New mechanism needed on resource transfer to States: Pranab

July 21, 2013 04:24 pm | Updated November 16, 2021 08:53 pm IST - New Delhi

President Pranab Mukherjee arrives for receiving a copy of the book "The New Bihar - Rekinding Governance & Development" in New Delhi on Sunday.

President Pranab Mukherjee arrives for receiving a copy of the book "The New Bihar - Rekinding Governance & Development" in New Delhi on Sunday.

Acknowledging that all states are facing similar challenges of tackling poverty and lack of infrastructure on the road to development, President Pranab Mukherjee on Sunday batted for introducing a more effective mechanism for resource transfer from the Centre to the states.

“The basic objective of development planning is to fight against these (challenges),” he said while listing out poverty, backwardness, lack of infrastructure and diseases as the common problems faced by various states. Mr. Mukherjee noted that while all the states in the country have distinct features, they face similar challenges.

The President was speaking in New Delhi after receiving copy of a book ‘The New Bihar -- rekindling governance and development’. The book was released by Noble laureate Amartya Sen.

Additionally, the President recommended taking a fresh look at the mechanism to transfer resources to the state governments beyond the statutory route.

"...Now if you want to do it and have a fresh look at it, perhaps time has come when we should concentrate on this and all stakeholders to put their heads together and find out if there could be a more appropriate mechanism through which the resources can be transferred (to the states)," he said.

Mr. Mukherjee was referring to the allocation of funds to the states by the Centre.

Recognising the higher resource requirements of the states relative to their resource raising powers, the Constitution mandates to transfer funds to the state governments through statutory transfer of tax receipts collected by Centre through the Finance Commission award. In addition, the states access central plan funds through Centrally Sponsored Schemes (CSS) and Central assistance to State Plans.

Speaking on the occasion, one of the editors of the book and Rajya Sabha member N K Singh praised the development of Bihar in the last few years, pointing out that it has reversed the "pessimistic scenario".

Mr. Singh said the book catalogues the developmental challenges of the states and also refers to a more participative model.

Montek Singh Ahluwalia, Planning Commission Deputy Chairman, who has contributed to the book, said while Bihar was among the 'BIMARU' states, it registered the highest growth in the 11th Five Year Plan among all states of the country.

"In fact," he said "all BIMARU states were doing quite well."

The BIMARU states are Bihar, Madhya Pradesh, Rajasthan, and Uttar Pradesh. BIMARU is an acronym formed from the first letters of the names of the states.

"Government of India must be contributing much more resources to the poor states. And in case of Bihar we do have a special plan...When growth expanded from very negligible levels, it was not because of the resources, but because something done right in Bihar which built on Bihar's own capabilities," he said.

Dr. Ahluwalia asserted the need for not just convergence in growth, but also convergence in per capita incomes.

Dr. Sen, who is also among the contributors, acknowledged that Bihar has made an improvement. Calling for a more integrated approach politically and economically, he reiterated that an educated and healthy workforce is a guarantee for sustained growth.

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