Himachal Pradesh chief minister Virbhadra Singh will attend a meeting of the NITI Aayog governing council, to chaired by Prime Minister Narendra Modi, on February 8 in New Delhi. However, there is still confusion over the functioning of the body that was set up to replace the decades-old Planning Commission that was considered beneficial for states like Himachal in terms of liberal funding.
At a recent meeting of chief ministers convened by Modi on December 7 last year the latter had said the "special status" accorded to the hill states should be continued. Virbhadra had sought an increase in grants in aid to Himachal besides a bigger share in central taxes. "The present 15% allocation of total Plan funds as block grants are too less to meet the development needs of states and it should be enhanced to at least 50%," he had said.
The cash-strapped Himachal government had proposed the annual plan outlay for the state for FY2015-16 at Rs 4,800 crore, an 8% rise over that for the previous fiscal. However, after the Planning Commission was scrapped and replaced by NITI Aayog, in the absence of clear guidelines the state was in dilemma over the submission plan. "Where has the plan to be submitted? We've not received any clear instructions so far," a state planning department official said.
A state finance department official said the February 8 meeting would be crucial in terms of understanding the functions of newly formed body. There are reports that process of downsizing centrally sponsored schemes has been started and the central government is likely to stress that states should know how to utilize the funds according to their requirements. Flexibility in funding had been demanded by several states and thus far around 85% of the plan budget (Rs 5.75 lakh crore) is tied to centrally sponsored schemes.
Central funds flow to states
Of the central government's total budget, 26% is kept under plan assistance further of which 15% is distributed to states under block grants. Block grants are further distributed on different parameters including the Gadgil Mukherjee formula, special plan assistance for special category states and one-time additional central assistance. Of the total budget plan funds is 26% central sector schemes (41% of the total plan funds) allocated to 70 ministries/departments of the central government. Central assistance to state plans (59% of the total plan funds) is further divided into block grants to states (15% of the plan funds)