Planning Commission proposals put State in a fix

THIRUVANANTHAPURAM, AUG. 30. It will be interesting to see how the Antony Government reacts to the Planning Commission's proposal to link Central assistance to performance, when the National Development Council (NDC) meets in New Delhi on September 1.

The agenda for discussion at this NDC meeting is the Planning Commission's `Draft Approach Paper to the Tenth Five Year Plan'. The Paper suggests a radical departure from the current practices to improve the nation's economic growth from the existing level of around 6.5 per cent to 8 per cent during the Tenth Five Year Plan.

One of the proposal relates to linking development assistance from the Centre to the performance of the concerned State in implementing projects. The Paper says that `Central assistance to State Plans should increasingly take the form of project specific assistance' so that the Centre can monitor how the funds are being utilised. The new system proposed also will have provisions for imposing penalties like denying assistance to the States which fail to implement reform measures ``identified jointly by the Planning Commission and the State''.

It should be recalled that this had been the pattern being adopted in earlier times for devolving Central assistance to the States although the provision for penalising erring States is a new ingredient. The project-specific system of devolving Central assistance was changed during Indira Gandhi's Prime Ministership following complaints from several States. The complaint was that the system left a lot of leeway for the Centre to exercise its pleasure in rewarding States of its choice at the expense of the States which were not in its good books due to political or other reasons.

The project-specific system then gave way to a formula-based system, whereby each State will be entitled to a specific share of the total Central assistance on the basis of several factors like poverty, population, area etc. All political parties in the State had been demanding that this formula, known as the Gadgil Formula, be modified to ensure that the progress made by Kerala in bringing down poverty, birth rate etc. does not lead to a reduction in the entitlement of the State. Now the Centre's wish is to drop the system altogether and go back to the old project- specific system with additional provisions to exercise its discretion.

During the discussion convened by the Chief Minister to gather views on the Planning Commission's proposals the other day, the Left parties, especially the CPI(M) had strongly argued that the State should oppose the move to link development assistance to performance. The note presented at the meeting on behalf of the former Chief Minister, Mr. E.K. Nayanar, notes that ``given our past experience, this is going to be disastrous for the interests of our State''.

Referring to the Planning Commission's suggestion for instituting ``a system of strong disincentives of losing out on Central assistance if the unpopular measures of increasing the user charges or improving governance are not put in place'', the note says: ``Such lines could not have been penned by anyone who has a respect for the federal ethos and the spirit of the Constitution. It negates the recommendations of the Sarkaria Commission and discussions in the NDC. Approaches such as this would be disastrous for the unity and integrity of the nation''.

Once this system is institutionalised through the NDC, it might lead to a situation where the State would have to surrender the freedom it used to enjoy in taking decisions on what its priorities should be in utilising the funds available to it.

For instance, among the `Monitorable targets for the Tenth Plan and Beyond' which the Planning Commission has set for the nation in its paper, there are several sectors in which Kerala's achievements are high above the national average. This might mean that projects charted out to achieve these targets would not bring the same level of Central assistance to the State as to the States which are lagging behind in those sectors.

The targets include ``reduction of poverty ratio to 20 per cent by 2007 and to 10 per cent by 2012; providing gainful employment to the addition to the labour force over the Tenth Plan period; universal access to primary education by 2007; reduction in decadal rate of population growth between 2001 and 2011 to 16.2 per cent; increase in literacy rates to 72 per cent by 2007 and to 80 per cent by 2012; reduction of infant mortality rate to 45 per 1,000 live births by 2007 and to 28 by 2012; reduction in maternal mortality ratio to 20 per 1,000 live births by 2007 and to 10 by 2012; increase in forest and tree cover to 25 per cent by 2007 and 33 per cent by 2012; giving access to potable drinking water to all villages by 2012 and cleaning of all major polluted rivers by 2007 and other notified stretches by 2012''.

It can be easily seen that in a majority of these sectors, Kerala had already achieved the targets fixed for 2007 and even 2012. Kerala's priorities, obviously are quite different from the priorities at the national level. Should not the people of the State reserve their right to decide what their priorities should be? To take but one instance, the Planning Commission is speaking about providing universal access to primary education, while the need in Kerala is to expand the facilities for higher education.

One section which would definitely be in favour of changing the system of devolution of Central assistance from the present formula-based one to the proposed project-based one is the bureaucrats. Understandably, it would make them feel more important, since their capabilities would count a lot in getting assistance sanctioned under each of the Central projects.

Subsequent to the meeting of the leaders of political parties convened by the Chief Minister to discuss the Planning Commission's paper, the State Planning Board also deliberated on the subject. The stand evolved thus was then placed in the Cabinet for its approval. The Chief Minister, Mr. A.K. Antony, during his routine press briefing after this Cabinet meeting on Wednesday, however, did not disclose what the State's stand would be at the NDC meeting.