A demand for setting up a committee of state finance ministers and headed by the Union Finance Minister to address issues relating to the debt burden of states, was made in the Rajya Sabha on July 26, with the government indicating its agreement to the proposal.
During the Question Hour, TMC member Derek O’Brien said several states like Uttar Pradesh, Gujarat, Tamil Nadu, West Bengal, Madhya Pradesh and Kerala, have huge debts.
Maintaining that the states were being burdened to pay back the debt, he asked the Centre to give the states “some level of confidence” and create a committee of state finance ministers to look into the issues.
Emphasising the importance of a “prudent fiscal policy”, Jaitely pointed out that expenditure has to be planned according to limited resources available, while adding that a committee as sought by O’Brien could be formed.
The Finance Minister also emphasised that two-thirds of the Central Sales Tax (CST) amount has been provided to states and the remaining one-third would also be discharged.
He also asserted that after the 14th Finance Commission, there is a siginificant increase in the amount provided to the states by the Centre.
Responding to O’Brien’s questions, Jaitley said that while the amount delivered for some specific schemes may have come down, overall the funds provided to states have been substantially increased.
Jaitley also said that the Fiscal Responsibility and Budget Management (FRBM) Act 2003 is to ensure inter-generational equity in fiscal management.