Share Pay Panel Burden – Group of State FMs

Powered by a better bargaining force as a joint entity, the Empowered Committee of Finance Ministers has demanded that the Central government now share a 50 per cent burden for implementation of the Sixth Pay Commission.

Though the empowered committee has made this request to the 13 th Finance Commission, it is for the first time that this request is being made to the Union Finance Minister. “Most states want to take unified approach, as they will not be able to bear the additional burden, arising from implementation of the pay commission recommendations,” said Ashim Dasgupta, finance minister of West Bengal and chairman of the committee, adding that an emergent meeting has been summoned in December to raise this demand, before the country goes into a poll mode.

The Committee will also pursue aggressively its demand for a 50 per cent share in the taxes collected from the states by the Centre. “The Article 280 of the Constitution provides that 50 per cent of taxes collected by the Centre should come back to the states and form part of development expenditure.

However, the devolution to states is only 30.5 per cent,” he said.

Dasgupta said that the revenue raising powers of states was restricted, even as the total development expenditure of all states is 1.5 times that of the total expenditure of the government of India.

Talking about the growing debt burden of the states, he said that the main reason was that the money coming to the states was only in form of loans, rather than as grants.

This had led to the burgeoning loan burden of the states. “The Central government dictates on how to use the money coming in through the centrally sponsored schemes. It should be left to the states to implement its usage,” he said.

Earlier, the finance ministers from Punjab, Haryana, Bihar, Maharashtra, Gujarat, Uttarakhand and Jharkhand held discussions on how to effect a smooth transition from Value Added Tax regime to Goods and Services Tax by 2010. “For this purpose, a Taxation Information Exchange System will be in place by the end of this fiscal, which will allow an inter state exchange of information on assesses,” he said.

Dasgupta also said that VAT collections across the country have seen a rise in 23.43 per cent till September this year, as compared to the same period last year. “Though the global meltdown has had an impact at the macro level, we will see its impact on the revenue collections only by the end of December,” he added.

Source : Tribune India

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