Changed funding pattern to shrink revenue in FY16 in Assam

With total debt of around Rs 25,000 crore, Assam government today said it will receive over Rs 7,000 crore less during 2015-16 due to delinking of schemes and change in funding pattern by the Centre.
"In the 2015-16 Budget, the Centre delinked 12 schemes worth Rs 4,052 crore. Besides, change in funding pattern will cost us an additional Rs 2,992 crore. So, the total loss to the state exchequer will be Rs 7,044 crore in this fiscal", Assam Commissioner and Secretary (Finance) Ravi Kota told reporters here.
The Centre has cited increase in tax devaluation to 42 per cent from the earlier 32 per cent as reason for this deduction, he added.

"However, a poor state like Assam cannot spend the additional devaluation fund for schemes as it has a huge non- Plan burden. Removing the Special Category Status has further affected us," Kota said.
He explained that the state's total requirement for salaries and pensions is around Rs 25,000 crore annually, while its internal resources can generate Rs 10,000-11,000 crore, Rs 14,000-15,000 crore will come from the Centre as devaluation of tax component.
"Therefore, it will be very difficult for us to keep the momentum of development going if we do not get additional funds or the earlier funding pattern is not restored," Kota said, adding the state will also lose over Rs 400 crore tax revenue due to cut in petrol and diesel rates.

Talking about the debt burden, he said the state currently has a total borrowing of around Rs 25,000 crore, most of which is long-term in nature.

"The state has ceiling of Rs 6,000 crore debt that it can raise every year. Earlier, we were not exhausting this amount. But due to fund cut from the Centre, last fiscal and this fiscal too, we will raise this entire amount as debt. Despite that, Assam has one of the lowest per capita debt in India", Kota said.
To meet the challenge, the state government has appointed the National Institute of Public Finance and Policy (NIPFP) to study different options to increase Assam's revenue generation, which is growing at a CAGR of 4.25 per cent for the last 15 years.

NIPFP is likely to submit its report for revenue generation in short-term by March next year, while the one for long-term purposes will be completed around June-July, he added.