State govts say fund allocations by Centre inadequate

Say reduction in block grants, share in central schemes more than the increase through Finance Commission

The Centre has been claiming it has increased devolution to states in the 14th Finance Commission, but most state governments are of the view that their financial position has worsened during 2015-16, compared to the previous year, if one takes into account the reduction in block grants and transfers through central schemes vis-à-vis the increase through tax devolution.

States have voiced concern in this respect in a report submitted to a sub-committee of chief ministers on revamping the central schemes under the NITI Aayog. The committee is headed by Bharatiya Janata Party-ruled Madhya Pradesh’s Chief Minister Shivraj Singh Chouhan.  

Data contained in the report show ed, though the devolution to state governments through the 14th Finance Commission’s (FFC) route increased by Rs 1.78 lakh crore in 2015-16, as compared to the previous year, deductions by way of the central assistance to state plans, the Centre’s share in schemes and also block grants has been greater during the period.  The total reduction in the central share through schemes, block grants and assistance to state plans was to the tune of around Rs 2.67 lakh crore in 2015-16, more than the increase of Rs 1.78 lakh crore to states through FFC route.

States also feel the overall impact of fund transfer through the commission received, by way of block grant from the Centre and its share of schemes, should not be to their disadvantage. The report, expected to be submitted to Prime Minister Narendra Modi in the next few days, emphatically says the issues raised by state governments could have an important bearing on the ongoing effort to strengthen cooperative federalism, though some of it might be outside its terms of reference (ToR).

The sub-group also suggested the Centre should get the concern raised by state governments suitably examined for taking appropriate measures. The report mentions some states in the course of their interaction with the sub-group said their share in the FFC grants has gone down as compared to the previous commissions, thereby making their financial position weak. They have opposed any additional burden from the Centre through upward revision in their share of centrally sponsored schemes.