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:: Press Releases ::
Tuesday, December 10, 2013

1. Dr. Y.V. Reddy, Chairman, Prof. Abhijit Sen, Ms. Sushama Nath, Dr. M. Govinda Rao and Dr. Sudipto Mundle, Members of the Fourteenth Finance Commission and Sh. A.N. Jha, Secretary visited the State of Odisha from December, 9 - 10, 2013 to hold consultations with the State Government and key stake holders.

2. The Commission met with the Hon’ble Chief Minister, his Cabinet Colleagues and senior officers of the State Government, for discussions.

3. The Chief Minister welcomed the Chairman and Members to Odisha and mentioned that the relative backwardness and the need to provide public services to a diverse population in an optimum manner needs to be recognised. Thus it is imperative to design a suitable fiscal transfer formula so that the state receives its due share. Since the bulk of expenditure responsibilities are of the state’s while the buoyant sources of revenues are with the Centre, he suggested that the past trend growth rate should not be the basis for assessment of revenues and expenditure needs as these underestimate the expenditure requirement of relatively poorer state.

4. He suggested raising the existing level of tax devolution to the states from 32% of the net tax receipts to 50%. Per capita income distance may be the primary criterion representing regional equity in the formula for horizontal sharing of Central Taxes among the states with weightage of 50%. He suggested that 1971 population should be adopted and the share of SC/ST population should be taken into account in a composite population factor with a weightage of 20%. Fiscal Discipline may be given a weightage of 20% in order to balance of the overall approach of equity with efficiency. The area factor as suggested by the Government should be defined as scheduled area plus the low population density with a weight of 10%. As tax devolutions are contingent upon actual central tax collection, a guaranteed floor level of tax devolution of at least 90% of the projected amount may be prescribed by the commission to ensure predictability of centre transfer of resources flow in the form of tax devolution.

5. He suggested that the conditions attached to specific grants should be kept to the minimum so that state can avail these grants easily. He also suggested that in order to augment the consolidated fund of the state to supplement the resources of the local bodies, the existing share of central taxes should be increased to 5%. He sought support for disaster relief and suggested that while deciding the size of State Disaster Response Fund(SDRF), the releases made from National Disaster Response Fund and expenditure from States’ own resources need be taken into account. The SDRF should be shared by the Centre and the State in the ratio of 90:10.

6. The State Government submitted its Memorandum and made a detailed presentation on the finances of the State Government, its projection for the award period and gave its views on the Terms of Reference of the Commission. During the presentations the state also highlighted the Macro Economic situation, achievements of the state, plan priorities, and the need to increase the capital expenditure especially in the area of infrastructure. A separate presentation was also made on disaster management, wherein the State stressed the need for immediate release of relief funds from the Centre and also the need to increase the size of SDRF. The Commission also interacted with representatives of political parties, Panchayati Raj Institutions, Urban local bodies and Trade and Industry Associations. The Commission visited sea erosion sites and Wetland Research Centre at Chandraput, Balugaon. Another team of Officials visited Chilika Development Authority(CDA).

7. The Commission places on record its appreciation to the Chief Minister and State Government for the cooperation and support extended to the Commission and assures that the issues raised will receive due attention in the deliberation of the Commission. The Commission also looks forward to continuing interaction with the State Government.

8. The Commission will finalize its recommendations by October 2014 after completing its discussions with all the State Governments, the Government of India and relevant stake holders.

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