In his opening address at the third meeting of the governing council of NITI Aayog, Prime Minister Narendra Modi addressed chief ministers as “Team India” assembled to reflect on ways to prepare India for changing global trends. Within minutes, chief ministers of Opposition-ruled states attacked the Centre over alleged curtailment of funds, and federalism, besides asking for timely compensation for loss of revenue due to GST. West Bengal CM Mamata Banerjee and her Delhi counterpart Arvind Kejriwal skipped the meeting. Tamil Nadu CM Edappadi Palaniswami said any cut in the overall transfer of funds while compensating the states for GST would greatly impact the states’ development expenditure. Kerala CM Pinarayi Vijayan said NITI Aayog was “in no way a real substitute for the erstwhile Planning Commission” and argued that the “space for constructive debate is shrinking as forums like National Development Council and Inter State Council have become “almost defunct now”. Vijayan also said the “structure of fiscal federalism in India is greatly tilted in favour of the Centre”. “This imbalance is manifested in the mechanism by which resources are shared between the Centre and the states as well as in the decreasing space for borrowing allowed to the state governments,” he said. Himachal Pradesh CM Virbhadra Singh said allocations under centrally sponsored schemes like Flood Management Programme, Accelerated Irrigation Benefit Programme and National Rural Drinking Water Programme have been “drastically reduced”. The PM mentioned there has been a 40 per cent increase in overall allocation to states between 2014-15 and 2016-17. Bihar CM Nitish Kumar agreed tax transfers have increased from 32 per cent to 42, but argued that under the 14th Finance Commission’s new formula for horizontal distribution, Bihar would receive Rs 50,748 crore by way of its own share of central taxes in 2015-16, an increase of 5 per cent, while other states would gain at least 30 per cent. “. Allocation of funds based on the formula. has resulted in the reduction of the share of Bihar from 10.9 per cent to 9.665 per cent,” he said. Palaniswami said, “The horizontal share of Tamil Nadu declined by almost 20 per cent, effectively nullifying the impact of the increase in the vertical share in devolution. The situation has been exacerbated by the increasing tendency of the government of India to levy cesses and surcharges on various central taxes which keeps such receipts out of the devolution pool.” Nitish also reminded Modi of his poll promise of doubling the minimum support price of crops. There can be no better initiative to double the income of farmers than this, he said, while criticising the Centre’s agriculture schemes. Many CMs asked the Centre to evolve a viable mechanism to ensure compensation on account of implementation of GST. Karnataka CM Siddaramaiah said, “No provision has been made for such compensation in the Union budget for 2017-18. The timely release of compensation to states under GST will be an important factor in ensuring that the relationship of mutual trust is maintained between the Centre and the states.”
