Discuss the recommendations of the Sarkaria Commission in respect of the National Development Council for improving Centre-State planning relations.

Context: The National Development Council & Existing Issues

The NDC, with the Prime Minister as its Chairman, included Chief Ministers of all States and members of the Planning Commission. While intended to be a collaborative body, the NDC often faced criticism for being dominated by the Centre. States felt their concerns were not adequately addressed, particularly regarding resource allocation and the formulation of policies impacting their specific needs. The Planning Commission, with its centralized approach, was also seen as a source of friction.

Sarkaria Commission’s Recommendations Regarding the NDC

1. Composition and Representation

• Increased State Representation: The Commission recommended a more balanced representation of States within the NDC. While retaining the Prime Minister as Chairman, it suggested giving greater weightage to State Chief Ministers’ views.
• Rotating Chairmanship (Limited): While not advocating for a complete shift in chairmanship, the Commission explored the possibility of rotating the vice-chairmanship among States to foster a sense of ownership.

2. Role and Functions of the NDC

• Strengthening the Role of the NDC: The Commission emphasized strengthening the NDC’s role as the primary forum for discussing and resolving Centre-State planning disputes. It suggested the NDC should be actively involved in the formulation of broad national policies with significant implications for States.
• Prioritization of State Plans: The Sarkaria Commission advocated for greater consideration of State plans and priorities during the formulation of national plans. It suggested a mechanism for incorporating State-specific needs into the overall planning framework.
• Inter-State Council Coordination: The Commission recommended closer coordination between the NDC and the Inter-State Council (established under Article 263 of the Constitution) to address issues requiring inter-state cooperation.

3. Financial Resources and Resource Allocation

• Review of Resource Allocation Formula: The Commission strongly recommended a comprehensive review of the formula used for allocating financial resources to States. It advocated for a more objective and transparent formula that considered factors like population, poverty levels, infrastructure deficits, and fiscal capacity.
• Increased State Share in Central Taxes: The Commission suggested increasing the States’ share in Central taxes to provide them with greater financial autonomy and resources for development.
• Greater Flexibility in Utilizing Funds: The Commission recommended providing States with greater flexibility in utilizing funds allocated by the Centre, allowing them to tailor programs to their specific needs and priorities.

4. Institutional Mechanisms for Coordination

• Establishment of Standing Committees: The Commission proposed the establishment of standing committees comprising representatives from both the Centre and States to address specific planning issues on a continuous basis.
• Regular Meetings and Consultations: The Commission emphasized the importance of regular meetings and consultations between Central and State officials to facilitate effective coordination and problem-solving.
• Strengthening the Planning Commission’s State Units: The Commission suggested strengthening the Planning Commission’s units located in States to improve communication and coordination between the Centre and States.

Implementation and Impact

While some of the Sarkaria Commission’s recommendations were implemented, many remained partially addressed. The NDC continued to function until its abolition in 2014 with the establishment of the NITI Aayog. NITI Aayog, while aiming for a more collaborative approach, has faced similar criticisms regarding the balance of power between the Centre and States. The recommendations regarding resource allocation formulas have seen some revisions over time, but concerns about equity and fairness persist. The emphasis on strengthening inter-state coordination has also seen limited success.

The abolition of the Planning Commission and the establishment of NITI Aayog marked a significant shift in India’s planning paradigm. NITI Aayog adopted a bottom-up approach, emphasizing State-led development and cooperative federalism. However, the core issues of Centre-State financial imbalances and the need for a more equitable resource allocation formula remain relevant even today.