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Plan panel may invite states’ wrath at NDC

Plan panel may invite states’ wrath at NDC
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First Published: Sat, Oct 22 2011. 12 24 AM IST

C. Rangarajan. Photo by Bloomberg
C. Rangarajan. Photo by Bloomberg
Updated: Sat, Oct 22 2011. 12 24 AM IST
New Delhi: The Planning Commission is likely to face opposition from the states on its view on poverty at the National Development Council (NDC) meeting on Saturday.
C. Rangarajan. Photo by Bloomberg
Economists closely watching the making of the 12th Plan also say there may be a debate on doing away with the concept of plan and non-plan expenditure as suggested by a committee headed by C. Rangarajan, chairman of the economic advisory council to the Prime Minister.
Besides, they say states may resist consolidation of centrally sponsored schemes (CSS) as envisaged by the Plan panel for the 12th Plan starting 1 April.
The NDC meeting, which is to clear the approach paper for the 12th Plan, will be the first public forum where state chief ministers, Planning Commission members and Prime Minister Manmohan Singh are to meet following the controversy on defining the threshold for poverty by the Plan panel.
Headed by the Prime Minister, NDC comprises chief ministers and bureaucrats in the centre and states. All planning processes have to be passed through the NDC.
An approach paper is a preliminary exercise setting principles around which a particular plan will be built.
The Plan panel had said in an affidavit to the Supreme Court last month that at June prices, the spending threshold per capita for the poverty line in cities was Rs 32 a day and Rs 26 in villages, following a provisional analysis based on a method suggested in 2009 by a committee led by the late economist Suresh D. Tendulkar.
Although the Plan panel has since changed its view on poverty and suggested delinking food entitlement to people living below the so-called poverty line from poverty figures as estimated by Tendulkar, critics say states will still oppose it.
“Certainly, the Planning Commission will invite a lot of resistance, not just from the states but also from some of its own members on poverty issues and it will not be a smooth sail this time,” said economist Y.K. Alagh, who first defined poverty on the basis of calorific value.
Even more challenging will be states accepting the Rangarajan Committee Report which can be implemented only if the states agree, Alagh said.
The committee has suggested a shift in budgetary approach from a one-year horizon to a multi-year horizon and from input-based budgeting to one based on output and outcomes.
“This NDC will be different as there are a number of sensitive issues but the Planning Commission is prepared to face them and we do hope like most other NDCs this one will also end peacefully,” said a Planning Commission official, who did not want to be identified.
While discussing the Rangarajan Committee report in September, deputy chairman of the Planning Commission Montek Singh Ahluwalia had accepted that convincing the states may not be easy.
S.L. Rao, former director general, National Council of Applied Economic Research, said since the Planning Commission has withdrawn its stance on spending thresholds of Rs 32 and Rs 26, it may face less opposition.
“However, if Montek can assure that better targeting of public distribution system and social sector schemes will be done, states may have some reconciliation,” said Rao.
Consolidation of CSS is a good move that will help get consolidated funds which can be utilized for different schemes, Rao said. Currently, if funds are released for a particular scheme, say Indira Awas Yojana (housing projects for those below the poverty line), it cannot be used for any other scheme even if a particular state has met its target under Indira Awas Yojana.
“However, states, which are known for misusing funds, will have to understand the benefits of consolidating schemes, which they won’t,” said Rao.
Civil society groups, however, remain unconvinced.
“NDC is pretty much a routine thing. There will be some discussions on GDP (gross domestic product), inclusive growth and perhaps schedule caste and tribes and the approach paper will be accepted,” said Amitabh Behar, convener of Wada Na Todo Abhiyan, an organization working for holding the government to its promises.
The organization represented the civil society in preparing the approach paper.
“It is unfortunate that states don’t assert themselves on issues such as strengthening the federal structure of the government and question the fundamentals of the approach papers,” said Behar. “They are only bothered about allocation of money and the real outcry will happen at that stage.”
Allocations will be talked about in the next stage when the 12th Plan will be ready.
sangeeta.s@livemint.com
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First Published: Sat, Oct 22 2011. 12 24 AM IST