NEW DELHI: States will no longer be able to pay lip service to environment issues. From the next financial year, environment performance will be taken into account while determining the amount of central assistance to states . 

The inclusion of an environment parameter is both an incentive to states to take specific efforts in this area as well as a compensation for the cost of green initiatives. 

This requires rejigging of the Gadgil-Mukherjee formula for determining central assistance to states. In determining the level of central assistance, state’s performance is given a weightage of 7.5%. This remains unchanged. The change is being introduced in the components of the state performance criterion. Environment performance will account for 2% of the state’s performance. It will be based on evaluation of five parameters—air quality, water quality, waste management, forest cover and climate change. 

In real terms, the environment performance criteria would impact allocation of, say, in 2010-11 terms, Rs 350 crore of the Rs 17,500 crore available for non-special category states. Similarly of the Rs 7,500 crore available for special category states, Rs 150 crore would be determined by the environment criteria. With this, the government has signalled the importance of environment in the growth and development agenda. 

Environmental performance will replace three of the existing criteria determining state performance. At present, six criteria are considered while determining a state’s performance under the Gadgil-Mukherjee formula. These are tax effort ( a weightage of 2.5%), fiscal management (2%), population control (2%), elimination of female literacy (1%), externally aided projects (0.5%) and land reforms (0.5%). 

In the reworked formula, fiscal management has been dropped, as it is now part of the fiscal reform and budget management framework, debt consolidation and relief facility and the finance commission. The criteria of completion of externally aided projects and land reforms have been also dropped. Weightage for population control has been increased to 2% and the new addition of environment performance will be given a similar weightage. 

As such, state performance will continue to have a weightage of 7.5%. As it involves a change in the Gadgil-Mukherjee formula, the proposal will have to be approved by the National Development Council, which is slated to meet in March. 

All five parameters of environment performance will be given equal weightage. To determine state’s performance on air quality, the deviation from targets amounts of nitrogen oxides (NOx), sulphur oxides (SOx) and respirable suspended particulate material (RSPM) in the atmosphere will be considered. 

Similarly, to determine water quality, the treatment efficiency of sewage, the coliform count and biochemical oxygen demand in local rivers will be taken into account. Efforts in waste management another important component will be determined as collection efficiency of municipal solid waste, treatment efficiency of biomedical water and industrial effluents. 

In keeping with India’s efforts to counter climate change, increase in forest cover will also be taken into consideration, as will adoption of efforts to promote a low carbon trajectory of growth. Increase in forest cover as well as improvement in the quality of cover will be considered. 

A move in this direction was made in the 13th Finance Commission which made an award of Rs 5000 crore over the five year period between 2010-15. This grant is in the form of a reward for past actions and an effort to incentivise future actions.