The importance of Planning Commission may get diluted if the Manmohan Singh government accepts the recommendation of high level committee giving greater weightage to the finance ministry in overall resource allocation process.
Singh is also chairperson of the Planning Commission constituted in 1950s to frame long term economic and social development plans for the country.
The group headed by Singh’s economic advisory council C Ranagarajan on Thursday pitched for abolishing the age-old distinction between plan and non-plan expenditure, which if executed would turn the commission into a recommendatory body. Instead, it wants the commission to start expenditure management approach based on measurable outcomes.
“This will facilitate linking expenditure to outcomes and better public expenditure,” the report released on Thursday said.
The committee’s argument is that present system of allocation of funds are not result oriented and therefore, the government should ensure how the every penny of the expenditure is spent.
In short, the committee questioned the present planning process and asked the commission to restrict is role to make five years plans in place of finalizing yearly allocation of funds. Finalisation of annual plans with the states could now be an automatic process if the committee has its way.
As per the committee’s recommendation the planning commission should be responsible for consolidation of five year plans and the finance ministry should be entrusted to prepare the annual budget based on the inputs from the plan panel.
Denying that the committee’s recommendations contract’s the role of the plan panel Rangarajan said: “In some way it rather expands the role of the planning commission. There is no issue of diluting anybody’s role. The need is to take a holistic view on the expenditure front”.
Plan panel deputy chairperson Montek Singh Ahluwalia said the report will be extensively discussed within the commission and with the state governments before formulating any opinion.
“We will examine the report internally. Although we have participated in the meetings, the state will have to be persuaded to appreciate the abolition of plan and non-plan classification,” he said, after several plan panel members objected to the recommendations at an internal meeting in the morning.
The members demanded clarity on the commission’s role vis-à-vis the finance ministry. “Planning Commission continued oversight on the role implementing ministries is imperative and we believe that the report does not clearly spell out the commission’s role in the proposed mechanism,” an official, who attended the meeting, said.
The non-plan expenditure to over 150 centrally sponsored schemes is a commitment of the central government whereas the plan allocation depends on the resources available with the Centre and varies on yearly basis.
On executing Public Private Partnership projects, the committee recommended ceiling on annuity payments which should form part of expenditure in the budget. Similarly, the viability gap funding or any other form of support for such projects may also be part of the budget.
The committee also wants uniform codes for the schemes so that the expenditure at the village level can be tracked and put in a public domain for citizens to know how and where the money has been spent. A Central Plan Scheme Monitoring system has been recommended for the same.