Odisha Chief Minister, Naveen Patnaik today demanded that the devolution of Central tax revenue to the states, which is currently provided at 32 per cent of the total receipts, should be enhanced to 50 per cent.
Patnaik said, while the responsibility of expenditure lies with the states, the buoyant sources of revenue is vested with the Centre. Hence, he urged the members of 14 Finance Commission, who are on a visit to the state, to design a suitable formula for liberal fiscal transfer to states.
"It is seen the share of Odisha in the aggregate transfer of resources recommended by successive Finance Commissions, shared tax and grants taken together, is going down. It is, therefore, imperative to design a suitable fiscal transfer formula, so that the states receive their due share." the Chief Minister said, addressing a meeting of the 14th Finance Commission headed by its Chairman, Y V Reddy here.
Citing a study done by the 13th Finance Commission, Patnaik said, a well designed fiscal transfer formula which envisages flow of tax resources from high income to low income region has proven to have positive results for the entire nation.
"Hence, we would submit before the Commission to design a formula or principle for determination of share of central taxes primarily on the principles of equity," he said.
The Finance Commission members are on a two-day visit to the state to take note of fund requirement of the state for the five year period starting 2015.For horizontal distribution of central taxes among states, Odisha suggested that the panel should reconsider the weightages given to certain parameters. It argued that while fiscal discipline should be given a weight of 20 per cent, the parameter of per capita income must have a weightage of 50 per cent.
Considering the higher population of SC/ST groups, the parameter should be raised to 20 per cent weight while total area, which may not represent the exact fiscal picture of a state, must be given a weight of 10 per cent, it added.
On the grants-in-aid front, Patnaik informed that the Commission should take steps to raise the level of grants from a fixed amount to a guaranteed 90 per cent of project amount.
Stating that Odisha was vulnerable to disasters, Patnaik said, while floods and droughts were recurring phenomena in the state, severe cyclones caused widespread damage and devastation.
"The share of Centre and State to State Disaster Relief Fund for a low income state like Odisha which is extremely prone and vulnerable to disasters and calamities should be set at the ratio of 90:10 ratio instead of 75:25 ratio," he said. During the meeting, the Odisha government said, though it has no problem in implementing the proposed Goods and Services Tax (GST) system, the interest of the state must also be taken care of."We are in favour of implementation of GST, but at the same time, we have been arguing for safeguarding the state's fiscal autonomy and standing constitutional arrangement for compensating the state for loss on account of implementation of GST," he said at the meet.In a memorandum submitted to the Finance Commission, the government today said that for 2015-2020 period, it would be requiring Rs 4,60,000 crore towards its share from central tax pool for strengthening of panchayat institutions, judicial system, increasing forest cover and creation and maintenance of public infrastructures.
During the current (13th) Finance Commission, Odisha was entitled to receive Rs 78,975 crore as its share from the central revenue pool while in the tenure of 12th Commission; it got Rs 36,942 crore for the period between 2005 and 2010.
The state argued that since it has increased budgetary provision for growth of agricultural and allied sector, it needs higher amount of fund for the five year period. It also requested the Commission for implementation of Mineral Rent Resource Tax, which would be charged at 50 per cent of windfall gains to miners.In last few years, Odisha has been able to attract large investment in power and metal sectors, but it still lags behind in creation of proper infrastructure."It suffers from deficiencies in critical infrastructure. The socio-economic indicators, though improving over the years, remain below the national average," said Patnaik, stressing that large investments are required to develop the state.
"We also intend to make massive investments to bridge the gap in availability of physical infrastructure," Patnaik said, adding capital investment to the extent of Rs 38,925 crore has been proposed including Rs 5,000 crore in PPP projects.
