The Finance Commission should not give excessive importance to factors like economic backwardness and incentive should be given for performance, demanded Maharashtra Chief Minister Ashok Chavan.
“Excessive weight has been given to factors like economic backwardness. The time has come to give due weight to factors like tax collection efforts, fiscal discipline and decentralisation. This would truly reward states that perform,” Chavan said.
The 13th Finance Commission, led by Vijay Kelkar, heard the Maharashtra government’s views on distribution of central government funds at a meeting here today.
Maharashtra’s share in the divisible pool has steadily declined over the years from the high of around 14.28 per cent to 4.63 per cent as a result of the 11th Finance Commission’s award. Such a sharp decline has serious disincentive effect and leads to a feeling that progressive states do not get their due despite demonstrating better fiscal prudence and efficient administration, Chavan pointed out.
He also asked for more share for the states in the service tax as 60 per cent of the Gross State Domestic Product (GSDP) comes from service and this also means lesser space available for state tax revenues.
Chavan also appealed the commission to pay special attention to the requirements of Mumbai, which both the Centre and the state government want to develop as the international finance centre that will act as the country’s growth engine.
