As chief minister of Gujarat, Narendra Modi had
often argued that the central government implemented schemes were at odds with
the state's needs and priorities. For example, schemes that provided funds for
electrification were at best of limited value to Gujarat since it had already
achieved near 100% electrification. This state could have spent the money
provided for such a scheme more productively if allowed to use it for other
purposes.
In advancing this view, Modi was joined by other
chief ministers such as Vasundhara Raje of Rajasthan who argued that the vast
numbers of central schemes further restricted their fiscal space because many
of them required matching contributions by them from their otherwise untied
funds. Once these matching funds were committed to access central schemes,
states were left with very limited funds for even the most important
expenditure items such as enforcement of law and order.
Nevertheless, this system has remained entrenched in
one form or another in the last several decades on account of coincidence of
three factors. First, outside of state leaders and a few economists and policy
analysts, advocates of the view that true federalism means giving greater
fiscal space to states and trusting them in setting their own priorities have
been few and far between.
Second, the Finance Commission appointed once
every five years plays a key role in the division of tax revenues between
Centre and states. Consistent with the first point, successive Finance
Commissions held untied funds to the states at or below 30% of the divisible
tax pool. Only the 13th Finance Commission exceeded this mark, setting states'
share at 32%.
Finally, successive central governments have
chosen to transfer the bulk of the remaining funds to the states via central
and centrally sponsored schemes. With nearly 8% growth over an entire decade,
tax revenues have significantly expanded. Alongside, central and centrally
sponsored schemes and the revenue resources they absorb have expanded
dramatically as well.
Two key factors have come together to
dramatically alter this equilibrium.One, India now has a prime minister who was
once a chief minister and strongly feels that cooperative federalism means
greater fiscal and legislative space for states. And two, by a happy
coincidence, the chairman and members of the 14th Finance Commission believe in
genuine federalism themselves.
Moreover, they have recognised the opportunity
offered by a prime minister at the helm who truly believes in
the power of states and their leaders. Accordingly, they have recommended that
starting 2015-16, states be awarded 42% of the divisible pool of tax revenues. This
is a gigantic and unprecedented 10% jump in devolution.
Predictably, the prime minister and his Cabinet
have accepted this bold recommendation of the 14th Finance Commission.
What implications does this change have? For
starters, with larger transfers coming as untied funds, states also have
greater responsibility in discharging their duties. It is likely that they will
now have to take greater responsibility in areas that have been hitherto covered
by the Centre, especially those falling on the state list. States will also
have to do this in ways that are more consistent with their priorities and not
according to “one size fits all “schemes. By the same token, with a lower share
in the divisible pool the Centre's fiscal space will shrink, requiring a
rethink of central and centrally sponsored schemes.
One might ask where does Niti Aayog fit into
this story? I am tempted to say that in replacing the Planning Commission by
Niti Aayog, Prime Minister Modi may have anticipated the 14th Finance
Commission. Under the previous regime, the Centre was often seen as “giver“ and
states as “recipients“ thereby making the latter feel that they were less than
equal partners. In replacing the Planning Commission by Niti Aayog, the prime
minister sought to change that equation and forge an equal relationship between
the two sides. As such this change represents a step towards cooperative
federalism.
We will have a more complete picture of the
emerging Centre-state relations this Saturday when the finance minister
presents the budget. But even with what we now know, one thing is clear: in the
years to come, Niti Aayog will have to play a much greater role in the
knowledge space. Greater fiscal freedom combined with greater legislative
freedom in areas covered by the concurrent list of the Constitution means that
states will need to play a more active role in designing their own programmes
and policies.
As they do so, they will need to reach out to
data, analysis and expert advice. The design of Niti Aayog as per the Cabinet
Note of 1 January 2015 positions it well to provide these services. By the same
token, those of us at Niti Aayog have to work hard in the months to come to
build new strengths so that we do not disappoint the states that reach out to
us for advice and assistance. We shall see.
Directions: (1-6): Read the following
passage carefully and answers the questions given below it. Certain words are
given in bold to help you locate them while answering some of the questions.
Ques. 1 As the Chief Minister of Gujarat,
Narendra Modi why argued that the Central Government implemented schemes are at
odds for the state government?
a) Because the Central Government was not paying
the equal amount of funds for all the states.
b) Because, he being from the opposition, want to criticize the steps taken by the Central Govenrment and leave an impression on the general public mind that what a crook central government is.
c) Because Central Government doesn't take in the picture all the perspective while allocating the funds.
d) Because he wanted more funds for filling his and his cabinet minister's pocket.
e) None of these
Ques. 2 Why Vasundhara Raje decided to join the views of Narendra Modi?
a) Being from the same party, she had no choice but to join hand in hand with her party leader.
b) Vasundhra Raje and Narendra Modi had a hidden plan of going against any of the good initiatives taken by the Central Government.
c) Vasundhra Raje was also facing the atrocities of Central Government and want to raise her voice with Narendra Modi.
d) Vasundhra Raje, being a Chief Minister of a state of India, where central schemes are restricted the fiscal space of the state government, feels that it is injustice on the part of Central Government.
