The Business Line 21.07.2009
Finance Commission focuses on better fiscal devolution
| States’ views sought on GST implementation. |
— P.V. Sivakumar 
Key role: Dr Vijay Kelkar, Chairman of the 13th Finance Commission, in Hyderabad on Monday.
Our Bureau
Hyderabad, July 20 The Chairman of 13th Finance Commission, Dr Vijay Kelkar, today said that the Commission’s focus is on ensuring continuity and covering of some fresh ground to ensure better fiscal devolution.
It is also eliciting views from States on the Goods and Services Tax (GST) implementation as the new tax regime is all set to come into being by April 1, 2010.
The Commission is keen to help in ‘grand bargain’ between Centre and States in GST implementation, he said.
The country’s financial sector is prudently sound. Inflation is under control and balance of payments position continues to be fine. The Government has initiated monetary, fiscal and sectoral policy measures to minimise the negative impact, Dr Kelkar felt.
Speaking at a meeting with the Andhra Pradesh Chief Minister, Dr Y.S.Rajasekhara Reddy, he said some States have increased capital spending without adequately providing for operational and maintenance expenditure.
Complimenting the State for its fiscal record and implementation of Fiscal Responsibility and Budget Management Act, he expressed the need to reduce the debt to Gross State Domestic Product (GSDP) ratio, which is currently at 31.1 per cent as against the recommendations of 28 per cent.
While Dr Kelkar expressed happiness with State’s efforts to execute Rs 65,328-crore worth projects under public-private partnership mode, he was concerned with the aggregate losses of Rs 2,770 crore in the public sector entities.
The Commission cited State Accountant General reports showing cost overruns of Rs 6,127 crore (by 2008) in irrigation projects and incomplete multi-purpose projects with significant irrigation component.
“Another major concern that could potentially jeopardise the State’s impressive fiscal achievements is subsidies both food (Rs 1,900 crore) and power (Rs 2,385 crore). Subsidies detract scarce resources and prudent control is essential,” he said.
The Andhra Pradesh Chief Minister earlier highlighted some of the key achievements in State’s fiscal management, increased investment in irrigation sector and efforts to bring in all round development.
