FM's pre-Budget meeting with states on Jan 13

Finance Minister Pranab Mukherjee will hold a pre-Budget discussion with state governments on January 13.

Recommendations of the 13th Finance Commission on devolution of funds, the Goods and Services Tax (GST) regime, continuation of stimulus packages and allocation for the Centre's flagship schemes such as National Rural Health Mission and Sarva Shiksha Abhiyan are expected to dominate the deliberations.

A government official told Business Standard that the states will make a strong pitch to continue the fiscal stimulus package.

The demand has already been made by industry representatives in earlier interactions with the finance minister. State governments fear another financial crisis. State economies are vulnerable to such incidents, especially when fiscal deficit is already on the rise.

Further, the official said, states have expressed displeasure over the 13th Finance Commission task force's methodology in its GST report, for arriving at a recommended 12 per cent revenue-neutral rate. The states have made a strong recommendation for a dual-rate GST, in keeping with the country's federal structure.

State governments want to impose the tax on small traders and producers. They want the Centre to keep the threshold for central GST at the existing level of Rs 1.5 crore (Rs 15 million) and raise the threshold for taxation of services, currently at Rs 10 lakh.