Chief Minister Naveen Patnaik on Monday demanded that the existing level of tax devolution to the States should be raised from 32 per cent of tax receipts of the Centre to 50 per cent.
Addressing a meeting of the 14th Finance Commission headed by Y V Reddy here, the Chief Minister said the share of Odisha in aggregate transfer of resources recommended by successive finance commissions, shared tax and grants is going down. He said a suitable fiscal transfer formula should, therefore, be devised so that States can receive their due share.
Stating that tax devolution is the major part of transfer of resources to the States, Naveen maintained that though bulk of the expenditure responsibility lies with the States, the buoyant sources of revenue are with the Centre.
A proper distribution largely determines the State’s share in Central taxes, he said.
On the grants-in-aid front, the Chief Minister said acute gap in delivery of services due to resource constraints is important and should be taken into account while recommending the conditions attached to the grants. Stating that Odisha is vulnerable to disasters, Naveen said while floods and droughts are recurring phenomena in the State, severe cyclones caused widespread damage and devastation.
The Chief Minister said the State is in favour of implementation of Goods and Services Tax (GST) system. But at the same time, Odisha has been arguing for safeguarding the State’s fiscal autonomy and standing constitutional arrangement for compensating the State for loss on account of its implementation, he said.
Naveen said though Odisha has been consistently growing above the national average over the past nearly 10 years, the State suffered from deficiencies in critical infrastructure. The socio-economic indicators, though improving over the years, remain below the national average, he said, while stressing on the need for investments to develop the State.
The State Government on Monday submitted a memorandum to the commission seeking `4,59,839 crore for the period between 2015 and 2020. Finance Minister Prasanna Acharya said this includes State’s share in Central taxes of `3,38,497.44 crore, maintenance grant of `51,549.35 crore, increase of State Disaster Relief Fund (SDRF) to `10,000 crore, disaster mitigation `8,925 crore, requirement of local bodies, both urban and rural, `27,188.51 crore and State specific grants `23,609.7 crore.
Other members of the commission Prof Abhijit Sen, Sushama Nath, Dr M Govinda Rao and Dr Sudipta Mundle were also present at the meeting attended by senior Cabinet ministers and Government officials. The commission is expected to finalise recommendations by October, 2014 after discussions with other State governments, the Centre and all stakeholders.