The government today said higher devolution to states following the recommendations of the 14th Finance Commission (FFC) will provide them with greater autonomy in designing developmental schemes.
"The FFC has made far-reaching changes in tax devolution that will move the country towards greater fiscal federalism, conferring more fiscal autonomy to states," Minister of State for Finance Jayant Sinha said in a written reply in the Lok Sabha.
Following the recommendation of the finance commission, the Union government has decided to devolve biggest ever increase in vertical tax devolution in the Central Divisible Pool from 32 per cent to 42 per cent to fill the resource gap of each state to the extent possible, he said.
"The higher tax devolution will allow states greater autonomy in financing and designing of schemes as per their needs," he said.
Besides, he said, post devolution revenue deficit grant has been provided to 11 states where devolution alone could not cover the assessed gap.
In addition, the finance commission has recommended local body grants (both to rural and urban local bodies) and grants for augmenting the State's Disaster Response Fund (SDRF), he said.
In another reply, Sinha said SBI has been allowed by the government to raise equity capital up to Rs 15,000 crore by way of FPO, rights issue, ADR/GDR or any other mode or combination of these.
The capital adequacy ratio for SBI as on December 31, 2015 is 12.45 per cent against the RBI prescription of 12.10 per cent as on March 31, 2019 as per Basel III transitional arrangement, he said.
However, the additional capital raised or to be raised will help meet the credit growth, he added.
