Resource transfer to states up 9%

DEVOLUTION TO STATES: Non-plan grants and centrally-sponsored schemes get a boost, while other allocations remain intact.

The total resources transferred to state and Union Territory (UT) governments are slated to go up by 9 per cent from Rs 3,01,460 crore in 2008-09 revised estimates (RE) to Rs 3,29,614 crore budget estimates (BE) in the next fiscal 2009-10. The central devolution of taxes to states will be Rs 1,71,197 crore in 2009-10, which is down by 4 per cent from the BE of 2008-09 at Rs 1,787,65 crore. However, it is 6 per cent up from the revised estimate for the current fiscal at Rs 1,60,179 crore.

The Centre gives 30 per cent of the total tax revenue to states as per the formula laid down by the 12th Finance Commission, which awarded the states with incentives to promote fiscal reforms and expenditure management. The 12th Finance Commission award period is coming to an end in 2009-10. Devolution to states of their share in Central tax for the period 2010-15 would be governed by the recommendations of the 13th Finance Commission. The report of the 13th commission is expected by November 2009.

Apart from the share of taxes collected by the Centre, states also get Central assistance for implementing Centrally-sponsored schemes and non-plan grants and loans to meet other expenditure.
 

DEVOLUTION OF RESOURCES TO STATES SINCE 2003*
year	Rs in crore

2003-041,82,048 2004-051,86,871 2005-062,56,283 2006-072,62,642 2007-082,68,773 2008-093,01,460 (RE)** 2009-103,29,614 (BE)*** *The table includes states’ share in small savings collections
** revised estimates                                            ***budget estimates

The non-plan grants and loans to states is also up by 7 per cent in the BE of 2009-10 at Rs 46,716 crore from Rs 43,383 crore in 2008-09 while it is 21 per cent more than the revised estimates of 2009-10 at Rs 38,510 crore.

The Central assistance for Central and Centrally-sponsored schemes saw an increase of 5 per cent at Rs 23,176 crore in BE of 2009-10 from RE of 2009-10 at Rs 21,977 crore. However, it is 9 per cent lower than the BE of 2008-09 at Rs 25,620 crore.

Looking at the yearly growth of resources transferred to states (including states’ share in small savings collections), there’s been a 2 per cent increase in 2003-04. There’s been a rise of 37 per cent in 2005-06. Again in 2006-07 and 2007-08, the increase has been at 2 per cent but in 2008-09, the devolution to states has again jumped by 10 per cent to Rs 3,01,460 crore from Rs 2,68,773 crore in 07-08.

The expenditure of five UTs (Andaman and Nicobar Islands, Chandigarh, Dadra and Nagar Haveli, Daman & Diu and Lakshadweep) has increased by 41 per cent at Rs 5,553.05 crore in 2009-10 from Rs 3,914.29 crore in 2008-09 BE.

The government has kept budget allocation intact in the current fiscal for programmes like the accelerated irrigation benefit programme, national e-governance plan, power development, rural electrification, initiative for strengthening urban infrastructure, etc.

Net resources (excluding recovery of loans and advances) transferred to states for the current fiscal is also up by 2 per cent to Rs 3,11,146 crore from Rs 3,04,960 crore in 2008 (BE). There’s an increase of 6 per cent in net resources transferred to states from the revised estimates of 2008-09 at Rs 2,93,361 crore.