The Haryana government has sought devolution of funds from the Centre on the basis of a formula other than the Gadgil-Mukherjee formula. The state also wants space for local initiatives and wants premium for efficient and fast-growing states.
This was stated chief minister Manohar Lal Khattar while speaking at a meeting of chief ministers convened by Prime Minister Narendra Modi in New Delhi on Sunday. The meeting was convened to discuss devolution of resources to states and put the stamp of approval on the new institution, which is set to replace the Planning Commission.
Khattar said they also want the annual central plan assistance (CPA) made automatic for identified national goals. Besides burial to the annual plan approval ritual, the state government has also voiced the demand for greater liberty to states in opting for strategy for achieving programmes within a given time-frame.
The chief minister said the classification of public expenditure into plan and non-plan should be modified and the CPA should continue as automatic general transfer. He said funds for the centrally-sponsored schemes (CSS) should be released as sector-specific grants. He 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, Khattar said.
As the CPA is proposed to be released automatically each year to all states for the national goals identified by the forum, the ritual of annual plan approval should be discontinued, he said.
“I am further suggesting that future devolution of CPA should be on a formula different from the Gadgil-Mukherjee formula. The present classification of public expenditure into plan and non-plan expenditure also needs to be modified. Thus, the CPA should continue as an automatic general transfer and the CSS funds should be released as sector-specific grants,” Khattar said.
“As you are aware, about 15% 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% of the central plan funds, the balance 41% 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,” the chief minister said.
Khattar also 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.
“To achieve this objective, I support the proposed council of chief ministers with the Prime Minister as its chairman. This forum should encourage debate and articulation of long and medium goals for each sector of the economy. It should also be a forum for coordination among states on issues of national importance like water, energy and sustainable living, and for promotion of mega infrastructure projects of strategic importance. This forum should also facilitate resolution of inter-state differences,” Khattar said.