File photo of Union minister Maneka Gandhi
In what could be a major embarrassment for the central government, one of its own ministers has questioned the idea of devolving funds to state governments, saying the idea could disrupt social sector programmes.
In a letter to the head of the Chief Ministers' task force of the NITI Aayog, Union minister Maneka Gandhi has said that the confusion over the proportion of expenditure on various schemes between the Centre and state governments "may result in a situation where the focus is lost on critical programmes related to malnutrition of children... nutrition for pregnant and lactating mothers."
In his first full-year Budget, Finance Minister Arun Jaitley announced that states would be given more power to decide how they should spend money adding, "In spite of the large increase in devolution to states, which implies reduced fiscal space for the Centre, in the same proportion we are committed to the welfare of the poor and the neo-middle class."
But in the April 30 letter, Ms Gandhi writes, "States have expressed grave concern about non-release of funds under various schemes which has not been possible due to uncertainty of budgetary allocations and the ongoing exercise of re-working the central-state shares in a large number of social sector schemes."
In real terms, this has meant a shortfall of Rs 10,898 crore under the Integrated Child Development Services (ICDS) programme and Rs. 433 crore Shortfall under the Integrated Child Protection Scheme, she says in the letter.
"Given the fact that state governments have their own priorities, suddenly for them to take on this responsibility of spending in the social sector and investing in some of these big projects the government was funding may end up in a situation where the social sector becomes the fall guy despite the fact that something good constitutionally has been done through devolution," says Prof. Biswajit Dhar, Professor of Economics at the Jawaharlal Nehru University.
Poorer states like Odisha, who rely more on central support, have already written to the Centre expressing its concern over the lack of clarity that has stemmed from the idea of states having to contribute financially to run some of the most critical social sector schemes, saying they face net losses.