Majority of states to gain because of FinCom report: Jaitley

Majority of states would stand to gain because of implementation of the 14th Finance Commission recommendations which has suggested 10 per cent hike in devolution of funds to them, Finance Minister Arun Jaitley said on Monday.

"Every state is earning thousands of crores more because of the recommendation of the 14th Finance Commission. . .," Jaitley said while intervening in a debate on General Budget in the Lok Sabha.

However, he also said that "because of one state, I cannot go back to the 13th Finance Commission recommendations", when TRS member K Kavitha said the allocation for Telengana had come down after taking into account the budgetary allocation and devolution of funds as per Finance Commission recommendations.

Kavitha said there was "a Rs 777-crore (Rs 7.77 billion) loss (in terms of central funds) to Telangana in 2015-16 fiscal" and added that the state plan allocation had declined from Rs 3.37 lakh crore (Rs 3.37 trillion) to Rs 1.96 lakh crore (Rs 1.96 trillion).

To this, Jaitley gave instances of states standing to gain under the new method, saying that for West Bengal the devolution was Rs 27,962 crore (Rs 279.62 billion) in 2014-15, which would rise to Rs 49,079 crore (Rs 490.79 billion) in 2015-16.

For Andhra Pradesh, it would go up to Rs 30,530 crore (Rs 305.3 billion) in next fiscal, from Rs 15,720 crore (Rs 157.2 billion) in 2014-15.

"If any state wishes to go back to the 13th Finance Commission recommendation, we (Centre) would have more money in our pocket," Jaitley said.

The 14th Finance Commission has recommended a record 10 per cent increase in the states' share in the Union taxes to 42 per cent, which has been accepted by the Centre and will give the states an additional Rs 1.78 lakh crore (Rs 1.78 trillion) in 2015-16.

The report of the Commission, headed by former RBI Governor Y V Reddy, also recommended a grants-in-aid of Rs 48,906 crore (Rs 489.06 billion) for 11 revenue deficit states, including Andhra Pradesh post-division, West Bengal and Jammu and Kashmir, for 2015-16.

For the period up to 2020, it will be over Rs 1.94 lakh crore (Rs 1.94 trillion).

The total devolution to the states in 2015-16 will be Rs 5.26 lakh crore (Rs 5.26 trillion), as against Rs 3.48 lakh crore (Rs 3.48 trillion) in 2014-15,

representing an increase of Rs 1.78 lakh crore (Rs 1.78 trillion), while the total devolution to states during the five year period up to 2019-20 will be Rs 39.48 lakh crore (Rs 39.48 trillion).