Centre plans to provide funds to States directly

19 January 2012: Majority of States have favoured the Rangarajan Committee's recommendations on doing away with the current system of classification of expenditure into plan and non-plan categories. They have also agreed that the BK Chaturvedi Group report on Centrally sponsored schemes should be implemented. The present classification of expenditure into plan and non-plan leads to several contradictions. This classification leads to the neglect of the maintenance of assets such as roads.

It also leads to an imbalance between the creation of physical infrastructure such as schools and hospitals, and creating the manpower required to provide services, such as doctors or teachers, the report had noted. States have requested the Centre to earmark 20 per cent of their budget allocation as ‘flexi funds' to address the issue of divergence among States in level of economic development, geographical condition and nature of gaps in physical infrastructure.

Source: Hindubusinessline