New Delhi: The finance ministry has allotted ₹30,000 crore in Budget 2020-21 to the states, even because it accepted the advice of 15th Finance Commission (FFC) on revenue deficit grants, which had put aside ₹74,340 crore. This may not go down effectively with the states.
“15th UFC, it’s informally learnt, awarded ₹74,000 crore as revenue deficit grants to states. In an unprecedented transfer Centre has slashed it all the way down to ₹30,000 crore. It is a critical blow to these states who suffered critical discount in tax share due to inhabitants issue,” Kerala finance minister Thomas Isaac tweeted on Monday.
The Commission had beneficial post-devolution revenue deficit grants for fourteen states in 2020-21. Of the ₹74,340 crore revenue deficit grants, ₹37,917 crore was meant for Andhra Pradesh, Kerala, Punjab, Tamil Nadu and West Bengal. ₹36,423 crore was for Assam, Himachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura and Uttarakhand.
“The authorities has accepted the above advice of the Commission,” finance ministry stated Sunday.
Since the FFC used 2011 Census knowledge, the tax share of most southern states with low inhabitants progress charges, equivalent to Andhra Pradesh, Kerala, and Karnataka, has come down, whereas the share of Bihar, Madhya Pradesh, Punjab, Maharashtra, and Gujarat has gone up.
The FFC assigned 15% weight to the inhabitants of a state, down from the 17.5% allotted by the 14th Finance Commission, whereas elevating the load under demographic efficiency from 10% to 12.5%.