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:: Press Releases ::
Thursday, December 19, 2013

1. Dr. Y.V. Reddy, Chairman, Prof. Abhijit Sen, Ms. Sushma 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 Kerala from December 18-19, 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 Kerala and highlighted that Kerala faces unique development problems leading to cost disabilities mainly on account of high forest area, large coastline and growing proportion of old age population. While the management of ecology of the Western Ghats needs to be considered, the State should be incentivised for revenue forgone on account of eco-fragile area and for maintaining net carbon sequestration area. The State expressed its difficulty in reducing Revenue Deficit beyond a point due to its social sector commitments. The State mentioned growing centralisation trend of the Union Government and expected that the Commission would adopt a fresh approach in respect of devolution of resources and availability of more funds to states for schemes which are locally more relevant.

4. 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. The State suggested that vertical devolution should be 50% of the divisible pool of the central taxes and the divisible pool enlarged by including the revenue from Cesses and Surcharges in existence for over three years, the windfall gains from spectrum to be shared with states and royalty of major minerals and petroleum to be included in the divisible pool. The State proposed that fiscal distance should be dropped and income distance be modified as distance from population share which was called ‘tax capacity distance’. The State proposed 5% of the divisible pool to be earmarked for Local Self Government Institutions and proposals relating to State Specific needs were also placed before the Commission.

5. The Commission also interacted with representatives of political parties, Panchayati Raj Institutions, Urban local bodies and Trade and Industry Associations. The Commission, also visited Technopark, Attungal Municipality and Azhoor Gram Panchayat.

6. 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 have been taken on board and will receive due attention in the deliberations of the Commission. The Commission also looks forward to continuing interaction with the State Government.

7. 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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