Ques. 3 The writer referred the PM's view of cooperative federalism, what do you understand by cooperative federalism?
a) It means a more prominent role for the Centre, than states.
b) It means the competitiveness between the Centre and the state.
c) It means more competitiveness among states
d) It means a sync in relation among the states and the centre.
e) It means a sync in relation among the states
Ques 4. What does writer meant by "one size fits all" schemes?
a) NITI Ayog will makes schemes that would be equally beneficial for all.
b) Previously, the schemes were more transparent and object oriented.
c) Planning Commission were making schemes without considering the crucial scenario in the sates.
d) Planning Commission was making more precise schemes, so as to address the actual needs of the states.
e) None of these
Ques. 5 Why the Government did a 10% increase in devolution?
a) To transfer the funds in the hands of state.
b) Shed of the extra responsibility of the state sponsored schemes.
c) To make state more self dependent.
d) To increase the extent of authority on states.
e) To appease the non BJP states in India.
Ques 6. What is the drastic change of the policy in NITI Ayog from that was in Planning Commission?
a) Now states will have equal equation with the centre.
b) States will have more financial freedom
c) Centre has given the responsibility to states to draft every scheme.
d) Both a and b
e) Both b and c
Directions (7-10): Which of the following words is the same in meaning as the word printed in bold as used in the passage:
Ques 7. Entrenched
a) disorganize
b) unsettle
c) establish
d) weaken
e) dissuade
Ques 8. Helm
a) rein
b) bottom
c) last
d) large
e) middle
Ques 9. Hitherto
a) last
b) until now
c) since
d) As far as
e) likely
Ques 10. Devolution
a) dispersal of power
b) control of power
c) bound by power
d) easing of power
e) deprived of power
b) Because, he being from the opposition, want to criticize the steps taken by the Central Govenrment and leave an impression on the general public mind that what a crook central government is.
c) Because Central Government doesn't take in the picture all the perspective while allocating the funds.
d) Because he wanted more funds for filling his and his cabinet minister's pocket.
e) None of these
Ques. 2 Why Vasundhara Raje decided to join the views of Narendra Modi?
a) Being from the same party, she had no choice but to join hand in hand with her party leader.
b) Vasundhra Raje and Narendra Modi had a hidden plan of going against any of the good initiatives taken by the Central Government.
c) Vasundhra Raje was also facing the atrocities of Central Government and want to raise her voice with Narendra Modi.
d) Vasundhra Raje, being a Chief Minister of a state of India, where central schemes are restricted the fiscal space of the state government, feels that it is injustice on the part of Central Government.
Ques. 3 The writer referred the PM's view of cooperative federalism, what do you understand by cooperative federalism?
a) It means a more prominent role for the Centre, than states.
b) It means the competitiveness between the Centre and the state.
c) It means more competitiveness among states
d) It means a sync in relation among the states and the centre.
e) It means a sync in relation among the states
Ques 4. What does writer meant by "one size fits all" schemes?
a) NITI Ayog will makes schemes that would be equally beneficial for all.
b) Previously, the schemes were more transparent and object oriented.
c) Planning Commission were making schemes without considering the crucial scenario in the sates.
d) Planning Commission was making more precise schemes, so as to address the actual needs of the states.
e) None of these
Ques. 5 Why the Government did a 10% increase in devolution?
a) To transfer the funds in the hands of state.
b) Shed of the extra responsibility of the state sponsored schemes.
c) To make state more self dependent.
d) To increase the extent of authority on states.
e) To appease the non BJP states in India.
Ques 6. What is the drastic change of the policy in NITI Ayog from that was in Planning Commission?
a) Now states will have equal equation with the centre.
b) States will have more financial freedom
c) Centre has given the responsibility to states to draft every scheme.
d) Both a and b
e) Both b and c
Directions (7-10): Which of the following words is the same in meaning as the word printed in bold as used in the passage:
Ques 7. Entrenched
a) disorganize
b) unsettle
c) establish
d) weaken
e) dissuade
Ques 8. Helm
a) rein
b) bottom
c) last
d) large
e) middle
Ques 9. Hitherto
a) last
b) until now
c) since
d) As far as
e) likely
Ques 10. Devolution
a) dispersal of power
b) control of power
c) bound by power
d) easing of power
e) deprived of power
ANSWERS
1. c 2. D 3. D 4. C 5. A 6. D
7. c 8. A 9. B 10. a