TN pitches for higher fund flows to states

Pitching for higher flow of funds from the Centre to the states, Tamil Nadu today demanded flexibility in the design of the flagship programmes and limiting the state's share to 25 per cent for such schemes.
In his presentation at the first meeting of the Governing Council of NITI Aayog here, State Chief Minister O Panneerselvam said vertical devolution of share to the states should be at least 50 per cent of the aggregate resources available with the Centre.
"We believe that the non-transparent, discretionary and uncertain fashion in which funds were allocated and disbursed to States by the erstwhile Planning Commission and by different Central Ministries under various centrally sponsored schemes must be comprehensively overhauled," he said at the meeting chaired by Prime Minister Narendra Modi here.

Seeking elimination of the distinction between plan and non-plan expenditure, he said increased fund flow would be feasible if other mechanisms of flow including plan assistance and centrally sponsored schemes were eliminated or greatly minimised.
Currently, transfers to States as Plan Assistance accounts for 15 per cent of central expenditure and 44 per cent of what States receive as central transfers, he said.
Stressing on substantial flexibility in the design of the flagship programmes to cater to the diverse needs and the capacity differentials amongst states, he said "the States' share should be limited to a maximum of 25 per cent of the scheme cost in order to ensure that the States' own expenditure priorities are not distorted."

Guidelines must allow states to dovetail central scheme funds with state funds where there is a similar state scheme and actual release of funds should adhere to the promised allocations without arbitrary mid-year reductions, he said.
Welcoming the inclusion of state Chief Ministers in the governing council of NITI Aayog, the Chief Minister said the views of the States need to be heard at different levels in the hierarchy of the Aayog.