by the Commission to the chief ministers is followed in letter and spirit, central sector and sponsored schemes will not longer be just the domain of the central ministries and government, instead they would be an amalgamation of priorities laid down by the state government, who in turn might also have the power to tinker with them as per their local needs. Whether it signals the all-togther death of central schemes remains to be seen.

In other words, a Prime Minister’s Grameen Sadak Yojana or rural drinking water programme might either get scrapped or reformed, if state governments unformly feel that such a focus is no longer required because of any reason.

Till, now, Central schemes were primarily designed by the Planning Commission in consultation with line ministries and in keeping with the priorities of then ruling party. Therefore, a MNREGA came into play, reflecting the priorities of the then Congress-backed UPA, irrespective of whether all states feel benefited from it.. 

However, if the change is implemented, then it will be the state governments who will decide whether the current model of MNREGA is uniformly suitable for all of them or not. The genesis of the problem of between Central government and states over Central schemes was first identified back in around 1998-98, and it got further entrenched in the subsequent years. 

It was felt that transferring funds to state treasuries for implementing central schemes was not yielding desired results as the treasuries were in a mess and more often than not in most states the funds so transferred ended up in meeting their salary needs. 

A mechanism was devised around 10 years back through the Central schemes through which funds from the central government flowed directly to the societies or panchayats, under the overall supervision of the local administration, bypassing the state treasuries. The matter was repeatedly raised by the state governments, following which it was decided in one meeting of the National Development Council (NDC) to let funds allocated for CSS be transferred to the state treasuries. It finally got implemented in the Budget of 2014 in February.

There was another set of problems in the central schemes, many times states complained that the schemes were too rigid and their priorities were not in tune with the state needs and just reflected the vision of the Central government. For example, Gujarat complained that it has built adequate number of rural roads, so the funds allocated to it under PMGSY was of no use, but it needed money for drinking water. 

However, because of rigid nature of central schemes, funds allocated for rural roads were not allowed to be spent on drinking water. Also, within the schemes there was little operational flexibility, which was resisted by states. “If we take the example of PMGSY, it says that funds will be allocated if roads of certain width is built. Now, North-East states always complained that it has little relevance for them as they can’t built wide roads in NE because of the terrain,” a senior official said. 

The existing Planning Commission did try to solve some of these issues by providing 10 per cent flexible funding in the CSS as recommended by a committee headed by former Cabinet Secretary and Planning Commission member B.K. Chaturvedi, but it was not seen to be adequate.

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

In the current mechanism, the schemes and their funding is devised in consultation with the central ministries, so managing in low funds is not a big problem, but as soon as states get involved and a broad priority is decided, the budget will jump.For example, at present drinking water gets a particular sum every year, which is determined by the Planning Commission in consultation with respective central ministry.

But, as soon as states get involved, this will increase as historically states demand more funds. “Also evolving a consensus between states for identifying a common priority could be tricky affair,” said the official. The central ministries need to be in line with this changed format.”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 Saumitra Chaudhuri, former member of the Planning Commission.

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