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Citing militancy,border area status,Punjab to demand more share in Central taxes

Fifteen years of terrorism in Punjab and the fact that it is a border state are the two specific items to be placed on the agenda by the government for the consideration of the 14th Finance Commission that begins its two-day visit to the state from September 6

Written by Chitleen K Sethi | Chandigarh | Updated: April 8, 2014 3:49 pm

Fifteen years of terrorism in Punjab and the fact that it is a border state are the two specific items to be placed on the agenda by the government for the consideration of the 14th Finance Commission that begins its two-day visit to the state from September 6.

The government is expected to impress upon the Commission that because of its border state status and the fact that the militancy had pushed Punjab back by over two decades,it should take a kinder view while evolving a formula for devolution of Central funds.

The Punjab finance department has also built a case that the state,because of its “perceived prosperity” and early economic development,has been consistently discriminated against when it came to devolution of Central taxes and allocation of funds under Union government’s different flagship programmes.

“Thirty per cent of all Central taxes are distributed among states. As per devolution of Central taxes,Punjab gets only 1.30 per cent as per formula devised by the 12th Finance Commission. The 13th Finance Commission did not make any major changes,” said a senior finance department official.

According to a PTI report,Punjab is likely to demand that its share in Central taxes be hiked from 1.389 per cent at present to 2.5 per cent while considering the state’s population.

Officials added that the formula used for devolution of funds from Centre to states gives 50 per cent weightage to income distance (preference to low per capita income states),which is unfavourable to high per capita income states like Punjab. Moreover,no weightage is given to the SC population. Punjab has a highest percentage of SCs in the country but this is completely ignored when it comes to devolution of taxes.

Officials added that Centre’s flagship schemes also focus on creation of new infrastructure and little priority is given to maintenance of already created infrastructure. Punjab,which has relatively well developed infrastructure in areas of education,irrigation,roads and electricity,has received comparatively less allocation.

Punjab is expected to urge the 14th Finance Commission to review the existing formula in a way that it increases the overall share of states in devolution of Central taxes to at least 50 per cent. Also,the Commission’s formula needs revision so that Punjab,which contributes over 50 per cent to Central food pool,may get a higher allocation.

“We will be seeking hike in our share in Central tax revenue from the 14th Finance Commission as the current level of share is quite low… We will also want that the Commission should give due consideration to state’s Scheduled Caste population while calculating tax share,” Punjab Finance Minister Parminder Singh Dhindsa told PTI on Sunday.

The 12th Finance Commission (April 1,2005 to December 31,2010) had recommended a grant of Rs 4913.59 crore for Punjab. The state received grants of Rs 4652.64 crore and could not access grants worth Rs 260.95 crore.

The 13th Finance Commission had recommended grants of Rs 5510.27 crore for Punjab for 2010-11 to 2014-15.

Out of this,Rs 627 crore was for local government bodies,Rs 1,100 crore for panchayati raj institutions and Rs 920 crore was allocated for disaster management.

The 14th Finance Commission was constituted in January 2013 under the chairmanship of former RBI Governor Y V Reddy. It is expected to submit its report by October 31,2014.

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