States Demand Rs 2,091cr More

States are seeking an additional Rs 2,091 crore from the Centre as devolution of resources. They have sought the amount by way of implementation of the alternative scheme of devolution with retrospective effect from last year.

At a meeting of standing committee of the inter-state council here on Saturday, state chief ministers said that Central allocation to states have slowed down as a result of the economic reforms and reduction in tax rates.

The overall share of the states in Central resources in terms of devolution of tax revenues, loans and grants have declined from 56 per cent to 46 per cent in recent years. The states now want to be compensated by way of a higher share of tax revenues and a share of the Centre's non-tax revenues as well, said G Timmaiah, member of the Planning Commission.

 

The alternative scheme of devolution will enable state governments to gain an additional Rs 3,000 crore out of the Central pool this year. If it had been implemented last year, the states would have got an additional Rs 2,091 crore in 1996-97.

This is the amount the states are now demanding over and above the allocation of resources in the current year.

The state governments have, however, managed to persuade the Centre that the alternative scheme should be limited to five years, instead of, the 10th finance commission recommendation for 15 years. The 15-year time limit cannot be accepted as that would mean pre-empting the 11th finance commission, which is due to be constituted, a senior West Bengal government official said.

In his Budget speech, finance minister P Chidambaram had announced the alternative scheme, under which the Centre will share 29 per cent of its tax revenues from this year.

This was in response to the recommendation of the 10th finance commission although different state governments have been demanding a higher share, ranging between 33 per cent and 50 per cent.As the recommendation of the 10th finance commission was due to come into effect from 1996-97, the alternative scheme for devolution of Central resources should be implemented with retrospective effect from last year, state chief ministers told the standing committee.

The standing committee of the inter-state council consists of the Central ministers for home, finance, industry, defence and human resources development. Chief ministers of six states - West Bengal, Orissa, Assam, Rajasthan, Andhra Pradesh and Maharashtra - are its members.

Home minister Indrajit Gupta presided over the meeting in his capacity as chairman of the committee.The committee is due to meet again in June, after which the issues discussed will be put up before the full meeting of the inter-state council. Prime Minister I K Gujral will preside over the inter-state council meet.