States have a lot to answer when FinCom comes calling

States have a lot to answer when FinCom comes calling


Have you introduced any austerity measures and what kind of savings have they generated? Do you give any incentives for innovation by the staff? What has been the impact of such measures?

These are some of the questions that the Fourteenth Finance Commission is asking state governments as it tries to get clearer picture of state finances.

Additionally,the commission has also sought data on impact of administrative reorganisation by states on their fisc as well as that of voluntary retirement schemes.

“The Thirteenth Finance Commission had made many recommendations on state finances. The questions are basically to understand what kind of fiscal discipline is prevalent in each of the states,” said a senior official.


Apart from devolution of taxes and resources between the Centre and the states,the Fourteenth Finance Commission has also been assigned the task of reviewing the finances of debt stressed states like West Bengal,Kerala and Punjab.

As part of its mandate,the panel is sending out questionnaires to states seeking data on tax revenues,state plan,budgetary position,outstanding loans,status of public utilities,road transport corporations and the power sector.

“Every finance commission asks state governments such questions as these provide inputs to the final report,” the official said.

The Commission has already held a round of meetings with nodal officials of state governments in March this year,but is awaiting data on these issues from states before it begins consultations in earnest.

“It could take at least another two to three months before the panel starts visiting states and begins discussions with governments,” the official said.

The panel,which is led by former RBI governor YV Reddy,is expected to make recommendations for the five year period starting April 2015. The five member panel is expected to submit its report by October 31,2014.