The chief minister presented a memorandum to the Commission and made a detailed presentation on the state finances. Detailed presentations were also made on Disaster Relief, requirements of Bangalore and regional imbalances, particularly Hyderabad-Karnataka Region.
The Commission also interacted with representatives of political parties, panchayat raj institutions, urban local bodies and trade and industry associations.
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The Commission will finalise its recommendations by October 2014 after completing its discussions with all the state governments, the government of India and relevant stakeholders.
In his submission to the Commission, the chief minister said Karnataka requires Rs 16,000 crore to remove imbalances in sectors like agriculture, horticulture, infrastructure, education, women and child welfare among others. He requested the Commission to recommend the Central government to release this amount. This amount was necessary to achieve the goals and targets set in the 12th five-year plan period.
Siddaramaiah informed that the state is the first to have enacted a Fiscal Responsibility Legislation in 2002 and has generated revenue surplus since then. It was stated that the state has less than one-third of its cropped area under irrigation and an investment of Rs 50,000 crore will be required to realise the irrigation potential of the state.
"The state has kept the administrative costs under control and the subsidy expenditure has been kept at around 15 per cent of the revenue receipts. The ratio of interest payment to revenue receipts has been around 9 per cent, which is well below the prescribed limit of 15 per cent," he said.
He also suggested to increase the share of the state in Central taxes from the present level of 32 per cent to 40 per cent and to include in the divisible pool the cess and surcharge which are in existence for more than three years. The state has welcomed the proposed introduction of GST provided the standard rate of GST is not lower than the Revenue Neutral Rate, the revenue losses are compensated and a structured mechanism is put in place for creation of a GST Compensation Fund to protect the interest of the states.
It was also informed that the 29 functions listed in the 11th schedule have been delegated to the local bodies and the state government is in favour of allocating 5 per cent of the divisible pool to the Panchayat Raj Institutions (PRIs) and 3 per cent to urban local bodies (ULBs).
The chief minister also requested for earmarking of 1 per cent each of the divisible pool to Disaster Relief Fund (DRF) and for maintenance of capital assets.
Apart from this, the issue of infrastructure upgradation grant for the city of Bangalore and suitable resource allocation for Hyderabad-Karnataka region was also raised in the deliberations.
Other members of the Commission such as Prof. Abhijit Sen, Sushama Nath, M Govind Rao and Sudipto Mundle and Secretary A N Jha were present during the discussions. The Commission assured that the issues raised will receive due attention in the deliberation of the Commission.
Industry bodies for early onset of GST regime
The Bangalore Chamber of Industry and Commerce (BCIC) has requested the 14th Finance Commission to recommend to the Central government an early implementation of goods and services tax (GST) regime.
In a submission to the 14th Finance Commission here today, the chamber said: "The trade and industry is still suffering the pangs of multiple levies and an input tax restriction regime."
"It is time to settle the differences between the Centre and the states as the trade and industry looks forward to the implementation of the GST regime," he said.
The 14th Finance Commission, headed by Y V Reddy, is on a three-day visit to the state to elicit views of stakeholders on issues relating to sharing of Central taxes among states and allocation of funds to priority sectors.
The chamber has also asked for recommendations that at least 45 per cent of the central taxes be devolved the states. Such devolution is based on five parameters such as distance, population, area, tax effort and fiscal discipline by assigning suitable weightage to each parameter.
"Karnataka is one of the best managed states with specific reference to Fiscal Responsibility. However, it is noticed that Karnataka's share of the Central Taxes is falling with each commission. It is noticed that there is a trend of declining devolution of taxes to states," H V Harish, President, BCIC, said.
He further said: "We strongly believe, since our per capita income has improved we are being penalised rather than being rewarded."
The BCIC has suggested many other measures like awarding centrally-funded food parks, assistance in setting up or modernising cold storage facilities which helps in job creation and value addition in agro and food-processing sectors. It also made out a case for awarding specific grants for developing inter-state corridors for the development of specific industrial zones and assistance in funding transport sector.