India PM Modi mulls overhauling costly welfare schemes

Indian Prime Minister Narendra Modi attending a meeting with China president Xi Jinping (unseen) to sign a series of agreements between the two nations at Hyderabad House in New Delhi, India, on Thursday on Sept 18, 2014. -- PHOTO: BLOOMBER
Indian Prime Minister Narendra Modi attending a meeting with China president Xi Jinping (unseen) to sign a series of agreements between the two nations at Hyderabad House in New Delhi, India, on Thursday on Sept 18, 2014. -- PHOTO: BLOOMBERG

NEW DELHI (AFP) - Indian Prime Minister Narendra Modi on Sunday ordered a review of dozens of national welfare schemes in the first meeting of a new economic planning body.

Modi, who stormed to power at general elections in May, is targeting the schemes designed to help tens of millions of India's poor that were a hallmark of the previous left-leaning Congress party's decade in power.

At the meeting, Modi asked chief ministers of India's states to come up with suggestions for the future of the schemes that opponents say are inefficient, prone to corruption and drain public finances.

The group of ministers will study the 66 schemes "and recommend which to continue, which to transfer to states, and which to cut down," the government said in a statement.

They include guaranteed employment and access to health schemes for tens of millions of rural poor, along with a programme to provide free lunches to school children.

It is unclear whether a multi-billion-dollar food welfare programme, offering subsidised grains to nearly 70 percent of the population, is included in the review.

Finance Minister Arun Jaitley said new groups would "look into skill development" and enhance a clean-up India campaign, along with the "rationalisation of federal schemes".

"We discussed the economic direction the country must get," Jaitley also told reporters after the meeting.

Two other "taskforces" would be formed to better focus on alleviating poverty and improving farm productivity, the government said.

The new economic body replaces India's Soviet-style Planning Commission, which was axed by Modi last year.

The commission was a relic of socialist policies put in place by India's first prime minister, Jawaharlal Nehru, who was impressed by the former Soviet Union's centralised planning and five-year economic blueprints.

Modi had branded the commission "a body of excessive centralisation, obstructing the plans of state-level governments".

Modi was elected on a pledge to reform and revive the economy, including revamping government departments to boost productivity.

Jaitley, who will unveil the national budget late this month, has set a target of cutting the fiscal deficit to 4.1 per cent of gross domestic product.