To tide over the impact of the economic slowdown on the state finances, the Orissa government has sought a share from the auction of the 3-G spectrum by the Centre.
It also urged the Centre to share the non-tax revenue from ‘profit gas’ and royalty on the off-shore explorations just like it shares the revenue from profit petroleum and royalty levied on the on-shore fields with the state of origin.
An estimated Rs 20,000 crore is expected to be paid as usage fee by the telecom operators to the Central government on the auction of 3-G spectrum.
Besides, it has drawn the attention of the 13th Finance Commission to consider its proposal to expand the base of the divisible pool with the inclusion of cess and surcharge collected by the Centre, which have become permanent in nature.
In a letter sent to the 13th Finance Commission, the state has urged the finance commission to devise some ways to share the revenue earned by the Centre particularly in cases where revenue is collected by the Union without rendering the service like license fee for auction of on-shore and off-shore petroleum and gas blocks, auction of 3-G spectrum, which remains outside the shareable pool. It may be noted the Central government is already sharing revenue from ‘profit petroleum’ (which is non-tax revenue receivable by the Central government out of the profit generated on account of production of crude oil and gas) and royalty levied on on-shore hydrocarbon fields. But such a system doesn’t exist for the off-shore gas fields
On the other hand, the expenditure liability in a state like Orissa is more than its fiscal capacity to meet the rising expenditure. In this context, sharing the off shore profit gas and royalty and the auction fee from 3G spectrum can make a considerable amount of resources available to the state, it reasoned.
The latest initiative of the Orissa government assumes importance as increased gas resources are likely to come from the off shore and it is going to provide tens of thousand of crores of ‘resource rent’ to the Centre in the form of profit gas and royalty. On the other hand, the current economic slowdown has resulted in decline in the collection of own tax and non-tax revenue along with the sharp fall in the state’s share in the Central taxes. Such a situation calls for remedial measures for expansion of the base of the shareable pool.
Though the share of states in the Central taxes increased marginally from 29.5 percent to 30.5 percent during the 12th Finance Commission, Orissa had demanded it to be 40 percent of the divisible pool. It has also demanded 50 percent of the net proceeds of Central taxes and duties before the 13th Finance Commission. It may be noted, the Twelfth Finance Commission (TFC) had recommended that the Union should share the profit petroleum from New Exploration Licensing Policy areas with the states from where the mineral oil and natural gar are produced on a ratio of 50:50.
Similarly, the revenue earned by the Centre on contracts signed under coal bed methane policy may also be shared with the producing states in the same manner as profit petroleum. If revenue loss is anticipated for a state in the process of implementation of a policy in respect of any mineral involving production sharing, a similar compensation mechanism should be adopted by Centre. Orissa had suggested the TFC that the profit from petroleum should be brought into the divisible pool, to be shared with all the states, in proportion to the consumption of petroleum products in a state.
