In the 2018-2019 budget, the Centre announced a massive scheme aimed at providing health insurance cover to 500 million people. It was, at the time, hailed as a bold move by many political analysts.
However, as the contours of the scheme evolved, the Pradhan Mantri Jan Arogya Yojana or ‘Ayushmaan Bharat’, as the scheme was christened, was rejected by a number of state governments. Odisha, Telangana, Delhi, Punjab and Kerala found the scheme deficient. All of them found their own scheme more comprehensive, even though this meant losing out on Central funds which would have been spent in their state.
This has once again revived earlier controversies relating to the policy of Centre in spending public money.
Under our Constitution, the legislative power of the Centre and the states has been defined in Article 246.
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It provides for three lists. The first two indicate where the Union and state take precedence and the final one where both can legislate on subjects indicated. However, in the concurrent list, Central legislation has precedence.
Many of the areas of concern to the average person like agriculture, animal husbandry, health, land development, communication including roads, urban development are all under the state government’s domain. Some other areas like electricity and education are in the concurrent list, but states have very large stakes in this. While rural development is not specifically mentioned, its close link with land and agriculture puts it in the domain of the state.
The Centre’s enthusiasm to launch schemes
Despite the above position, most Centrally sponsored schemes relate to subjects falling in the legislative competence of the states. The enthusiasm of the Centre to launch schemes in areas which fall in the state’s domain can be ascribed to several factors.
Firstly, in many indicators of health and education, we continue to fare poorly. Under the global ‘millennium development goals’, there are certain national commitments. It is important that funds are provided to these sectors so that the goals can be met. So, in addition to the finance commission funds given to the states, resources are required to step up growth. There are worries that if the Centre does not launch schemes in these areas and transfer funds to the state governments without guidelines, the states may not spend it on these national priorities.
Second, there are certain basic necessities and infrastructure which are required by all citizens, especially the poor. This may include purchasing food grains at affordable prices, rural roads, rural housing and water, access to electricity, employment opportunities and addressing growing regional inequalities. The Centre cannot, and should not, be a mute spectator when problems exist in these areas.
Third, with increasing struggle for capturing political power in the states and the Centre by different political parties, they launch schemes which can provide them a good base for cornering votes. Since areas which directly affect the lives of the people (who are the voters) generally are the domain of the state, the Centre tries to launch schemes in these sectors while naming several of these as ‘Prime Minister Yojana’. This clearly indicates that the Centre is responsible and should be given credit for benefits enjoyed by citizens under the scheme. The states try to name their important imitative as ‘Chief Minister Yojana’ with similar objectives in mind. At times, states may prefer to forego Central funds, lest the party at the Centre gets political mileage out of the scheme.
After the NDA-II government came to power, there was an initial push for sharply reducing Centrally sponsored schemes as part of ‘good governance’. But soon enough, new schemes were announced by the Centre. A number of these related to areas of health, rural development, agriculture, urban development, irrigation and medium and small industry – all state subjects. The net result has been that Centrally sponsored schemes have again gone up in areas which are the domain of the state.
File photo pf Prime Minister Narendra Modi with a beneficiary of the Pradhan Mantri Ujjawala Yojana. Credit: PTI
The states’s opposition
State governments are opposed to this on several grounds.
One, in a country as diverse and big as ours, the requirements of development differ widely. By asking states to implement these schemes which have a uniform approach to their problems, their individual development gap is ignored.
Two, the local conditions are varying in different parts of the country. The schemes make uniform provisions and guidelines without considering this factor. Often, the norms prescribed under the scheme require change to be applied meaningfully to a state. This flexibility has been missing in Central schemes.
Three, considering that most of these schemes relate to subjects under the domain of states, they would like to have full freedom for developing their own schemes. They want the Centre to transfer all resources to them for effective use of funds in accordance with their needs and consistent with the federal nature of our polity. This will ensure that schemes will be tailor-made to the needs of the states and funds will be used more productively.
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In the initial five decades of our independence, the financial position of states was not very healthy.
In the last two decades, there has been a consistent improvement in their financial position, largely because of a series of recommendations made by the finance commissions and supported by the Centre.
As a result, the revenue deficit of states has declined from 4% of the GDP in 2001-02 to 0.2% in 2005-06 and has been nil for the past several years. There has been a sharp improvement in this after the 14th Finance Commission, which gave its recommendation for years 2015-20 to increase the share of states in divisible pool of Central taxes to 42.5% from an earlier share of 32.5%.
The importance of flexibility
Despite an extra strain on states’s resources due to decline or moderation in funding of certain erstwhile schemes by the Centre, their overall resources have been buoyant. This has given them further financial muscle to decline Central funding and push schemes which may give the ruling party an electoral advantage. Part of the reason for the opposition to the Centre’s Ayushmaan Bharat could be their perception of getting this advantage. This attitude is not a healthy development for our growth.
It is quite clear that resources of the states have to be supplemented through fund transfers under the Centrally-sponsored schemes, in which states should have flexibility. The formulation of such schemes should also keep in view the success stories of individual states. This will address a range of development problems. But making this a political agenda and naming the schemes after the PM or the CM will distort the effectiveness of national development strategy.
A political consensus needs to be evolved on removing all names of political leaders or their offices from existing schemes or those which may be launched in future. This will strengthen growth and strengthen democracy.
B.K. Chaturvedi is a former cabinet secretary and member, Planning Commission