Dec 09 2014 : The Economic Times (Delhi)
How to Revamp the Planning Commission
Let the Centre stop borrowing for the states
The Planning Commission itself has been working on changing with the times, for some time. It has been pruning and merging centrally-sponsored schemes, focusing on scenario building and incentive funds for good economic conduct, such as in the power sector, rather than on sectoral allocations. But all this has not fundamentally changed the nature of the commission as an overlord of central funds whom the states resent but must heed if they want those funds. The way to radically overhaul the Planning Commission is for central funds to devolve to the states almost entirely through the Finance Commission mechanism, instead of half the funds going through the Planning Commission as of now.In the kind of federal autonomy that the states seem to desire, there is no room for the Centre to borrow just for lending on to the states. The states have their areas of constitutionally given responsibility and sources of revenue, soon to be supplemented and fortified with a goods and services tax. If they want to finance projects they cannot fund with their own resources, including the central devolutions that are their due, they have the freedom to tap the bond market. The states cannot expect the Centre to borrow money and pass it on to them without asking questions about how the money would be spent and later monitoring compliance with stated intent. The best way to end such central intrusion into federal autonomy is to end central Plan assistance out of borrowed funds. Non-borrowed resources will be devolved through the Finance Commission, in any case.
Once the commission divests itself of the function of allocating Plan funds across states and schemes and subsequent monitoring, it can focus on creating long-term policies for different sectors of the economy and drawing up alternative frameworks in which these policies find coherence. The task of constantly suggesting updates for regulatory frameworks for different sectors can also be performed by the agency . Let it become a think tank, and stop being an ATM for the states.
Once the commission divests itself of the function of allocating Plan funds across states and schemes and subsequent monitoring, it can focus on creating long-term policies for different sectors of the economy and drawing up alternative frameworks in which these policies find coherence. The task of constantly suggesting updates for regulatory frameworks for different sectors can also be performed by the agency . Let it become a think tank, and stop being an ATM for the states.
