Government fund formula drives wedge between rich, poor

The report highlights the trend of increasing disparity in infrastructure levels and human development indicators since the Planning Commission was dismantled.

Published: 01st November 2017 08:33 AM  |   Last Updated: 01st November 2017 08:33 AM   |  A+A-

Express News Service

NEW DELHI: The Modi government’s formula for financial allocation to states for Centrally-sponsored schemes has deepened inequities and widened the gap between rich and poor states. The confirmation for this has come from a report prepared by the government itself.

The report, sponsored by the Niti Aayog and prepared by National Institute of Public Finance and Policy, an autonomous research institute under the Ministry of Finance, highlights the trend of increasing disparity in infrastructure levels and human development indicators since the Planning Commission was dismantled.
The report, authored by M Govinda Rao, takes a grim view of the phasing out of the plan panel and states that general transfer of resources, which are not tied with states improving their performance on social indicators, is creating regional disparities.

Demonstrating the need for the Centre to do course-correction on its approach to financing social sector schemes, the report underlines that since states now have to bear a higher burden of funding social sector schemes, the poorer states are slipping further.

Highlighting one example, the report says Bihar was able to utilise only 38 per cent of the total funds allocated for MGNREGA in the financial year 2014-15 since it could not match the Central contribution.
“In 2014-15, only 71 per cent of the allocated funds were disbursed in the case of rural employment guarantee scheme and the extent of difference varied between 38 per cent in Bihar, the poorest state, and 91 per cent in West Bengal, a middle income state. This creates uncertainty in implementing schemes and invariably states with greatest shortfall in services, suffer the most,” the report states.

In 2012, there were 147 Centrally-sponsored schemes for which the Planning Commission disbursed funds to all the states. In 2014, Prime Minister Narendra Modi constituted a committee of selected chief ministers, with Shivraj Singh Chouhan as the convenor, to consolidate and rationalise the Central schemes.
The committee consolidated the schemes to 66 in 2013 and later further rationalised it to 28.

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