Fifteenth Finance Commission Chairman NK Singh on Friday called for rationalisation of centrally sponsored schemes and the constitution of a panel to re-examine classification of legislative subjects between the Centre and states. Singh added a fiscal deficit range, based on expenditure outcomes, rather than a point target may be the need of the hour.
“We need to constitute an empowered group of domain experts to submit to the Finance Minister and Prime Minister on modalities of further and deeper rationalisation of these centrally sponsored schemes,” said Singh at a virtual conference organised by the Federation of Indian Chambers of Commerce and Industry. Singh noted that there were around 211 schemes and sub-schemes under 29 core umbrella schemes sponsored by the central government.
Singh said the total public outlays on centrally sponsored schemes were close to Rs 6-7 lakh crore per annum and that the central government spends over Rs 3.5 lakh crore, or around 1.2 per cent of GDP, on these schemes.
“Are we persuaded that the outcome from this large public outlay both by the Centre and the States justifies this recurring expenditure?” asked Singh.
A panel should be set up to review the allocation of legislative powers between the Centre and the states in Schedule VII of the Constitution. “We need to revisit the VII Schedule of the Constitution in a more fundamental way,” he said, noting that the division of functions between the Centre and states had eroded over time. A high-powered panel should take into account changes in technology, global interdependence and changes in national priorities when recommending the classification of subjects to the union, state or concurrent lists. He argued need for a greater emphasis on expenditure-based outcomes when setting fiscal targets.
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