14th Finance Commission Report impact: Maharashtra to get over Rs 5.5 lakh crore

State govt says Commission's approach will empower states for better performance and delivery

The Finance Commision recommendations have come as a ray of light for the cash-strapped BJP government in Maharashtra. 

The 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%. 

Besides, the state's share under the divisible pool will be Rs 2,60,000 crore compared to Rs 75,000 crore, a rise of 246% during the same period. 

Maharashtra will also get Rs 15,000 crore against Rs 5,500 crore for Panchayati Raj institutions, Rs 12,000 crore against Rs 3,000 crore for urban local bodies and Rs 7,300 crore against Rs 1,834 crore for disaster management.

A senior government official, who briefed state chief minister Devendra Fadnavis on Wednesday evening about the 14th Finance Commission report, told Business Standard, "There is a major shift in fiscal management. Maharashtra will get more fiscal space. There will be further empowerment while encouraging states like Maharashtra for better performance and delivery.'' 

However, the official said the flip side is that the 14th Finance Commission has observed that grants for sector-specific and state-specific schemes are not necessary. 

"In view of the stand taken by the 14th Finance Commission, the Maharashtra government will have to step up efforts to mobilise funds for state-specific schemes including irrigation for rain-fed agriculture, reduction in intra-district disparities and strengthening infrastructure especially in Mumbai,'' the official said. 

He added that the details with regard to the actual allocation and other modalities will be known only after the Centre issues necessary guidelines in this regard.

Maharashtra's public debt relative to gross state domestic product (GSDP) is 18.8%, well below the target of 25.3% set by the Finance Commission and government will continue to adhere to these norms in future too, he added.

In its presentation to the 14th Finance Commission in January 2014, the Congress-NCP government had suggested that vertical devolution should be enhanced to 40% of the divisible pool of the central taxes. On horizontal distribution, it was suggested that population be assigned a weight of 35%, fiscal capacity distance 25%, fiscal discipline 25% and area 15%. The state stressed that the size of State Disaster Response Fund be kept at Rs 10,000 crore for the award period. 

Furthermore, Maharashtra had stressed the need for allocation of 5% of the divisible pool for local bodies. The general basic grant and performance grant may be divided into rural and urban shares on basis of their respective population as per 2011 Census. Proposals relating to state specific grants amounting to Rs  21,097 crore were also placed before the Finance Commission.