Financial powers gone, Planning Commission stares at shutdown

[Ray]

Winds of change: Financial powers gone, Planning Commission stares at shutdown

A television monitor in the lobby of the Planning Commission which used to run the schedule of meetings planned for the day when Montek Singh Ahluwalia was Deputy Chairman, now displays "Thoughts for the Day".

Ahluwalia has resigned, and for the first time since the Planning Commission was set up in 1950, it will not decide on the gross budgetary support for the Railways.

Instead, the Finance Ministry has scheduled a meeting later this month to decide the Plan budget for the Railway Ministry.
The moving of financial powers out of Yojana Bhawan formalises the end of the role of the Commission, and marks the biggest change in the Indian fiscal space in decades.

Minister of State (Independent Charge) for Planning Rao Inderjit Singh made the nature of the change clear in a brief conversation with The Indian Express. He indicated the government was in no hurry to appoint a new Deputy Chairman of the Planning Commission.

"Things are in a state of flux. It still has to be decided by the Prime Minister if a Deputy Chairman is to be appointed," Singh said. "It has been a Cabinet-level post in every government so far. We will decide later."

A source said the decision to give the Finance Ministry charge of allocations for state and central level ministries shows the Commission will not function in its present form any longer.

As a result, while North Block has passed under the security blanket of the intelligence agencies that precedes the laying of the Budget, no such instructions has been issued for the Planning Commission, unlike in past years.

Ahluwalia declined to speak on the subject. Former Member Saumitra Chaudhuri said, "We had all stepped out by May 27th from there, vacating our offices." Most of what was on the Members' tables has since been transferred to Secretary-level officers posted as principal advisers at the Commission.

Former RBI Governor Bimal Jalan, who has also been a member in the Commission, said it would be better if the plan panel works on monitoring implementation of projects. "I don't mean it should be checking how much money allocated has got spent, but it should check the progress of projects cleared by the state and central governments," he said.

A committee headed by C Rangarajan said in 2012 that the distinction between Plan and non-Plan should be done away with. Arun Jaitley's Budget is expected to be the first one to implement this recommendation.

Since the interim Budget had already transferred most centrally sponsored schemes to state governments, the Commission, in any case, has little substantive role to play in the allocation of funds to states. Each state government has said that it would prefer the new arrangements to continue and expand.

The BJP's election manifesto had hinted at a revamp of the agency that is seen as a legacy of India's socialist past. It had said that the Centre should only be an enabler and facilitator for state governments.
Winds of change: Financial powers gone, Planning Commission stares at shutdown | The Indian Express

Will this increase or decrease the effectiveness in governance and the allocation and monitoring of expenses?

 

[Ray]

Hard decisions needed now: Chidambaram

Days after Prime Minister Narendra Modi said his government could take some "tough economic decisions", former finance minister P Chidambaram on Friday said "hard decisions are required" and asserted had he been in the government he would have supported "hard decisions."
He, however, hit out at Modi for his remarks that the UPA had left the coffers empty and asked the Prime Minister to come out of the election campaign mode and get on with the business of governing the country.

"If they want to take tough decisions, they will be welcome to do that. But each decision has to be weighed in the context of the economy at any given time. Let us see what these decisions are "¦ If we were in government, suppose I had continued in government, I would have supported "¦ hard decisions. It is in the 10-point agenda that is there in the Interim Budget speech as well as in the Congress party's manifesto. Hard decisions are required. Because the world economy is still very sluggish and there are head winds in the Indian economy," he said.

Chidambaram also admitted that inflation was one of the reasons for the Congress defeat in elections and said that the new dispensation will also soon realise that not all factors which leads to inflation are under control of any government. "I assume that inflation was one of the reasons. That is a very logical conclusion "¦ inflation certainly must have been one of the reasons why people voted against us," he said when asked what he thought was the reasons for the debacle.

"But the government will soon learn that not all factors are under the control of the government. This is what we had said when we were in the government that not all factors are under our control. We have to deal with the situation as we find them. I sincerely hope that situation in Middle East moderates or cools down. But if crude prices remain high as they were $115 a barrel, I am afraid it will pose difficulties to the government in management of the economy," he said.

Chidambaram also favoured downsizing of the Planning Commission amid reports that the government is likely to recast its role. "I cannot speak for the party here. My personal view has been that the Planning Commission should be a much more limited body and tasked with drawing up prospective plans. Planning Commission, as it is today, is too big, too flabby and too unwieldy," he said and added that he had expressed the same view within the government when the UPA was in power.

The former finance minister, addressing a press conference, said the cash balance on June 1, just after the UPA government demitted office, was Rs 26,510 crore as compared to "negative Rs 2,730 crore" on the same date in 2004 after the NDA left office.
Hard decisions needed now: Chidambaram | The Indian Express | Page 99

Thus Spake Swami Chidambaramananda.