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GST - Finance Commission to make realistic revenue projections for States: Chairman

Published: Sep 07, 2018

By TIOL News Service

North versus South debate is misleading, he mentioned, as many States from other parts of the country are also expressing similar apprehensions as made by southern states like the issue of population date of 2011. It will be the endeavour of commission not to penalise the states doing well on demographic front as well as economic front while carefully balancing the equity and efficiency.

Acknowledging that there are issues with GST like rates and the compensation which may take some time to settle, he said that Commission will try to make realistic GST projections for states considering that 14% compensation will not be there for states in the last three years of award period of this commission. It will also be a challenge to make revenue projections from GST for Centre. Finance Commission is doing consultation with CBIC on GST.

Challenge arising out of urbanisation and resultant migration is a significant issue for Tamil Nadu which needs serious consideration as the urban centres are the growth engines for not only TN but for the country as well. With achieving total fertility rates less than replacement rate of population growth, rising percentage of ageing population will create new pressure on state finances and need specific care by the state.

Appreciating the growth momentum of the state, Chairman said that Tamil Nadu has made an outstanding contribution in the momentum for India's economic development with per capita income significantly higher than national average and poverty significantly below, noted the Chairman. There have been excellent record of fiscal management and debt management well within the limits, however, inter district disparities are a worrisome feature and need priority attention.

Tamil Nadu has been traditionally welcoming the private and foreign investment which makes TN an important engine of Indian growth. Commission also noted the policy imperatives by the state govt for enhancing Ease of Doing Business which has also helped in creating jobs.

Other issues which were discussed during meeting to take growth momentum of TN further while reducing disparities

1. Floods management system

2. Improving productivity of agriculture

3. Imp flood erosion works and paucity of resources for management of water resources

Commission has taken serious note of all the submissions made in the memorandum submitted and discussed and assured TN govt that to ensure that gains that TN has achieved is further strengthened so that TN continues to play the important role which it has played as an important engine in india's economic growth and creating a catalytic effect by attaracting foreign investment.

The Commission noted all the suggestions made by the State Govt. with respect to higher vertical devolution and different weightage for horizontal devolution. In particular, the way calibration is done for the geographical areas, forest areas, environment and high density of tribal population. Commission recognised that it requires sympathetic treatment by the Finance Commission and to come up with solutions in terms of combining the virtues of rewarding efficiency and equity along with consideration to special needs of states like Jharkhand.