XVIth Finance Commission impressed with CM’s presentation on growth aspiration
Shillong, Sept 30: Meghalaya is the eighth state that has demanded an increase in vertical devolution to state from the divisible pool to 51 per cent.
Chairman of the 16th Finance Commission Dr Arvind Panagariya said that the state government has submitted proposals worth Rs 1.2 lakh crore of grants-in-aid during the meeting held in Shillong today.
Addressing media persons, Dr Panagariya said, “…the state pitched for vertical devolution to the state from the divisible pool be increased from the current 41 per cent to 51 per cent. There is some consensus on this, with demand for a hike from 41 to 50 per cent from many states. Normally, the finance commission does not increase or change the share…”.
Asked if the demand is practical, the chairman said, “Meghalaya is the eighth state to make such a demand. Normally in the past, we have never taken a large jump… from 41 percent to 50 percent is an incredibly large jump”.
During the 7th and 14th Finance Commission, there was a rise in vertical devolution, informed Dr Panagariya, while advocating for maintaining a status quo by not increasing to a large amount, which can disturb the budget.
“Generally, the finance commission moves slowly and maintains a status quo on vertical devolution as well as horizontal devolution,” he added.
The chairman also informed that the state government submitted proposals of over Rs 1.2 lakh crore worth of grants-in-aid for a five-year period.
“Grants-in-aid come from the consolidated fund of the central government. In the 14th Finance Commission, the devolution of central tax revenue was high. Hence, the central government now exercises its discretion toward the release of a consolidated fund based on the recommendation of the finance commission,” the chairman added.
Stating that the horizontal devolution mandates how the shares are to be divided among the 28 states of India, Dr Panagariya said, “The state has some very specific suggestions and in particular, the state pitched for a larger proportion of its share to be devolved based on forest. The 15th Finance Commission has given a weigh of 10 per cent to forest and ecology. Meghalaya proposes that we raise it from 10 to 15 per cent.”
“They (Meghalaya government) also suggested the introduction of a new criterion called the rural dispersion of the population, to which they said two and a half to five per cent weigh be given. If we can do that, then this will be a new criterion as rural dispersion has not been a criterion in the past for any finance commission,” he said.
Earlier, the chairman informed that the commission was very impressed with the Chief Minister Conrad K Sangma during the presentation.
“The state has given a fantastic presentation,” he remarked.
Regarding the presentation on Mission 10, the chairman said, “Another aspect of the presentation was a discussion on Mission 10 under which the state has a very ambitious plan. Both the programmes that it wants to undertake and the commitments it has to the people of Meghalaya and the state are targeting to take the GDP to 10 billion dollars by 2028, which would bring its per capita income to close to about 3000 dollars, which is quite good.”
Dr Panagariya said the commission is currently in consultation with the states and other stakeholders but its priority lies with the states.
