Transfers through the Planning Commission

The States in India receive central fiscal transfers through the mechanisms of Finance Commission, Planning Commission and the Central Ministries. The transfers through the Finance Commission are statutory, being a part of the design in the Constitution of India. The transfers of central assistance for plan financing of the States from the Planning Commission are a part of the democratic decentralisation adopted through an executive order. The transfers from the Planning Commission also provide reasonable space for ventilating the political aspirations of the governments in the States. The transfers from the Central Ministries are by way of the central sector programmes and the centrally sponsored schemes are such transfers are generally menu driven, leaving little scope for discretion.

One often reads statements issued by various interest groups about the central government favouring a particular State government or ignoring the interests of the State. As it is, such statements are laced with praising the outfit at the central level or criticising it if the State government happens to belong to a different political ideology. The general public, at large, cannot appreciate the nuances of such statements.Read Full Story