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Odisha to get Rs 2 lakh cr. as Central aid in next five years

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Odisha Sun Times Bureau
Bhubaneswar, Feb 25:

The Odisha government stands to get nearly Rs 2 lakh crore by way of Central assistance over the next five years (2015-16 to 2019-20) as per the recommendation of the 14th Finance Commission, which was accepted by the Narendra Modi government yesterday.

Courtesy: newswala.com
Courtesy: newswala.com

While the amount may look impressive on the face of it, it is barely 43% of the Rrs 4.60 lakh crore the state had asked for.

Experts, however, say the state’s demand for Rs 4.60 lakh crore, which is nearly five times the amount it had got under the 13th Finance Commission, was ‘unrealistic’. The state, it may be noted, had asked for Rrs 3.38 lakh crore as central assistance, Rs 1.22 crores as special assistance and the rest as compensation for loss on account of GST.

The lion’s share of the Central allocation (Rs 1.83 lakh crore) would come in the shape of the state’s share of central taxes, while about Rs 16, 000 would be due to the state as assiatnce under various central schemes.  The gross Central assistance to the state for the next five years would be Rs 1,98,431 crore.

As per the recommendation of the Commission, Odisha would receive 4.64 percent from the Centre as Central tax for the next five years till 2019-20. The share for the state recommended by the 14th Finance Commission is .77 percent less than the recommendation of the 13th Finance Commission (4.77%).

However, the state, like other states, would receive 10 percent more -42% now against 32% earlier – as its share in Central taxes as per the recommendations of the Commission. Earlier, the Central tax allocation was 32 percent. This means the state would get Rs 1.83 lakh crore for the next five years with an average annual inflow of Rs 36,000 crore.

The state government had estimated the Central tax share of Rs 19, 508 crore for 2015-16 fiscal. Going by the recommendation of the Commission, the state would receive Rs 26,890 crore for 2016-17 fiscal which is Rs 7, 310 crore more than its estimate.

The Commission has recommended Central assistance to the states on three heads.

The assistance relates to revenue deficit, panchayats and civic bodies and disaster management.

While Odisha would not get a single pie from the Centre on the revenue deficit head, it will receive Rs 7,965 crore in assistance for panchayat bodies and Rs 1418 crore for civic bodies over the next five years. Besides, it will also receive Rs 885 crore and Rs 354 crore towards capacity building of the panchayat and civic bodies respectively.

The state would receive Rs 4130 crore for disaster management assistance, which is Rs 2, 483 crore more than the recommendation of the 13th Finance Commission.

For strengthening of the state judiciary system, the Commission has recommended Rs 405.67 crore in the next five years.

While the Centre has not made any specific allocations for infrastructure development, repair, education, health and sanitation, it said it would formulate a new allocation policy for the states after considering their fiscal situation, need and poverty ratio.

The Commission has recommended Rs 14,77, 943 crore assistance to the states on these heads in the next five years.

Apart from this, the Commission has also recommended the Centre to direct the state governments to compensate the loss towards Goods and Services Tax (GST).

As per the recommendation, the Centre would provide compensation towards loss on account of the implementation of GST to the states for five years.

The Centre would provide 100 percent compensation in the first three years, 75 percent in the fourth year and 50 percent in the fifth year.

The Commission has also recommended more powers to the states to make expenditure on their annual plans by incurring loans from external sources.

It has also recommended raising the total fiscal deficit amount to 3.5 percent of the Gross Domestic Product (GDP) of the states which was 3 percent as per the recommendation of the 13th Finance Commission.

Predictably enough, the BJD has cried ‘central neglect’ with party spokesperson Pratap  Keshari Deb saying what the Centre has given with one hand, it has taken away with another hand. ‘The net result is that the state would get less than what it got last time,” he said.

Union minister Jual Oram, however, has rubbished the BJD claim. “Poor states like Odisha would get at least twice the amount they got earlier in the new arrangement. They would not raise the demand for special category status anymore,”: Oram said,

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