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Task Force wants new devolution norms for states

The Special Task Force for devolution of powers to states today decided to recommend to the Union government an alternative scheme of devolution and a special relief package for states to enable them to overcome the burden they are facing in implementing the Fifth Pay Commission recommendations.

Task Force Chairman and Rajasthan Chief Minister Bhairon Singh Shekhawat said the members favoured pooling of all taxes and increasing the states's share in these from 29 per cent to 33 per cent. He said even the standing committee of the Inter-State Council had also recommended more than 29 per cent share of central taxes to the states.

Shekhawat said this would require a constitutional amendment. The Tenth Finance Commission had also favoured a greater share to the states but nothing was done.

Besides Shekhawat, the three-member Task Force comprises eminent economist Amresh Baghchi of the National Institute of Public Finance and Policy, and S R Hashim, member secretary, Planning Commission.

Those who attended today's meeting were West Bengal Finance Minister Asim Das Gupta, Bihar Finance Minister Shankar Prasad Tekriwal, Rajasthan Deputy Chief Minister and Finance Minister Harishankar Bhabra and the finance secretaries of Andhra Pradesh, Arunachal Pradesh, Gujarat and Kerala.

The Task Force, which held its fourth meeting today, decided to meet again on May 25.

The primary aim of today's meeting was to solicit the views of the states on the devolution of greater resources to them.

The Task Force will submit its report in phases and an interim report will be submitted to Prime Minister Atal Bihari Vajpayee very soon after finalising its views on the states's demand.

Shekhawat said some states demanded that 50 per cent of the central budgetary support should be in the form of subsidy as against the current ratio of 30 per cent, where 70 per cent is loan element.

Some states suggested that the government should put a moratorium on the loans they owed to the Centre in view of the difficulties they are facing as a result of the Pay Commission recommendations.

There were some states which wanted a higher royalty on the mineral wealth they possessed.

Some states demanded that the revenue losses suffered by them as a result of enforcing prohibition should be reimbursed by the Centre.

The overdraft limit of states should be increased from the present ten days to 15 or 21 days.

A large number of states favoured that some centrally sponsored schemes should be transferred to states.

There were states which wanted the Centre to impose additional excise duty on tobacco, textiles and sugar and this be given back to the states. Such a system was in force 20 years back, Shekhawat said.

The Planning Commission and the finance ministry officials will make an assessment of these and a large number of demands raised by the states, he said.

Some states insisted that 29 per cent of the devolution to states under the Voluntary Disclosure of Income Scheme should not be computed in the Central assistance to the states. It would enable the states to have an arrears of Rs 45 billion.

It was also decided to suggest drastic changes in the system of externally funded projects.

Shekhawat desired that the recommendations be made as practical as possible so that they did not meet the same fate as some earlier reports.

The meeting took note of the fact that the Sarkaria Commission had many suggestions on the Centre-state financial relations. These had been discussed in detail in various meetings of the Inter-State Council and chief ministers had given their views on this matter. However, the problems and differences on the issues still remained.

Dr Baghchi, sources said, had suggested that the Task Force should develop new sources of income without changing the Constitution.

UNI

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