Niti Aayog meet: States to get greater say in new national planning regime

At Niti Aayog meeting, PM Narendra Modi vows to address growth imbalance, asks states to take lead in move to a January to December fiscal year

Prime Minister Narendra Modi and state chief ministers on Sunday considered a new approach in policy planning that aims to give states a greater say in determining national priorities—including in internal security and defence—set out in a 15-year vision and a draft three-year short-term action plan ending 2019-20.

The vision document and the draft 300-point action plan prepared with suggestions from states and gram sabhas rest upon the spirit of cooperative federalism that succeeds the Nehruvian era’s centralized five-year planning that drew to a close on 31 March with the end of the 12th five year plan. They were discussed as part of the Niti Aayog’s third governing body meeting. The vision document projects the economy to grow more than three-fold to Rs469 lakh crore by 2031-32, from Rs137 lakh crore in 2015-16, assuming an 8% annual growth.

“Niti Aayog is a collaborative federal body whose strength is in its ideas, rather than in administrative or financial control,” an official statement quoted Modi as saying in his opening remarks to the think tank. He promised states that regional growth imbalance will be addressed both nationally and within states. The Prime Minister also suggested that states should take the lead in changing the financial year to January-December and “carry forward the debate and discussion on simultaneous elections.” The idea is better economic and political management of the country. Modi also urged states to put in place State Goods and Services Tax (SGST) laws without delay and to speed up capital expenditure and infrastructure creation.

Niti Aayog tweeted that the long-term national development agenda up to 2031-32 extend the traditional plan mandate to include internal security and defence. By 2031-32, the country should be “highly educated, healthy, secure, corruption-free, energy abundant, environmentally friendly and globally influential,” it said.

Niti Aayog vice-chairman Arvind Panagariya told reporters after the meeting that the action plan assesses the revenue available to the union and state governments over the next three years to suggest enhanced spending on priority areas like health, infrastructure, agriculture and rural economy. The action plan will be finalized after states give their feedback.

The governing body also reviewed the progress in drafting a Regulatory Reforms Bill, a model Agriculture Land Leasing Act, changes to the Agricultural Produce Marketing Committee Act, a national energy policy and strategic disinvestment of state-owned enterprises.

Madhya Pradesh chief minister Shivraj Singh Chouhan made a presentation on doubling of farmers’ income, by focusing on irrigation, technology generation and dissemination, market reforms and livestock productivity.

The short-term action plan coincides with the remaining three years of the 14th Finance Commission’s award period ending in 2019-20 as it gives certainty on the cash flow of central and state governments for the period.

Shaping the country’s development plan with state governments consolidates the resetting of centre-state relations under the co-operative federalism achieved through higher untied fund allocation to states from the centre’s divisible pool of taxes (without specifying end-use) and the setting up of the goods and services tax (GST) Council, in which neither the Union nor the state governments can take decisions without the support of the other.

GST reflects the spirit of “one nation, one aspiration, one determination,” Modi said. He said that the share of central funds to states that are tied to specific central projects have come down from 40% of total allocation in 2014-15 to 25% in 2016-17 with a corresponding increase in funds which are not linked to specific schemes, giving states greater freedom in their utilization.

The meeting also reviewed Niti Aayog’s move to encourage states to excel in various governance parameters by comparing performance.

Experts welcomed the move to foster competition among states.

“Competitive federalism is a very good strategy. Comparing states on ‘ease of doing business’ is a good first step. Now states must be compared on the pace at which they are creating jobs and livelihoods, improving health and education for citizens, and developing local governance capabilities,” said Arun Maira, former member of the Planning Commission.

Modi said it was the collective responsibility of the gathering to envision the India of 2022—the 75th anniversary of independence—and see how the country could swiftly move forward the goals set in the vision document.

The prime minister told states that advancing of the Union budget date to 1 February in 2017 from the customary last day of the month was meant to make funds available for various schemes so that they could be utilized in time, especially for farming before the monsoon arrived. Dropping the distinction between plan and non-plan spending has enabled the authorities to focus on welfare spending, Modi said.