47. Government have already appointed a Special Task Force on Devolution of Powers to States, under the Chairmanship of Shri Bhairon Singh Shekhawat, to examine and recommend measures for devolution of additional financial powers to the States and additional or alternative means by which States can raise more resources. The first report of the Task Force has been received. We are examining the recommendations in consultation with the RBI.

48. The distinction between plan and non-plan expenditures in our budgetary system has created several problems. It has led to an excessive focus on so called plan expenditures with a corresponding neglect of items such as maintenance which is classified as non-plan. Various bodies, including the Finance Commission, have advocated the elimination of the plan and non-plan distinction in the budget. I propose to constitute a Task Force, including representatives of Planning Commission, Finance Ministry, Comptroller and Auditor-General of India and State Governments to examine these issues in a comprehensive manner and to make recommendations for a functionally viable and more focussed presentation of government expenditure in the budget.

49. A related problem is the proliferation of Central Sector and Centrally Sponsored Schemes over the years. There is a need to rationalise these, with the objective of reducing overlaps and duplication, modifying procedures and norms and making them more easily accessible to the intended beneficiary. The Task Force, mentioned above, will also advise on this issue.