Modi seeks states' hand in reviving investment cycle

Before Budget, promises more untied funds

In a step towards "cooperative federalism", Prime Minister Narendra Modi on Sunday chaired the first meeting of the National Institution for Transforming India (NITI) Aayog's governing council, and sought states' cooperation in reviving the investment cycle to bring the economy back on a high-growth path. Promising states more funds and greater power to run schemes, he asked them to expedite implementation of projects.

Addressing the governing council, which includes chief ministers and members of the Aayog, Modi, also the chairperson of the NITI Aayog, dropped hints that the 'one-size-fits-all' model would end, even as several states asked for more untied funds ahead of the Budget for 2015-16.

The prime minister, keen to revive investments, asked the chief ministers to personally monitor the factors that were affecting project execution, and suggested each state identify an officer to help resolve pending issues.

West Bengal Chief Minister Mamata Banerjee skipped Sunday's meeting but Bihar Chief Minister Jitan Ram Manjhi, who is facing political turmoil back home, was present.

Among others who attended were Uttar Pradesh Chief Minister Akhilesh Yadav, Assam's Tarun Gogoi, Punjab's Parkash Singh Badal, Tamil Nadu's O Panneerselvam, Kerala's Oommen Chandy and Himachal Pradesh's Virbhadra Singh, besides chief ministers of all states ruled by the Bharatiya Janata Party.

The interaction during the governing council meeting was coordinated by Finance Minister Arun Jaitley, while opening remarks were made by NITI Aayog Vice-Chairman Arvind Panagariya.

Investment cycle in the country is facing hurdles due to over-indebtedness of companies. It was for this reason that the finance ministry's 'Mid-Year Economic Analysis' spoke of increasing public investment. Modi urged the chief ministers to get over all differences and work together to perk up investments.

"Forgetting all our differences, let us focus on the cycle of investment, growth, job creation and prosperity," he said at the meeting, attended by chief ministers and representatives of 31 states and Union territories, whom he addressed as 'Team India'.

The prime minister also highlighted that states had an important role to play, as it was in states that economic activities were to really take place. Asserting the world had started looking at India differently, he said "our biggest challenge still is how to eliminate poverty". Without growth, jobs could not be created and poverty could not be eliminated, he said. "First and foremost, we should aim at a high rate of growth."

He announced setting up of three sub-groups of chief ministers - one to decide on the future of the Centrally sponsored schemes (CSS), another to foster skill development, and a third to push his pet project, the 'Swachh Bharat Abhiyan.'

Alongside, two task forces will be set up in each state by the local government - one on poverty alleviation and the economic model needed to achieve this, and the other to address the specific agriculture-related needs of the state.

These task forces and sub-groups will be constituted under the overall supervision of the NITI Aayog.

The sub-group on CSS would decide whether the number of such schemes should be brought down from the current 66, or should those be completely abolished, or should some be transferred to state governments, Jaitley told reporters after the meeting.

Modi said: "We will move away from the 'one size fits all' schemes and forge a better match between the schemes and the states' needs."

Jaitley said the sub-groups were expected to give their reports within the next month and a half. The sub-group on 'Swachh Bharat Abhiyan,' would explore institutional mechanism and technical know-how to push the programme.

The Centre's assistance to states for the 66 CSSes in 2014-15 has been Rs 338,562 crore, more than double the Rs 136,254 crore the previous financial year.

In the 11th Plan period, the total provision for CSSes stood at Rs 6.6 lakh-crore. At one point, there were as many as 360 such schemes but their number has come down over a period of time - last year, it was reduced from 147 to 66.

Officials said the government had plans to reduce the number of CSSes to 10, so that states could get more flexibility to spend on development works, in line with their requirements, and not according to the schemes designed by the Centre.

Some of the flagship central schemes include the Mahatma Gandhi National Rural Employment Guarantee Scheme, Bharat Nirman, Sarva Shiksha Abhiyan and Pradhan Mantri Grameen Sadak Yojana.

At present, the Centre allocates to states money for these development schemes, and states have to spend the funds according to guidelines. Modi said states would be empowered with adequate finances, technology and knowledge from the Centre to be able to plan and execute better.

The recently constituted NITI Aayog has replaced the six-decade-old Planning Commission as a think-tank to suggest policy directions to the central and state governments

FOR 'TEAM INDIA'

• PM Modi constitutes three-sub groups of chief ministers - to revamp Centrally sponsored schemes, for skill development, and for Swachh Bharat
   
• Each state will constitute two special task forces - on poverty alleviation and agriculture
   
• Officers in each state for smooth execution and completion of pending infrastructure projects
   
• PM has assured states of more funds from the Centre and asked them to end political differences
   
• Jaitley says the 12th Plan will continue for now, a mid-term appraisal is on