State readies proposal for 16th Finance Commission

The panel is expected to resolve the controversy over tax devolution.
A view of the Odisha Secretariat in Bhubaneswar
A view of the Odisha Secretariat in BhubaneswarFile Photo| Express

BHUBANESWAR: With the 16th Finance Commission set to hold talks with states over financial devolution, the Odisha government has begun the process of preparing a full-fledged proposal on the state’s demands as per the terms of reference.

The commission, headed by former vice chairman of NITI Aayog Arvind Panagariya, is expected to resolve the controversy over tax devolution and suggest ways to augment the states’ respective consolidated funds to supplement the resources of local bodies such as panchayats and municipalities.

The Finance Department has urged all other departments to identify critical areas that need intervention by the 16th Finance Commission for the recommendation of grants under sector-specific needs for the 2025–30 period.

“The departments have been asked to furnish information on proposals justifying the requirement of sector-specific grants by May 20. After a thorough discussion, the final memorandum will be submitted for consideration of the commission,” said an official of the department.

Odisha had submitted 37 proposals with a demand of Rs 83,820 crore before the 15th Finance Commission. This time, the consolidated proposal is expected to cross Rs 1 lakh crore.

Last time, it had demanded the highest Rs 25,000 crore for piped water supply to all, Rs 11,816 crore for flood management in rivers (master plan for the Mahanadi basin), Rs 7,736 crore for building cyclone- and flood-resilient electrical distribution systems, and Rs 5,851 crore for the maintenance of PMGSY roads.

Among other proposals, Rs 5,175 crore was sought for connecting the unconnected habitations, Rs 3,957 crore for canal lining and system rehabilitation, Rs 2,450 crore for the upgradation of Ashram schools to high schools, Rs 2,360 crore for increasing green cover, Rs 2,050 crore for the creation of infrastructure for the promotion of quality education for scheduled tribe students; and Rs 2,000 crore for the upgradation of high schools to higher secondary schools.

“The state government had raised demands for grants under sector specific needs. The 15th Finance Commission, in turn, had recommended grants under some sectors, including health, PMGSY, agriculture, education, judiciary and statistics,” said the official.

States are hoping they will get more funds as, departing from the earlier practice of giving a detailed set of considerations, the Centre, for the first time, has provided the commission flexibility to define the scope of its work, approach and methodology. The commission has sought public opinion before setting its terms of reference.

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