States now have greater flexibility in using central funds, fixing norms

Apr 07 2014, 03:21 IST
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SummaryWhile some states and regional parties have been demanding special category status and financial packages

While some states and regional parties have been demanding special category status and financial packages as a precondition for lending support to national parties in the forthcoming Lok Sabha elections, the Centre has now given states greater flexibility in using central funds. Planning Commission member BK Chaturvedi told Raj Kumar Ray that, along with this, the increase in state Plan sizes by 20-30% (inFY15) will go a long way in empowering state governments. Excerpts:

In line with the recommendations of the committee headed by you, the government has reduced the number of centrally sponsored schemes (CSS) to

66 in the interim budget from 138 at the start of UPA-II. How will it help the Union and state governments?

I am happy that the number of CSS has been reduced to 66. More than that what I am happy about is the approach adopted to reduce it. While reducing the CSS, we amalgamated a number of schemes and put them in a sort of an umbrella scheme. This, I feel, has long-term implications for CSS because for anyone who wants to take up a scheme, the activity of his choice can be undertaken under the umbrella scheme. There will be flexibility in moving resources from one scheme to another under the umbrella.

The interim budget also shifted a lot of central resources directly to the state plans. How will it help in overall fiscal management?

There were CSS for which funds were provided to various central ministries. Some CSS were going through additional central assistance (ACA). Some of the ACA was reflected in the state plans. Now, all of the ACA will be reflected in the state budgets. This will be a true reflection of how much a state

is getting.

Earlier, the size of the CSS was about R2.5 lakh crore. So to that extent, the state budgets will go up. During FY15, some of the state plan sizes will go up by as much as 20%-30%.

We were earlier providing money through various agencies directly from the central government and central organisations. This has given rise to criticism, especially from the CAG, because the accountability for this money was not there. States were unhappy because it was not routed directly through their budget and treasuries. Now, it will be routed through their budgets, so they can easily monitor the funds, and they will be responsible for utilisation. The government of India can

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