By Bhabani Prasad Mahapatra :

India, being a union of states suffers from horizontal and vertical imbalances. There are two leading institutions to correct these imbalances. They are Finance Commission [FC] and the Planning Commission [PC]. FC is a constitutional body, but PC is not.

However, the central government runs both FC and PC like any of its line departments. Most of the times, the state governments strongly object the recommendations of these two commissions particularly by those states ruled by the party other than the ruling party at the centre.

Recently, the central government has accepted 14th FC. The FC decides the formula for the devolution of union tax proceeds to be distributed among the states and grants-in aids for the states. However, the sectoral and state specific grants are not fixed by the FC. The 14th FC has referred to Inter State Council (ISC) for devising formula for deciding and distributing the plan assistance for the state and sectoral grants.

At the same time the FC neither mentioned about the PC or its new incarnation NITI (National Institute for Transforming India) Aayog – which was recently constituted by Modi Government at the centre, even once. The concept of planning commission has been synonymous with socialistic planning in India and after the independence; the PC was formed to chalk out policies for a planned development of India, which now is a thing of past with the formation of NITI Aayog in its place.

With the union government doing away with PC, what is best option left to the state government, which also has created two similar institutions, viz. – State Planning Commission [SPC] and State Finance Commission [SFC].

While the SFC is a constitutional body and planning commission of State is not a constitutional body. Does the state planning commission have any relevance in the changed scenario like NITI Aayog?

The Odisha government may also have to take a lead among the states to change the SPC into a more professional and independent body like State Institution for Transforming Odisha (SITO) and the members of the SITO could be the chairmen of Zilla Parishad. In other words, SITO should be the true political representation of all the districts of Odisha. The chief minister could be the ex-officio chairman. The SITO should have some experts having exemplary experience in polity, economy, administration, law. Among the experts, one may be called the CEO (Chief Executive Officer) and this group of experts should be made accountable for the planning of the state considering the inter district inequalities.

SITO should verify the district plans and then finalize the annual plan of Odisha after getting it endorsed by the majority of the members. This type of institution will be beneficial for addressing the inter district and regional inequalities. At the same time the district plans have to be more realistic and time bound.

Similarly, the SFC is a constitutional body and basically recommends the Central Finance Commission for the grants-in-aid for the urban and rural local bodies. However, the terms of reference of the SFC can be broadened. For example, special district assistance can be suggested by the SFC. More importantly, the District Planning Committee (DPC), which is constitutional body, should give a proposal for getting additional assistance because of the backwardness of a particular district. The SFC can decide different criteria for choosing the backwardness of a district for availing the special assistance by the state plan.

Once, the SFC recommendation and suggestion are accepted by the state government, the SITO should implement it by letter and spirit. If required, mid-term corrective measures can be suggested by SITO.