Bhubaneswar, Dec 9:
Odisha needs large investments to strengthen critical infrastructure for its socio-economic development as socio-economic indicators, though improving over the years, remain below the national average despite the state consistently growing above the national average over last five to ten years, said chief minister Naveen Patnaik.
Addressing the 14th Finance Commission team headed by its chairman Dr Y V Reddy which is on a 2-day visit to the state, the chief minister said there has been a significant improvement in the finances of the state over the last decade but however, the revenue raising process in the state was plagued by several constraints. He pleaded for a rational and liberal fiscal transfer to the state to help accelerate its development process.
Highlighting his government’s enhanced budgetary support to agriculture and allied sectors for increasing agricultural productivity and raising the income level of the people dependent on agriculture and allied activities, Patnaik said his government intended making massive investments to bridge the gap in availability of physical infrastructure adding Capital investment to the extent of Rs. 38,925 crore has been proposed in this regard including Rs 5000 crores in PPP projects.
The chief minister advocated a suitable fiscal transfer formula that enables the state to receive its rightful share as the aggregate transfer of resources ( shared tax and grants taken together) recommended by successive Finance Commissions had been far below expectations.
Patnaik demanded the raising of the existing level of tax devolution to the states from 32% of the tax receipts of the Centre to 50%, saying the bulk of the expenditure responsibility is that of the states and the buoyant sources of revenue are with the Centre.
Citing a study commissioned by the Thirteenth Finance Commission that, well designed fiscal transfers from high income to low income regions of India have net positive welfare implications for all regions, Patnaik urged the Commission to design the formula or principle for determination of inter se share of Central Taxes primarily on the principles of equity.
The chief minister also urged the Commission that the acute gap in service delivery due to resource constraints in important areas as identified by the state governments should be taken into account while recommending the grants, while at the same time, the conditions attached to the grants should be kept to the minimum lest they become constraints in availing the grants for the specific purposes.
Patnaik suggested that the Commission should review the current arrangements for provision of grants for disaster relief citing Odisha’s high vulnerablity to multiple disasters. While floods and droughts are recurring phenomena, severe cyclones cause wide spread damage and devastation, he added.
The chief minister said while his government was in favour of implementation of Goods & Services Tax (GST), this should uphold and safeguard the state’s fiscal autonomy as well as honour the standing constitutional arrangement for compensating the states for losses on account of implementation of the GST.