Odisha 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 was going down. He said a suitable fiscal transfer formula should, therefore, be devised so that states could receive their due share.
Stating that tax devolution is a 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, Naveen 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 were recurring phenomena in the state, severe cyclones caused widespread damage and devastation.
The Chief Minister said the state was in favour of implementation of Goods and Services Tax. 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’s growth rate has been above the national average over the past 10 years, the state suffered from deficiencies in critical infrastructure. The socio-economic indicators, though improving, remain below the national average, he said, stressing on the need for investments to develop the state.