New Delhi, February 6 (Agencies): Finance Minister Arun Jaitley today said he expects states to increase spending on infrastructure and poverty alleviation schemes as the 14th Finance Commission has devolved higher funds to them.
“We expect that those states whose resources have been increased after the implementation of the 14th Finance Commission will spend further on infrastructure creation and anti-poverty programmes since their income have increased considerably,” Jaitley told reporters here.
Several states, in their pre-budget meeting with Jaitley, sought higher allocation in the upcoming budget for implementing Pay Commission recommendations as well as under centrally-sponsored schemes.
“The states have discussed their own resources and each one of them is competing for higher resources, higher investment and they are all geared up to fight this environment of global slowdown so that India remains an economy which is on the move,” he said.
The 14th Finance Commission had last year recommended a record 10 per cent increase in the states’ share in the Union taxes to 42 per cent, which has been accepted by the Centre.
The 7th Pay Commission in November recommended increase in remuneration of about one crore government employees and pensioners which is estimated to impose an additional burden of Rs 1.02 lakh crore in 2016-17. The new pay scales, subject to acceptance by government, will come into effect from January 1, 2016.
“As far as central government is concerned we would like to cooperate with every state, and as the growth of states increases, the national growth will also increase,” Jaitley said in his opening remarks.
He also said that one of challenging area is agriculture which suffered in last two years due to inadequate monsoon.
“It’s been a tradition to meet the states to discuss the budget and other economic issues. They gave their suggestions for more resources” Jaitley told reporters after the meeting, that was called ahead of the national budget for the next fiscal, due on February 29.
“Most states suggested that they have been concentrating on anti-poverty programmes, particularly on the agricultural sector,” he said and assured the states of more funding by the Centre.
“Resources of states have also increased after the 14th Finance Commission. We want states to use these for anti-poverty schemes,” he said after the two-hour long meeting, adding: “We also hope they will spend further on infrastructure creation.”
Speaking to reporters, West Bengal Finance Minister Amit Mitra also said that the central government must keep its promise of releasing more funds to states. “The last budget had promised 10 percent more devolution to the states,” he added.
Tamil Nadu Finance Minister O. Panneerselvam said his state was particularly hit by some of the Finance Commission’s recommendations.
“We have been adversely affected due to this horizontal sharing formula,” he said, drawing a distinction between vertical allocations where states can spend the allocated money as they desire, as opposed to transfers based on parameters like poverty levels and fiscal prudence.
During the meeting, the states also demanded early release of the long pending compensation for phasing out of central sales tax (CST) and raising state’s borrowing limit as per the recommendation of 14th Finance Commission.
With inputs from IANS and PTI
