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NITI Aayog�s recommendation to favour NE

By Spl Correspondent
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NEW DELHI, Nov 12 - In a major relief to the North Eastern States, the NITI Aayog has recommended that the funding pattern in a Centrally-sponsored scheme should be either 100 per cent by the Centre or at least, the existing pattern of 90:10 should continue.

A report of the Sub Group of Chief Ministers on rationalisation of Centrally-sponsored scheme funding, released here today, said that Himalayan and North Eastern States have stated that it is difficult to mobilise their share even on the existing pattern. This is likely to be further exacerbated due to discontinuation of the block grants.

The Sub Group recommended that there should be no Centrally-sponsored scheme with less than 50 per cent share of the Central Government. For all schemes, the proposed funding pattern should be implemented from the current financial year itself. For the core schemes of social inclusion, no change in the funding pattern has been recommended.

For the eight North Eastern States and the Himalayan States of Himachal Pradesh, J&K and Uttarakhand � all Special Category States � the funding pattern was as follows: Core Sector Schemes: Centre 90:10 and Optional Schemes: Centre 80:20. However, schemes presently having the Centre�s share below 80 per cent will remain at the same level, it was recommended.

There is consensus among States that the procedure for the release of funds from the Centre to the States should be streamlined. The present system is process-ridden and, as a result, funds are often released towards the end of the financial year when they cannot be utilised effectively, the report said.

The Sub Group further noted that some North Eastern and Himalayan States have pointed out that the working season in their States is very short and, as a result, fund utilisation remains sub-optimal. The Sub Group is of the view that any procedure for the release of funds should be simple on the one hand and on the other, it should also be in accordance with a robust policy of cash management by the Centre and the States, the report said.

In its submission, Assam said that due to the mid-course change in the system, its Budget proposals have been completely derailed. Due to the discontinuation of the block grants and the proposed change of pattern in funding, additional resources awarded by the 14th Finance Commission as untied funds may actually get offset. The so-called untied funds will actually be tied to meet the higher State share in a scheme.

The State Assembly has passed a resolution for restoration of plan assistance to the States. Special Category Status should continue and the funding pattern of Centrally-sponsored schemes for Assam should remain at 100:00 or 90:10, as the case may be, but not at a pattern which may put Assam to any disadvantage vis-�-vis the present position.

Resource allocation for Centrally-sponsored schemes should be communicated in November-December positively to facilitate effective planning and proper budgeting at the State level and there should be greater flexibility.

The release of instalments should be smooth and hassle-free. There may be special packages for completing ongoing Centrally-sponsored schemes. Flexi funds may be increased, the Assam Government demanded. The Sub Group further noted that in percentage terms, block grants formed a much larger portion of the Central Plan transfers to Special Category States. The annual average release to all 11 North Eastern and Himalayan States for Centrally-sponsored schemes is about Rs 25,790 crore, whereas for a populous State like Uttar Pradesh, the overall release is on an average Rs 22,333 crore per year.

The Sub Group opined that the main issue at hand is to assess the efficiency of resource use. Large flows of Central assistance must be effectively utilised in terms of outcome. This entails comparing performances across States to identify strengths and weaknesses with a view to build on the strengths of the individual States.

The Sub Group further noted that for schemes falling under Category B in the Union Budget, the 2014-15 allocation for the North Eastern and three Himalayan States was less than Rs 24,000 crore. However, the actual releases to these States were just about Rs 15,000 crore, which is a little over 60 per cent of the Budget expenditure figure.

The Sub Group noted that the above figures clearly indicate that due to various factors, the North Eastern and Himalayan States have not been accessing Central assistance to their full potential.

Currently, there are no transparent criteria for inter-State allocations for Centrally-sponsored schemes. In this regard, the Sub Group recommended that the NITI Aayog, in consultation with State and Central Ministries should evolve transparent criteria based on the development needs, population and potential of the State in that sector of NE and Himalayan States.

