Higher allocation of funds to states: PHD Chamber

Pranav Gupta, Co-Chairman of PHD Chamber, while stressing the need for better management of state finances, suggested that State developmental expenditure focusing on social welfare and infrastructure should be increased to a level of 60 per cent in the 11th plan.   

"Higher allocation for development would be possible provided various heads under the committed expenditure are reduced. For this, restructuring various departments of the Government and employing the tool of e-governance to enhance efficiency and productivity is desirable," he  said.     

The Chamber suggested to the Commission that the criteria for allocation of funds to the States need to be reviewed since the current one  rewards inefficiency.    

He said expenditure incurred by the state government on social services, degree of subsidization of various services and preference to cost based user charges may be considered as the basis for allocation of funds.     

Gupta said that it was imperative that the 13th Finance Commission should give higher regard to the States with better fiscal management consistent with efficiency and economy.

"Special incentives should be provided to the States with better realisation of tax and non-tax revenue. Prudent financial management by States like Haryana should be rewarded by higher devolution of funds," he said.