The 14th
finance commission has radically enhanced share of the states in the central
divisible pool from the current 32% to 42% which is the biggest ever increase
in center- state (vertical) tax devolution. (all the previous finance
commissions have suggested only 1 or 2% increase)
As per the increased devolution suggested in the report of
the 14th Finance Commission, the states will get Rs 3.48 lakh crore in 2014-15
and Rs 5.26 lakh crore in 2015-16 allowing states greater autonomy in financing
and designing of schemes as per their needs and requirements.
The
Economic Survey 2014-15 goes on to say that, all states stand to gain from this
phenomenal increase in vertical tax devolution, but when scaled against
population, NSDP (net state domestic product) and own tax revenue, the biggest
gainers are Uttar Pradesh, West Bengal and Madhya Pradesh in general category
states and Jammu & Kashmir, Himachal Pradesh and Assam in special category
states.
A partial relief for Maharashtra Government
Maharashtra state government, which is struggling
with high debt of Rs 3.44 lakh crore and revenue deficit of Rs 26,000 crore,
will get Rs 2,95,000 crore as grant between 2015-16 and 2019-20 as against Rs
91,700 crore, a rise of 221.70%.
Maharashtra will also get
Rs 15,000 crore against Rs 5,500 crore = (173% rise)for Panchayati Raj institutions,
Rs 12,000 crore against Rs 3,000 crore = (300% rise)for urban local bodies
and Rs 7,300 crore against Rs 1,834 crore = (298% rise) for disaster management.
So, it is a mixed bag for the Maharashtra
government, struggling to cope with public debt and a revenue deficit. There
will be a rise in devolution from the Centre but the state will have to mobilize
finances to support state-specific schemes.
This
has been a major shift in fiscal management. Maharashtra government like its
other counterparts is getting more fiscal space.
The Maharashtra government will have to take efforts
to mobilizemore funds for state-specific schemes of state subjects- irrigation
for rain-fed agriculture, intra-district disparities and urban infrastructure.
(Reference – times of India
Wednesday April 15, 2015 – Pimpri Chinchwad Municipal Corporation (PCMC) to
return Rs 273 crore SRA funds – because the municipal corporation failed to
complete 7 projects taken up under JNNURM.)
JNNURM allegedly stands to be one of the centrally
sponsored schemes among the 8 to be now abandoned on the background of states’
increased shares in center’s tax revenues.
Maharashtra
state government will have to wait for the guidelines relating to state shares
in schemes, including the Rashtriya Krishi Vikas Yojana, Sarva Shiksha Abhiyan,
National Health Mission, Accelerated Irrigation Benefits Program and the
Jawaharlal Nehru National Urban Renewal Mission.
The Centre
has delinked itself from eight centrally-sponsored plans and has changed the
sharing ratio for another 24. It is expected that the higher resources will be
used to supplement the programs where the Centre has withdrawn.”
State-list subjects like- health, education and rural livelihoods
will now see states with addiction burden of funding. But this is where state
governments will have to exert more policy creativity and innovation.
References and bibliography
1.
The Fourteenth Finance Commission
Report
2.
Economic Survey India 2014-15
Volume 1
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