BHUBANESWAR: Chief Minister Naveen Patnaik’s apprehension that Odisha may stand to lose over Rs 3,000 crore tax in terms of its share in the Central divisible pool stems from the large difference between the budget estimates of 2019-20 and 2020-21.
The total pool from which the devolution to States is made was estimated at Rs 8.44 lakh crore in 2019-20 as per budgeted estimates basing on which the State’s share was calculated at Rs 39,206.59 crore. Odisha’s share in the pool as per the 14th Finance Commission is 4.642 per cent.
However, as per the Budget estimates of 2020-21, the State is projected to receive Rs 36,401 crore given the calculations of the shared tax pool at Rs 7,84,181 crore by Union Finance Minister Nirmala Sitharaman. This, the Government, says will lead to a drop in the share because of shrinkage in estimates by about Rs 59,000 crore which the Chief Minister pointed out in his reaction on Saturday.
However, the loss pointed by Odisha is because of the budgeted estimates basing on which it worked out its State Budget and pegged its share in the Central pool at over Rs 39,206 crore.
Since the Centre’s tax collection did not meet the targets, the revised estimate of shared tax for 2019-20 stood at Rs 6,56,046 crore. Basing that, the actual devolution to the State could be about Rs 30,453 crore. That means, the State may stand to gain another Rs 6,000 crore if the 2020-21 estimates hold true.
The grant-in-aid to the State as per its budgeted estimate last fiscal stood at Rs 30,559 crore which is likely to be met and may not increase. Similarly, other proceeds as per the Finance Commission grants such as grant for urban local bodies, rural local bodies as well as NDRF may remain largely unchanged.
The recommendations of the 15th Finance Commission, which the Union Finance Minister said have been accepted, will come into effect from 2021-22. Some of the southern states are likely to lose given a change in the parameters while some northern and eastern States may gain. Odisha’s status is yet to be clear.