NDA govt gives more fiscal, legislative space to states: Watal

Finance Secretary Ratan Watal said the Finance Commission brought about a compositional shift allowing states to set up their own priorities

The National Democratic Alliance (NDA) government has given more fiscal and legislative space to states and is fully committed to the principle of cooperative federalism, Finance Secretary Ratan Watal has said.

“The present government is fully committed to the principle of cooperative federalism both in the letter and spirit,” Watan said in an interview to the finance ministry’s YouTube channel.

“More untied grants are now being given to the states... The focus of the present government is unique in the sense as it allows more fiscal and legislative space to the States,” he said.

So far this financial year, “over Rs 4.1 lakh crore (78.6 per cent of Budget Estimates) has been released to states by way of tax devolution and three more instalments will be released in March 2016 based on the tax collections till then”, Watal said.

The 14th Finance Commission (FC) award has significantly raised the level of devolution of divisible resources to states from 32 per cent to 42 per cent.

In Budget 2015-16, the finance ministry had made a provision of Rs 5.2 lakh crore under devolution of taxes to States as compared to the allocation of Rs 3.38 lakh crore in 2014-15.

Watal further said: “The states demanded that the Centrally Sponsored Schemes (CSS) were straight jacketed and that they should have more freedom and fiscal space. Presently, more untied grants are being given to the states. The Finance Commission brought about a compositional shift allowing states to set up their own priorities.” Besides, the number of Flagship Schemes has been reduced from 33 to 17 with a 60:40 funding pattern.

In reference to schemes prioritised by different state governments, he said these would be funded on a 50:50 funding pattern, adding that there has been a compositional shift but no scheme has been shortchanged.

On the transition from the Planning Commission to NITI Aayog, Watal said the coming year would be the last year of the 12th Five Year Plan (FYP).

“However, planning still remains vital and the role of NITI Aayog extends beyond the 12th FYP. Planning exercises have been held at the level of the Prime Minister’s Office (PMO) where 50-60 secretaries have been put into different groups,” he said.