Bihar, Assam, Tripura may lose share in central taxes

States like Bihar, Assam, Tripura and Uttarakhand may witness decline in their share in union taxes, following implementation of recommendations of the Fourteenth Finance Commission (FFC) though the constitutional body has raised the overall share of states by 10 per cent to 42 per cent.
A quick analysis of the resource position post FFC recommended transfer indicates that Uttarakhand and Tripura, the worst hit states, could suffer a loss of about 30 per cent of their current plan size.
Hill state of Uttarakhand is going to lose about Rs 2,800 crore, while Tripura may lose about Rs 1,500 crore, sources said.

Uttarakhand has an annual plan size of Rs 9,700 crore and Tripura Rs 4,850 crore during the current fiscal.
Bihar, which was one of the first states to show its displeasure over the report, will get about Rs 1,200 crore less while Assam nearly double of what Bihar loses.
Bihar Chief Minister Nitish Kumar had termed the recommendations of the 14th Finance Commission as "disappointing" and threatened to move the Supreme Court if the "loss" to Bihar was not compensated.

"Bihar will face about 1.3 per cent point loss due to the 14th Finance Commission recommendations as compared to the 13th Finance Commission report," he had said.

The Chief Minister vowed to move the apex court for 'justice' if Bihar was not compensated for the loss, among others, by ending fund under Backward Regions Grant Fund Programme (BRGF), which was devised by a law.
Similarly, Tamil Nadu may lose about Rs 2,700 crore out of the plan size of Rs 50,660 crore.
FFC has removed the special dispensations granted to certain states called special category states by merging all the special grants into the devolution formula.
While this is likely to hit the North Eastern states like Meghalaya and Mizoram, it does not augur well for aspiration of Bihar which had been seeking the special category status and made it a poll plank.

Moreover, sources said the continuation of special plan for Bihar has come under doubt with all special packages and plans subsumed in the devolution formula.
The grant will be lower for about 6-7 states, incidentally
non-NDA states because of removal of special category status, thereby they will lose from block grant from the Finance Ministry.
"The Centre's acceptance of the FC recommendation to raise the states' share of divisible Central taxes from 32 to 42 per cent has increased the projected receipts of the states by Rs 1.41 lakh crore - that is, by 37 per cent.
"But this has been matched by a reduction of Rs 1.34 lakh crore in the budgeted Central assistance to state plans (CASP)," FCC member Abhijit Sen said in an article published recently.