Cabinet urges rethink on finance panel recommendations

By Our Staff Reporter

HYDERABAD, AUG. 9. The State Cabinet has urged the Centre to withhold further proceedings on the Action Taken Report (ATR) on the recommendations of the 11th Finance Commission on finances of the States till the matter was discussed in detail at a special meeting of the Inter-State Council.

It noted that ``the Centre had not discussed the matter in the Inter-State Council and simply accepted the recommendations of the Finance Commission and placed the ATR before Parliament on July 27.''

The following is the text of the resolutions made by the State Cabinet at a meeting held here on August 8: ``The Council of Ministers took serious note of the adverse impact of the recommendations of the 11th Finance Commission on the finances of the State. They felt that the award creates an adverse impact in respect of sharing of central revenues between the Centre and the States as also its distribution among the States. The overall ceiling on central devolution and excessive weightage given to poverty and backwardness penalise States that have initiated economic reforms and made sincere efforts to improve their fiscal performance.''

``The implementation of this award will not only discourage such progressive States but also send a wrong signal to other States that non-performance pays. In the long run, such an atmosphere in the country will be counter-productive in the achievement of national development goals.''

The Council of Ministers recalled the assurance given by the Prime Minister, Mr. A.B. Vajpayee, at the Inter-State Council meeting held on May 20, asking the State Governments and the Union Ministries ``to make use of the Council forum on all matters concerning inter-State relations in the true spirit of federalism.''

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Section  : Southern States
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