FinMin may emerge as nodal agency for state outlays

Against the possibility of a reduced role for the Planning Commission under the BJP-led government, the Finance Ministry may emerge as a nodal agency for dealing with state plan outlays here on.

Immediately after the Union Budget is presented in Parliament, the meetings between the Centre and states start taking place to decide annual fund allocations. These meetings were until now held between states and the Planning Commission.

But the Planning Commission has not been reconstituted till date and the government has already announced dates for the presentation of the Union Budget. This has given rise to the speculation that there will be no role for the plan body at all in the annual plan outlay of states this year.

Sources in the government say that Prime Minister’s Office is expected to be directly responsible for all kinds of coordination between the Centre and states and the views of the Finance Ministry will prevail on financial matters.

“This move will ensure greater efficiency,” a source said when asked if the Finance Ministry will be given the responsibility of allocating state funds. “The distinction between Plan and non-Plan outlays may also become a thing of the past, gradually,” he said.

The government may also think of scrapping the 12th plan if the focus shifts to annual plans, according to experts.

Strengthening Centre-state relations by giving more financial autonomy to states was an election promise of the BJP. Its election manifesto talked about reviving and strengthening institutions like National Development Council and Inter-State Council, but was completely silent on the role of the Planning Commission.

Prime Minister Narendra Modi had during his election campaign stressed the need to take the states along while “realising a national dream of development”.Modi has in the past too been critical of the role of the Planning Commission in the existing set-up.