Feb 6, 2016

Pre-Budget meet: States seek compensation for implementation of 7th pay commission report

States have sought additional funds from the Centre in 2016-17 to pay for the implementation of the Seventh Pay Commission report as well as carry on development activities as a number of them are unhappy with the fund devolution by the Fourteenth Finance Commission.

Concerned by two straight years of poor monsoons, they have also asked the Centre to take steps to improve farm sector productivity and growth.
The issues were discussed on Saturday at a pre-Budget meeting called by Finance Minister Arun Jaitley with his State counterparts.

“It has been a tradition to meet with States to discuss on the Budget and other economic issues. They gave their suggestions for more resources and investments,” Jaitley said after the meeting.

He said that most States want agriculture productivity to increase and have also sought more funds for poverty alleviation schemes.

“But resources of States have increased after the Fourteenth Finance Commission and we want States to use these for anti-poverty schemes,” he said after the two-hour long meeting.

The Finance Minister will present the Union Budget 2016-17 in just about three weeks on February 29.

Sources said that a number of States also sought compensation for the implementation of the Seventh Pay Commission report as states too will have to provide a similar hike to their employees.

“The committed liabilities of States will increase and so the Centre should give use some assistance or at least compensate us for a part of the pay hikes,” said Abdul Bari Siddiqui, Bihar Finance Minister, adding that the State has also sought a special category status.

“Tamil Nadu has been very adversely affected due to the horizontal sharing formula recommended by the Fourteenth Finance Commission,” said O Panneerselvam, Finance and Public Works Minister, Tamil Nadu, adding that the Centre has also reduced its support to Centrally Sponsored Schemes and has shifted the burden onto States.

However, the issue of Goods and Services Tax was not taken up in much detail at the meeting. “GST is a separate issue and has a separate forum of the Empowered Committee,” said Chhattisgarh Commerce and Industry Minister Amar Agrawal.

He said that the State has given suggestions for economic development as well as tax exemptions for real estate, fly ash and interest on bad loans.

Meanwhile, Talangana has sought relaxation of borrowing limits to 3.5 per cent of the gross state domestic product that was recommended by the Fourteenth Finance Commission.

SOURCE - the hindu business line