Finmin wants states to take bigger share of Central schemes
September, 20th 2006
The finance ministry has favoured a 50:50 budgetary support-sharing formula between the Centre and the states, as against the present norm of 75:25, for centrally sponsored schemes.
Pending a settlement of the outstanding issue of transfer of centrally sponsored schemes, it should be considered that all Central budgetary interventions require matching Budgetary intervention from the states on a uniform 50:50 norm for the next Plan, the finance ministry commented on the Planning Commissions approach paper for the 11th Plan.
The suggestion is significant in the face of a demand by certain special-category states like Himachal Pradesh, Jammu & Kashmir and those in the north-east to reduce their contribution to 10 per cent.
If the equal-sharing formula of the ministry is adopted, there is a possibility that the fiscal deficit of the states may go up and affect the state gross domestic product, a Planning Commission official said.
Making a case for the transfer of all centrally sponsored schemes to states barring those in national priority areas, the finance ministry said there was a distinct possibility of the Centre over-extending itself by taking on responsibility for an increasingly larger set of objectives and goals, most of which lay squarely in the domain of local bodies and state governments.
It said the approach paper should emphasise the primacy of the role of the state governments, instead of placing the burden on the Centre.
This, it said, was necessary for balanced regional development and accelerating growth in backward states like Bihar, Madhya Pradesh, Orissa, and Uttar Pradesh.
In this context, there was a need to review reform-linked incentive programmes since the experience with schemes like the Jawaharlal Nehru Urban Renewal Mission and the Accelerated Power Reforms Development Programme had not been satisfactory.