State governments, even those run by the Bharatiya Janata Party’s political rivals, reacted to the recasting of the Planning Commission as NITI Aayog with caution but broadly endorsed the proposal. Some said they had concerns and needed to see the fine print.
While Congress-ruled states such as Kerala, Karnataka and Assam expressed fears about the sudden demise of the planning process and wondered what it would be replaced with, also worrying about the immediate implications on annual Plan outlays, Andhra Pradesh said it was considering setting up its own NITI Aayog.
Telangana said now that there was no Planning Commission, funds meant for centrally sponsored schemes and bulk grants should come to the states without any shackles. Assam said it was not clear how the Sixth Schedule areas in the state, which have a special financial dispensation, would be treated by the new body.
Moreover, states said if the NITI Aayog was going to work as an appendage of the Prime Minister’s Office (PMO) and the consultative body dominated by a single party, it would do more harm than good.
Most states said as no annual Plans had been discussed this year, they were clueless about how, and through what mechanism, funds would flow to them. However, by and large, state governments have welcomed the move.
The annual Plan discussion is meant to arrive at a Plan size, putting together what the state government will allocate to the Plan head and how much the states will get from central government schemes, along with normal central assistance to fill the gap.
Much of the allocation comes from the state government. The role of the Planning Commission has been to consolidate these figures and devise an annual Plan format, adding a small amount to fill the gap. If the state governments increase allocations, the Plan allocation has to be increased. So on this count, the new body does not change anything.
The officials are likely to remain the same. There will be a nodal officer for each state. The state government will send its plans by fax, which the nodal officer will scrutinise and take a decision on. There might not be any discussion, so the annual Delhi visit for plan discussions appears to have been dispensed with.
For 2014-15, no annual Plan discussion has been held in Delhi. “We expect there will be a nodal officer for Tamil Nadu who will take a decision and inform the state government,” said a source.
The Planning Commission was an adjudicating body between Centre and states though it tended to act in favour of the Centre. Now if NITI Aayog becomes a part of the PMO, this will create difficulty for state departments.
The state government is not fully in favour of the new body. The new system should have specific duties and responsibilities assigned and some clarity in terms of financial allocation. However, one thing is clear: There is no relevance of the distinction between Plan and non-Plan funds any more. This distinction should be done away with, especially since no annual Plan discussions will be held or Plan targets finalised.
States such as Assam have Constitutional obligations under the Sixth Schedule. “We have had very little time for consultations with other stakeholders within our state, including the autonomous councils in the Sixth Schedule areas.” said an official.
The only way to close the gaps in the inter-regional, inter-state and intra-state disparities that exist in the country is through a planned process of public investment to address human and social development requirements, and by planning and investment in economic infrastructure of all kinds. It is here that the role of the Planning Commission is crucial. “We have to be careful not to arbitrarily jettison this role of the commission. Besides, there is a lack of clarity on the institutional reforms necessary to meet the requirements of the new economy.” the official added.
Over the years, the Planning Commission has been instrumental in ensuring social equality, promotion of decentralised planning, and in the monitoring of human development; especially that of the socially and economically backward segments in the country’s population. The proposed move to distribute planning functions among the ministry of finance and subject matter ministries will result in loss of perspective and long-term view. The proposal to replace it with a new body is half-baked, unwarranted, and ignores the need of planned development of the country.
“We fully endorse the scrapping of the Planning Commission and are thinking of creating our own version of the NITI Aayog after the Centre provides us clarity and information on the new body,” said a source.
Andhra Pradesh has had no discussions with the Centre on the 2014-15 annual Plan size. This was because the undivided state went for a vote-on-account budget in February 2014 on the brink of bifurcation. Later the government of the truncated Andhra Pradesh adopted a separate annual budget for the same period in August 2014.
Normally consultations with the Planning Commission begin in November on the process of approval of the Plan size for the next financial year. Our concern is that it is not yet clear whom we should approach for Plan grants from the Centre. We were told that the Finance Commission will be given powers to decide on Plan grants as well. It is for the finance ministry to decide what course to adopt.
“We support the new NITI Aayog broadly. The state government had suggested to the Centre that it should increase bulk grants to states so that funds are utilised according to local priorities. We expect that to happen now. Over 80 per cent of the Centre’s plan support comes by way of the centrally sponsored schemes while the remaining comes in the form of bulk grants. Changing the paradigm in this regard will bring real decentralisation in planning.” an official said.
The Telangana government had earmarked 48 per cent of its total Budget for annual Plan outlay involving programmes on restoration of minor irrigation tanks, establishment of a water-grid and strengthening of the road network. Bulk grants from the Centre alone can help the state government to meet the funding requirements of these projects.
Although we broadly support the NITI Aayog, we need to know the details of the Plan, including clarity on key areas like finalisation of annual plans of states and doling out central assistance. There is no clarity on whether the new body will address issues of finalisation of annual plans for states and receipt of central assistance. We believe the finance ministry will allocate funds to the states.
The NITI Aayog should function like an independent body with greater autonomy for states. We welcome the inclusion of chief ministers in governing council of the Aayog. But the new body should ensure that the states’ interest is given priority in formulation of Plans, policies and allocation of funds.
We have demanded the body should have some special provisions to ensure that economically backward states are benefited. On the whole, the new body is welcome as it involves the participation of chief ministers and this will enable states to articulate their views, thereby facilitating alignment of central and state policies.
According to the state, there was no need to create a new forum when the Planning Commission was doing a good job and had adapted to the changed economic environment. The state government has already started the process of preparing its Budget and Plan size for the next financial year. Normally, the central government issues guidelines and holds consultations with us by December on how to go about preparing the Budget for the next year and what should be the Plan size and growth target. “But this year we are yet to receive their guidelines. We have started preparing our budget for next year on the basis of assumptions,” said a source.
The Gujarat government welcomed the Centre’s move and stated it had begun discussions for the state’s Plan. “The planning process for next year is on and we will be taking it up with the Aayog,” said Saurabh Patel, Gujarat’s finance minister. “We expect the planning as well as execution process to be further streamlined under Niti Aayog, since it will have the direct interest of the prime minister. However, we do not know the status of the ongoing five-year Plan,” said a senior state government official.
The Gujarat Pradesh Congress Committee termed it as old wine in a new bottle. “The Planning Commission was autonomous. But now with the prime minister as chairman and his appointee as vice-chairman of the Niti Aayog, the new government has robbed it off its autonomy. It was the Planning Commission that had led to improvement in the country’s poverty, health and literacy parameters,” said Arjun Modhwadia, president of the Gujarat Pradesh Congress Committee.
Nitish Kumar, former Bihar chief minister and senior JD(U) leader, had opposed scrapping the Planning Commission. He said the Centre wanted “the market forces and capitalists alone to lead the country’s growth”. Chief Minister Jitan Ram Manjhi slammed the Centre, saying “The manner in which this meeting has been convened suggests the PM had made up his mind and we have been called up to put our stamp on this decision.”