States demand additional Rs 20,000 cr aid

Close on the heels of the stimulus package announced by the government, the states have asked for an additional assistance of Rs 20,000 crore from the Centre to boost infrastructure and social sectors, besides more freedom to borrow from the market.

"We are soon going to meet Prime Minister Manmohan Singh, who is also the Finance Minister with these issues," Chairman of Empowered Committee of State Finance Ministers Asim Dasgupta told reporters after the meeting here today.

Pointing out that the revenue of the states from value added tax (VAT) fell 19.9 per cent in November, he said, states would need additional resources to step up funding in basic infrastructure like irrigation and social sectors.

VAT revenues of the states, which were showing an increase of 24 per cent till October, he said, fell by about 20 per cent in November.

Dasgupta further said the states were feeling the impact of slowdown in key sectors like real estate, iron and steel, cement and petrochemical.

In order to boost the sagging industry, the central government recently came out with a stimulus package, which included an across the board cut in excise duty by four per cent and an increase in public expenditure by Rs 20,000 crore over the amount allocated in the budget for 2008-09.

Replying to questions on jet fuel, Dasgupta said the VAT panel was opposed to the idea of bringing aviation turbine fuel (ATF) in the category of declared goods by the Centre.

The states cannot impose more than four per cent tax on an item once it is categorised as declared goods.

Dasgupta also reiterated that the Centre should bear half the burden of states towards implementation of the revised pay scales on the pattern of Sixth Pay Commission.