Outcome-based programmes see jump in funding over the next five years.
States are in for a Rs 33,866-crore bonanza, thanks to a debt relief package announced by the Thirteenth Finance Commission.
About Rs 28,360 crore is expected to accrue by reduction in the interest rate on loans from the National Small Savings Fund taken before March 2007 and outstanding at the end of March this year. The commission recommended the interest rate be lowered to 9 per cent from 10.5 per cent. Between April 2010 and March 2015, the benefit is estimated to be of the order of Rs 13,517 crore.
States also gain by another Rs 4,506 crore from the recommendation to write-off loans given by central government agencies other than the finance ministry. The commission said further loans under centrally sponsored schemes should be avoided.
The commission wants the relief linked to enactment of a Fiscal Responsibility and Budget Management Act. Among states, only West Bengal and Sikkim are yet to do so. West Bengal is also the largest recipient of small savings.
In its report tabled in Parliament, the Union government said it had accepted the recommendations in principle. “However, since the recommendations are comprehensive and cover other structural aspects like interest rate mismatch, tenor mismatch and other administrative matters, the finance ministry will constitute a committee to work out the modalities for implementation.”
Apart from debt relief, the commission more than doubled the level of grants-in-aid to states for 2010-15. It estimated aid at Rs 3,18,581 crore against Rs 1,42,639.6 crore during 2005-10.
A total non-plan revenue grant was recommended for eight states — six in the north-east, Jammu & Kashmir and Himachal Pradesh. In addition, a performance grant was suggested for three special category states — Uttarakhand, Assam and Sikkim.
The state-specific grants come with a rider that these may not be used to acquire land for any development project. The commission has recommended that Rs 27,945 crore be provided for state-specific needs.
There is significant increase in the share of allocation to local bodies and various disaster relief programmes. The environment and outcome-based programmes were other priority sectors. For instance, Rs 5,000 crore has been set aside to incentivise states to bring down infant mortality rates. And, an equal amount to promote morning and evening courts and alternate dispute resolution mechanisms.
Similarly, Rs 2,989 crore is proposed to be given to states to encourage enrolment of beneficiaries of various social benefit schemes under the unique identification (UID) programme.
The report also set aside Rs 24,068 crore for elementary education for the five years.
While maintenance of roads and bridges will get Rs 19,930 crore during the five years, there is no specific allocation towards maintenance of buildings, as done by the previous commission.
