NITI AAYOG Suggests Performance Based Grant System for States

In the 2nd meeting of the 15th Finance Commission with it, the NITI Aayog recently put forth suggestions for the 15th Finance Commission and made a case for an award of  Performance-Based Grants for States /Sectors.

While observing that richer states grew faster than poorer states, the NITI Aayog made suggestions to the Commission on the transfer of resources to States by the Centre.

The Aayog also listed out certain possible indicators for the consideration of the Commission, it made recommendations on Innovation and Transformation funds as well as on Medium Term Expenditure Framework.

Appreciating the suggestions of the Aayog, Chairman, N.K. Singh said there were concrete new thoughts and Commission would certainly examine the recommendations thoroughly.

The Chairman added that since NITI Aayog was an important and integral part of the Central Government, its recommendations must be part of the Central Government Memorandum to the Finance Commission.

The Members also exchanged views on the issues raised by the Aayog and discussed relevant issues like the Centrally Sponsored Schemes – which have now been made Co-terminus with the award period of the respective Finance Commission, conditionality/lack-of-conditionality of the horizontal, vertically and sector specific, and striking balance between performance grants and basic grants.