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:: Press Releases ::
Thursday, February 6, 2014

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 Shri A.N.Jha, Secretary along with some other officers visited the State of Uttar Pradesh on February 6, 2014 to hold consultations with the State Government and key stakeholders.

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 in his speech welcomed the 14th Finance Commission and highlighted the following:-

(i) UP being the biggest State in terms of population, the State ’ s growth and performance has a direct bearing on the overall growth and development of the country. The need of vast financial resources to remove the economic backwardness was highlighted and special attention of the Finance Commission was sought on this aspect, to bring the State at par with others;

(ii) Horizontal sharing of the divisible pool for allocation of shares amongst States be made on the basis of weightage of 25% for 2011 population, 5% for area, 50% for fiscal capacity index and 20% for fiscal discipline;

(iii) The share of central taxes to the States as part of vertical devolution be raised from 32% to 36%, keeping in view the need for development of social and infrastructure facilities and other responsibilities of the States;

(iv) While narrating the various initiatives taken by the State Govt. following the developmental agenda set for itself, it was urged that the Finance Commission should consider these facts while recommending the devolution of taxes, duties and grants to the backward States;

(v) The legislation based initiatives of Centre lay financial burden on the States and the Commission should allocate adequate grants to the States to meet expenditure requirements for implementation of these Acts;

(vi) Special assistance has been sought for the State to tide over the difficult financial situation accentuated by the implementation of the Financial Restructuring Programme of the DISCOMs ’ ;

(vii) It has been suggested that inflation factor be taken into account by the Commission for recommending grants to retain the present value of the grants for the entire period;

(viii) The State Govt. views are that in order to promote asset creation the limit of Fiscal deficit be raised to 4% of GSDP if the State achieves Revenue surplus and the concept of Effective Revenue Deficit be extended to the States as well;

(ix) The State expressed its clear objections on the sharing of Central subsidies and urged Finance Commission to avoid giving any recommendation on this aspect;

(x) The Commission was urged to increase the allocation for the Local bodies to 5% of the divisible pool to enable provision of desired level of services by the PRIs and the ULBs; and

(xi) It was suggested that the assessment for relief from NDRF be looked into to make it easier, prompt and transparent.

4. The State Government submitted its Memorandum to the Commission highlighting some other suggestions and views on broadly all the Terms of Reference of the Commission. Detailed presentation on the finances of the State Government, its projection for the award period, etc. were made along with other presentations on Health, Power and Home Departments, highlighting the major issues and needs of the State.

5. The Commission later interacted with representatives of Political parties, Panchayati Raj Institutions, Urban Local Bodies and Trade & Industry Associations of the State and had the benefit of their views on various issues relating to the Commission ’s work.

6. The Chairman and other Commission Members placed on record their appreciation to the State Government for the cooperation and support extended to the Commission and assured that the issues raised would receive due attention in the deliberation 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 stakeholders.

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