The Hindu : 'Change in Gadgil-Mukherjee formula only after consensus'

Online edition of India's National Newspaper
Tuesday, Dec 24, 2002

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'Change in Gadgil-Mukherjee formula only after consensus'

By Our Special Correspondent

NEW DELHI DEC. 23. The Planning Commission is unlikely to yield immediately to the demands of some of the better-performing States to change the Gadgil-Mukherjee formula that determines a State's share of Central resources.

A demand for such a revision was voiced by many Chief Ministers during the 50th meeting of the National Development Council (NDC) here on Saturday, their main contention being that the Gadgil-Mukherjee formula "penalised" the better-performing States, while allocating more resources to the "laggard" States. The formula has fixed percentages for allocation of funds, depending on the population of a State or the extent of poverty in that State. Consequently, once any State improves on these parameters, its share of resources goes down, is the refrain of the complaining Chief Ministers.

Responding to this issue at a press meeting today, the Deputy Chairman of the Planning Commission, K. C. Pant, conceded that a demand for revising the formula had been made, but "it is practically impossible to get a consensus understanding on changing the formula.

``We have to have a minimum sense of consensus before we can think of changing the formula".

Mr. Pant said that some States had expressed unhappiness about the poverty ratios worked out by the National Sample Survey Organisation (NSSO) for them. The Centre's response was that the States should take up the issue with the NSSO in case they had difficulties with its findings. "After that, the State concerned, the NSSO and the Planning Commission can discuss the matter if it is just a statistical problem," he said.

The Chief Ministers had raised a number of other points at the NDC meeting relating to proliferation of Centrally-sponsored schemes (CSS), lack of involvement of States in designing the CSS, debt relief, revision of loan-grant ratio which is applicable to Central assistance to State plans, high interest rates being charged to the States on Central loans and problems arising out of the Forest Conservation Act and related court judgments. "We will be responding to these after due consideration by the Central Government," he said.

On the States' demand for compensation from the Centre for the likely loss of revenue with the introduction of value added tax (VAT) country-wide from April 1 next year, he said the Union Finance Minister, Jaswant Singh, had assured 100 per cent compensation in the first year and had also promised the States to "hold their hands" in the future too.

About the Tenth Five-Year Plan, Mr. Pant said with the unanimous endorsement by the NDC, the Commission would now get down to finalising the terms of reference of the four empowered sub-committees of the NDC that the Prime Minister, Atal Behari Vajpayee, proposed at the meeting. Also, as directed by the Prime Minister, the Commission would draw up a Priority Agenda of Action for 2003-04 on specific directions contained in the Plan document, whose time-bound implementation would be monitored by the Cabinet Committee on Economic Reforms.

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