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NITI Aayog�s recommendation to favour NE

NEW DELHI, Nov 12 - In a major relief to the North Eastern States, the NITI Aayog has recommended that the funding pattern in a Centrally-sponsored scheme should be either 100 per cent by the Centre or at least, the existing pattern of 90:10 should continue.

A report of the Sub Group of Chief Ministers on rationalisation of Centrally-sponsored scheme funding, released here today, said that Himalayan and North Eastern States have stated that it is difficult to mobilise their share even on the existing pattern. This is likely to be further exacerbated due to discontinuation of the block grants.

The Sub Group recommended that there should be no Centrally-sponsored scheme with less than 50 per cent share of the Central Government. For all schemes, the proposed funding pattern should be implemented from the current financial year itself. For the core schemes of social inclusion, no change in the funding pattern has been recommended.

For the eight North Eastern States and the Himalayan States of Himachal Pradesh, J&K and Uttarakhand � all Special Category States � the funding pattern was as follows: Core Sector Schemes: Centre 90:10 and Optional Schemes: Centre 80:20. However, schemes presently having the Centre�s share below 80 per cent will remain at the same level, it was recommended.

There is consensus among States that the procedure for the release of funds from the Centre to the States should be streamlined. The present system is process-ridden and, as a result, funds are often released towards the end of the financial year when they cannot be utilised effectively, the report said.

The Sub Group further noted that some North Eastern and Himalayan States have pointed out that the working season in their States is very short and, as a result, fund utilisation remains sub-optimal. The Sub Group is of the view that any procedure for the release of funds should be simple on the one hand and on the other, it should also be in accordance with a robust policy of cash management by the Centre and the States, the report said.

In its submission, Assam said that due to the mid-course change in the system, its Budget proposals have been completely derailed. Due to the discontinuation of the block grants and the proposed change of pattern in funding, additional resources awarded by the 14th Finance Commission as untied funds may actually get offset. The so-called untied funds will actually be tied to meet the higher State share in a scheme.

The State Assembly has passed a resolution for restoration of plan assistance to the States. Special Category Status should continue and the funding pattern of Centrally-sponsored schemes for Assam should remain at 100:00 or 90:10, as the case may be, but not at a pattern which may put Assam to any disadvantage vis-�-vis the present position.

Resource allocation for Centrally-sponsored schemes should be communicated in November-December positively to facilitate effective planning and proper budgeting at the State level and there should be greater flexibility.

The release of instalments should be smooth and hassle-free. There may be special packages for completing ongoing Centrally-sponsored schemes. Flexi funds may be increased, the Assam Government demanded. The Sub Group further noted that in percentage terms, block grants formed a much larger portion of the Central Plan transfers to Special Category States. The annual average release to all 11 North Eastern and Himalayan States for Centrally-sponsored schemes is about Rs 25,790 crore, whereas for a populous State like Uttar Pradesh, the overall release is on an average Rs 22,333 crore per year.

The Sub Group opined that the main issue at hand is to assess the efficiency of resource use. Large flows of Central assistance must be effectively utilised in terms of outcome. This entails comparing performances across States to identify strengths and weaknesses with a view to build on the strengths of the individual States.

The Sub Group further noted that for schemes falling under Category B in the Union Budget, the 2014-15 allocation for the North Eastern and three Himalayan States was less than Rs 24,000 crore. However, the actual releases to these States were just about Rs 15,000 crore, which is a little over 60 per cent of the Budget expenditure figure.

The Sub Group noted that the above figures clearly indicate that due to various factors, the North Eastern and Himalayan States have not been accessing Central assistance to their full potential.

Currently, there are no transparent criteria for inter-State allocations for Centrally-sponsored schemes. In this regard, the Sub Group recommended that the NITI Aayog, in consultation with State and Central Ministries should evolve transparent criteria based on the development needs, population and potential of the State in that sector of NE and Himalayan States.

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