MUMBAI/HYDERABAD/KOCHI, AUG 5: Many states - including Maharashtra, Kerala and Andhra Pradesh - have come out against the recommendations made by the Eleventh Finance Commission (EFC) and asked the Union government to review some of the proposals which reward non-performing states. Maharashtra Finance Minister Jayant Patil has gone on record expressing serious disappointment over the recommendations of the Finance Commission especially on devolution of funds to states. "Maharashtra, which contributes the most to the total tax collection nationally, is the loser," he observed. According to Patil, the state's share in the devolution of taxes would cut from 6.126 per cent to 4.632 per cent and thereby it would lose around Rs 807 crore annually for the next five years. "It is ironical that the badly managed states such as Bihar, Uttar Pradesh are the real beneficiaries as their share has been increased. In case of Bihar, it has increased to 14.59 per cent from 12.86 per cent while Uttar Pradesh's share would rise to 19.78 per cent from 17.8 per cent," he added. Kerala Chief Minister E K Nayanar has urged the Prime Minister to call an emergency meeting of the Inter-State Council to discuss the anomalies inthe recommendations of the 11th Finance Commission. Kerala stands to lose Rs 3,600 crore to Rs 4,000 crore thanks to the recommendations of the 11th Finance Commission. This is much more than the annual Plan allocation of Rs 3,535 crore for the state this year. The State Government is examining the Finance Commission report in detail. However, the Finance Commission seems to have not seriously looked into the recommendations made by the state government when the Commission had visited Kerala. Andhra Pradesh is set to lose about Rs 1,000 crore in the current financial year thanks to the recommendations made by the Finance Commission (EFC). Ridiculing the recommendations, AP Chief Minister N Chandrababu Naidu has sought the emergency meeting of the National Development Council to take a final view on the subject. "The unilateral decision on the recommendations by Central Government is not acceptable to us," Naidu said. The panel had submitted its final report to the President of India in Julythis year. The report has suggested a devolution of 28 per cent of revenue from central taxes to states and an additional 1.5 per cent of central taxes in lieu of additional excise duties on sugar, cotton and textiles. Naidu also revealed that he is writing to the Prime Minister AB Vajpayeeabout his reservations on the recommendations. He felt that the commission has favoured the Union Government at the expense of the just needs of the states. Considering that the EFC's recommendations are adversely affecting the fabric of fiscal federalism of the country, Naidu expressed the need for an open national debate on the issue before they are put into operation. Speaking to presspersons here on Saturday, Naidu pointed out that while the over all ceiling is pegged at 37.5 per cent of gross central revenue receipts, the states have so far received a meagre 29.5 per cent only. Interestingly, earlier during 1993-95 the state governments have received the highest-ever share from the Central receipts which is to the tune of over 44 per cent. Naidu felt that the total apportionment to the states must be over 52 per cent on the gross Central revenue receipts. While during 1991-92the states' share was about 39.88 per cent which had reduced to 34.75 per cent in the year 1999-2000. The master reformer Naidu has accused EFC that it has rewarded the non-performing states while reforming and performing states have been put on a discount. Jayant Patil said he and the chief minister VD Deshmukh would take up this issue with the Centre and added that the drastic cut in the tax due to the state from central kitty would severely affect the state's attempt to cover a deficit of Rs 786 crore in the current year's budget. Nayanar pointed out that Union Finance Minister Yashwant Sinha had assured earlier that the draft report of the 11th Finance Commission would bediscussed at the Inter-State Council before releasing the final report.Already many states have protested against the unjust recommendations ofthe commission headed by A M Khusro. The Commission should have taken intoconsideration the requirements of the states and the criteria fordevolution of tax revenue. But this has not taken place and for states likeKerala, the devolution of funds suggested cannot be justified. Therefore,the Prime Minister should personally intervene, Nayanar insisted.
