By the Way

Federal freedom

What is the power of the central government when it deals with the States? The central government manages the finance, defence and foreign affairs in letter and spirit. In his announcement from the Red Fort on August 15, Narendra Modi disbanded the Planning Commission and opened a new debate in the ministries. If sources are to be believed, the new planning dispensation is of the opinion that the budgetary provision for the States will be transferred to the respective States in one tranche. Now the Secretaries and Joint Secretaries in the ministries are bewildered. The States report to different ministries for financial sanctions from time to time and ministries keep monitoring the schemes. If the money is transferred in one go, there will be no control or audit mechanism. Senior bureaucrats feel that Modi must have been offended by the federal mechanism of the Congress party but the new mechanism being implemented will open a Pandora’s box as the States have poor financial management and most of them are running on overdraft. The bureaucrats are afraid that if the money is passed on to the States in one go, it will be very difficult to stop misuse of the funds. It may create more financial indiscipline among the States. But who is bothered?

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