In a move to reduce disparities among states, improve their performance, and initiate better fiscal management of resources, Prime Minister Narendra Modi has ushered a key social sector reform.
The Prime Minister’s Office has asked the Planning Commission to introduce a mechanism to give financial incentives to the lagging states to improve their performance in delivery of schemes and identify areas where a focused approach is required.
This, the PMO believes, could result in infusing greater competition among the states on improving their performance on the social sector schemes. It has outlined four focus areas to improve performance and has asked the officers in the panel to devise a strategy.
The panel has suggested that financial rewards in the form of united funds can be given to the best performing states. Machinery for monitoring of such funds will have to be put in place, the panel said, adding that the state government should be accountable to demonstrate that the results can be achieved through use of additional funds.
Another incentive suggested was recoginition of states for good performance. The Centre may establish a system of annual awards in different areas of public service delivery in recoginition of exemplary performance at the state government level as it would create competition among states, a panel official said.
The panel also said that the Centre should introduce performance ranking of the states in consultation with them on social factors. Once that is done, the flow of Central funds can be linked with performance.
It also wants more funds to be given for improving the capacity of the local bodies to implement government schemes and introduce the concept of community monitoring.