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:: Press Releases ::
Wednesday, February 12, 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 Uttarakhand on February 11th -12th, 2014 to hold consultations with the State Government and key stakeholders.

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

3. The Chief Minister in his speech welcomed the Fourteenth Finance Commission and highlighted the following:

a) The growth rate of the State that recorded at a healthy 12.28% between 2004-05 to 2012-13, has been impacted on account of the withdrawal of the concessional industrial package, the prevailing macro-economic situation in the country and the devastating natural calamity witnessed in 2013 with a huge setback to the developmental efforts in the State. The Hon’ble Chief Minister mentioned that the support of the Fourteenth Finance Commission is critical for the State at this critical juncture.

b) The Fourteenth Finance Commission was requested to continue with the plan and non-plan financing of Special Category States even if they show better results on human development indices, as these mountainous States forming a class by itself have larger expenditure requirements on account of their topography.

c) The Hon’ble Chief Minister pointed out that the state was faced with acute staff shortage to deliver on public services due to low levels of recruitments in the past which required to be corrected through filling up of the existing vacancies across various departments. It was requested that this need for additional expenditure on salary along with the impact of implementation of the 7th Pay Commission be taken into consideration by the Commission while determining the expenditure forecast of salary instead of making routine normative assessment.

d) The expenditure requirements of the State, it was stated, is higher both on account of higher cost of delivery of services and for bridging the gap compared to the other prosperous States. Keeping in view the low levels of private investment in the social sector and the limited capacity of the people to pay, the support of the Finance Commission was sought for covering the projected revenue gap so as to ensure future prosperity and financial viability of the State, at this critical juncture of reconstruction.

e) The Commission, it was suggested, should incorporate forest cover as an additional criterion for horizontal devolution, with an assigned weightage of 10%. Alternately, it was suggested that the State should be allocated Rs. 2000 crore per year as “Green Bonus”.

f) It was stated that the State was in dire need of funds to provide and improve the infrastructural facilities, including road connectivity and maintenance thereof since the rail network is very limited and air services are almost non-existent.

g) The Commission was requested not to put any conditionalities for grants recommended for the functioning of the Local Bodies as these conditionalities became difficult to fulfil and the local bodies could not avail of the grants recommended by 13th Finance Commission.

h) On the Vertical devolution, it has been suggested that the shareable pool should comprise of Gross Tax Revenues and the share of States in the shareable pool of central taxes be raised to 40%, with share of special category states insulated against shortfall in central revenues. It was also suggested that for working out the horizontal devolution, a divisible pool be separately earmarked for Special Category States.

i) Hon’ble Chief Minister suggested that a proper index of cost providing public and merit services be recommended by the Commission and used in the devolution formulae with adequate weight.

j) The Commission was requested to evaluate the State’s revenue and expenditure forecasts in the light of the projected requirements of the State for spending on social and economic infrastructure as well as servicing the committed liabilities, while recommending non plan revenue deficit grants to the State.

k) The requirement of the State for the State specific ‘special problems’ and ‘up-gradation of standards of services’ was projected at Rs.2910.38 crore.

4. Detailed presentations on the fiscal situation of the State were made highlighting the major issues and needs of the State along with a presentation on the recent disaster faced by 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 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 have been noted and would 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 stakeholders.

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