Economic policy: Modes of State intervention in the context of Centre's Budget (2013-14)
- Part 2 -

Dr L Krishnamangol Singh *

In the context of the responsibility for the formulation or preparation of economic policies for the States, the State Governments can also find out several development opportunities or programmes for economic development of the States.

But, they are subject to careful scrutiny and approval of the Centre. Again, the State Governments cannot formulate alternative economic policies for economic development of the States against the policy framework of the nation's economic policy.

In fact, the State Governments cannot go beyond the legitimacy, power and functions of the States. However, the State Governments can initiate development programmes within the policy framework of the Nation. They can also adjust to the national economic policies in order to promote national interest and national development with the Central government playing or assuming the leading role in the management of the national economy.

In fact, there is the need for State-level reforms for economic development in the states, which call for political support of the Centre.

This approach will also help in Nation building and development of the entire country (i.e. India). For example, there is the need for re-examination of the present system of State Five Year Plans, in which there should be wider scope for people's participation in development.

The State Governments also need to be given more active role to make the public, State and private sectors more effective and efficient in their working or activities. While there is the need for State-level Planning Commissions in the model of State-level reforms suggested here, there is also the urgent need for decentralisation of Five Year Plans at the district and grass-root levels.

In fact, there is the need for identification of the factors for establishing a new system of Five Year Plans both at the State, District and Block levels with the Central Government assuming the responsibility for regulating the entire system of Five Year Plans or planning for the nation. In fact, there should be well-knit system of Nation building and Nation development in this new paradigm shift in the exercise or preparation of economic policies of the State Governments for economic development of their own States.

And such economic policies should also be in conformity with the national economic policies. Thus, the standard theory of economic policy suggests that the States or modern Governments should take more active role in the preparation and formulation of economic policies and in implementing them for economic growth, development and welfare of the people.

In the context of the responsibility for the formulation or preparation of economic policies for the States, the State Governments can also find out several development opportunities or programmes for economic development of the States.

But, they are subject to careful scrutiny and approval of the Centre. Again, the State Governments cannot formulate alternative economic policies for economic development of the States against the policy framework of the nation's economic policy.

In fact, the State Governments cannot go beyond the legitimacy, power and functions of the States. However, the State Governments can initiate development programmes within the policy framework of the Nation. They can also adjust to the national economic policies in order to promote national interest and national development with the Central government playing or assuming the leading role in the management of the national economy.

The foregoing discussions have revealed that the modern Governments have the responsibility for formulating the economic policies of the states. In the context of India, the Central Government has assumed the main responsibility for conducting or formulating the economic policies of the country. Thus, the rational economic polices or the sound economic policies are essential pre-requisites for promoting and accelerating rapid economic development in the country.

Again, the State Governments in the country have also integral roles in the formulation of the Nation's economic policies and promoting national economic development. It may, therefore, be suggested that the States or the Governments can assume main responsibility for the preparation and formulation of economic policies.

The standard theory of economic policy also suggests that the State Governments should assume the responsibility for framing the various economic policies for economic development and welfare of the people in the countries. The theory of economic policy also further suggests various policy measures for strengthening the modern State or Government.

In the context of India, it is now high time to assign critical roles to the State Governments in the exercise for the formulation of economic policy or policies of the country. This calls for State-level reforms in many areas of planning and governance for tackling the various development issues of the states.

However, the national framework of economic system can be maintained with the Centre assuming a crucial role in addressing various development issues of the country. Thus, it is necessary to integrate the economic policies of the States with the economic policy of the country.

In fact, it is only when the States are given heavy responsibility for the exercise of economic policies, India can expect faster rate of economic growth along the path of sustainable development in many fields or aspects.

To conclude, it can be emphasised that in spite of the laudable proposals and schemes in the Union Budget (2013-14), the defects or weaknesses of the Centre's current budget (2013-14) can be removed only when the States are given more power for the formulation or adoption of economic policies or development policies for the different States in the country.

Indeed, there should be scope for mid-term review of the Centre's Budget or Union Budget (2013-14) in order to remove the development gaps and explore opportunities for socio-economic development of the States and the country (i.e. India).

Such a reform will also help in fulfilling the long-term objectives contemplated or envisaged in the country's 12th Five Year Plan (2013-2017). And it can also be pointed out that the 'middle income' in Manipur is also suffering a long phase of economic hardships due to a number of uncontrollable socio-economic factors, which need no explanation here.

Therefore, the Centre's technique of resource mobilisation should not be applied to the States in the North-Eastern Region, including Manipur, which continue to remain relatively backward in many respects. Instead of attacking the middle income level, it would be rational for the Centre to concentrate on measures for accelerating and diversifying the production and productivity of the States in order to help in maximizing the country's GDP.

In this respect, the States have important roles in the formulation of economic policies. Finally, it can be suggested that economic policies for generation of maximum employment opportunities (formerly called full employment) will be the lasting solution for both inclusive and exclusive economic growth and development of the country including Manipur. Therefore, it is high time to make a paradigm shift in the formulation of economic policies for the country.

Concluded ..