POLITICAL INSTITUTIONS AND ECONOMIC PLANNING
13
Fourth Plan for this expenditure, the states will be responsible for
9,200 million.
Does this mean that the central government has no means available
for carrying out its recommended agricultural policy? The states meet
only part of their own needs, with the central government making up
the balance. Thus for the First Plan, the central government guaran-
teed to pay 39 percent of the total sum spent by the states.
For the
Second Plan, the states could raise only 12,800 million rupees out of a
total of 22,400 million rupees. For the Third Plan, the states estimated
a sum of 14,600 million, with the central government contributing
23,700 million.4 Despite these contributions, the central government
found that the agricultural plans were in trouble. At the beginning of
1964, for instance, the Planning Commission informed the states that
aid from the central government would be reduced if funds intended
for agriculture and community development were used for other pur-
poses, without previous authorization from New Delhi.6 Hardly to
anyone's surprise, the situation was not put right very quickly, and on
July 24, 1964, the Central Ministry of Agriculture and the Planning
Commission were obliged to repeat their instructions.®
It is clear that the states need to increase their fiscal effort. In
November, 1963, the Planning Commission had to call in the arrears of
eight states: Uttar Pradesh, Kerala, Bihar, Madhya Pradesh, Andhra,
Mysore, Rajasthan, and Assam. (Let it be mentioned in passing that
the first four states at least were then, and still are, victims of an
unstable political situation.) The following March, the Minister of
Finance, T. T. Krishnamachari, expressed the opinion that "There
would be cause for anxiety if borrowed funds are utilized to fill
revenue gaps and not spent on projects which were economically
sound and could be expected to generate the resources for repaying
their liabilities." 7
In its report on the 1961/62 performance, the parliamentary Public
Accounts Committee condemned the "lethargy" of some states
in fiscal
matters. For various reasons, too, it was not unusual for some ministers
of finance to underestimate their income and overestimate their ex-
penditures.8 An editorial in the Hindustan Times (Feb. 26, 1964)
commenting on the budgets that had just been voted said: "The finan-
cial health of the states varies from the near parlous position of
4 For these figures, see Review of the First Five Year Plan (1957), pp. 19, 24; Sec-
ond Five Year Plan (1956) , pp. 55, 87; Third Five Year Plan (1961) , pp. 58, 102.
8 See Hindustan Times, Jan. 2, 1964.
6 Ibid., July 25, 1964.
7 Reported by the Northern Patrika, March, 1964.
8 Hindustan Times, Mar. 19, 1964.