Finance panel for more grants, debt relief to states

He declined to go into specifics, but said the panel has ‘‘tilted’’ the balance towards grants so as to benefit smaller and less developed states whose share of tax revenue is lower. At the same time, he said the complaints of better performing states of a relative lower share of revenue, have also been addressed.

The Commission has set milestones for both the Centre and states in terms of restructuring of their financial position. ‘‘There is a separate chapter on restructuring of public finances of both Centre and states,’’ Rangarajan added. Rangarajan said the Finance Commission has tried to address the problems of states in totality.

While increasing the grant proportion, it has ensured that economically backward states get higher share of central pool of funds for their development.

The 11th Finance Commission had pegged tax devolution at 29.5 per cent of the central pool of taxes and indications are that it has been raised to 30.5 per cent.

Asked if service tax was also part of the divisible pool of taxes, Rangarajan said as of now that was the case.