Pre-Budget meet: Sitharaman seeks cooperation from states to spur economy

If the deficit targets are to be achieved it should be achieved from the revenue side and not the expenditure side, Kerala FM Thomas Isaac said

Some states on Friday demanded stimulus to boost the economy, even if it led to a higher fiscal deficit in the full Budget for 2019-20 than 3.4 per cent pegged in the interim Budget. State finance ministers met Union Finance Minister (FM) Nirmala Sitharaman on Friday. They also raised some issues specific to their states.

Sitharaman exhorted the states to work together with the Centre, stating that while the Union government sets the direction of economic growth, it is for the states to ensure effective implementation on the ground.

Kerala FM Thomas Isaac said, “Achieving fiscal deficit targets is not an end in itself. While insisting on mechanical deficit targets irrespective of situations is quite unreasonable, even that should not be aimed to be achieved by cutting expenditure, especially development expenditure.”

Stating that the Indian economy weathered the crisis rising out of the global financial meltdown in 2007-08 better, he said even if the deficit targets are to be achieved it should be achieved from the revenue side and not the expenditure side. 

“The economic slowdown and savings-investment collapse point to the need for an expansionary fiscal policy in the Indian context, where the Centre should stimulate demand, even by breaching its fiscal and revenue deficit targets,” Isaac said. 

Delhi Deputy Chief Minister Manish Sisodia demanded the state’s share of Rs 6,000 crore from central taxes, adding that it has been getting only Rs 325 crore for the past 18 years.

Sisodia also holds finance portfolio in the Arvind Kejriwal government. He demanded the creation of a separate fund for the municipal corporations of the national capital on the lines of other civic bodies. Asserting that goals cannot be achieved unless states and the Centre work together, Sitharaman sought their cooperation. 

“No goals can be achieved if states and the Centre don’t work together in cohesion... The Centre has the responsibility of setting the direction of the economic growth while it’s the responsibility of the states to implement in the field,” Sitharaman said.

In a series of tweets, the finance ministry said Sitharaman sought the cooperation of all the states and union territories in achieving the aspirations of the people and extended full cooperation from her side in achieving the desired goals.

She said, “Unprecedented level of devolution of funds has taken place from the Centre to the states… it has increased in recent times from Rs 8.3 trillion to Rs 12.4 trillion.”

The share of states in tax devolution has increased from 32 per cent under 13th Finance Commission to 42 per cent in 14th Finance Commission during the first term of the present government.

Chhatisgarh Chief Minister Bhupesh Baghel sought to increase in the PM Kisaan scheme allocation. He also sought more allocation for roads construction in areas affected by Naxalite activity.

Goa CM Pramod Sawant sought faster land acquisition for the MOPA airport. He also sought relief for mining and tourism sectors.