States demand more funds, flexibility

At the first meeting of the Governing Council of NITI Aayog which was attended by 31 States and Union Territories, the States have asked Centre for higher fund flows.

Finance Minister Arun Jaitley told reporters after the meeting that States raised issues regarding special requirements for the North-East, hilly and land-locked States. They also talked about greater flexibility to States, besides more financial devolution.

At the meeting, Tamil Nadu demanded flexibility in the design of the flagship programmes and limiting the State’s share to 25 per cent for such schemes. In his presentation, Chief Minister O Panneerselvam said vertical devolution of share to the States should be at least 50 per cent of the aggregate resources available with the Centre.

“We believe that the non-transparent, discretionary and uncertain fashion in which funds were allocated and disbursed to States by the erstwhile Planning Commission and by different Central Ministries under various centrally-sponsored schemes must be comprehensively overhauled,” he said at the meeting.

Seeking elimination of the distinction between Plan and non-Plan expenditure, he said increased fund flow will be feasible if other mechanisms of flow, including Plan assistance and centrally-sponsored schemes, were eliminated or greatly minimised. Currently, transfers to States as Plan assistance account for 15 per cent of Central expenditure and 44 per cent of what States receive as central transfers, he said.

Similarly, Uttar Pradesh sought 90 per cent grants for central schemes saying tough conditions imposed by the Centre in many of its schemes made it difficult for most States to benefit from them.

Chief Minister Akhilesh Yadav urged Prime Minister Narendra Modi to make the process of allocation of funds to States more transparent.

He also stressed the continuation of Five Year Plans, but also said he agreed with the need for making long-term plans of 10 to 15 years duration.

Yadav said only a few regions were benefitting from central schemes as the conditions imposed in them were difficult to comply.

He batted for making the conditionalities more flexible to enable more States to take advantage. Referring to Modi’s new mantra of ‘Sabka saath, sabka vikas’, Yadav said “it is not possible without provision of adequate resources for economically weaker States.”

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