Date:31/03/2008 URL: http://www.thehindu.com/2008/03/31/stories/2008033160181400.htm

National

CPI(M) for more financial powers for States

K.V. Prasad

A reduction in revenue made the economy of States vulnerable, says Yechury

The States under financial stress: Resolution
States forced to look for alternative sources
of funding

— Photo: K. Ananthan

Congress minutes: CPI(M) leader Sitaram Yechury briefs the media on the resolutions adopted on the second day of the 19th Congress of the party in Coimbatore on Sunday.

COIMBATORE: The Communist Party of India (Marxist) will embark on a nationwide campaign for greater devolution of financial powers for the States, Polit Bureau member Sitaram Yechury said here on Sunday. The objective was to create self-reliant States that were now dependent on the flow of funds from the Centre, in the form of a share of the taxes.

Briefing presspersons on a resolution on Centre-State relations, passed on the second day of the six-day 19th Congress of the party, he said the States were under financial stress, with low tax revenue being a major reason.

The resolution attributed imbalance in the revenue to the important powers to raise revenue remaining with the Centre.

Mr. Yechury said the share of funds for the States from the direct taxes collected by the Centre was also getting reduced. This was because of tax concessions offered for investments.

A reduction in the quantum of revenue brought pressure on the States to look for alternative sources of funding for development schemes. The sources include lending institutions such as the World Bank. The economy of the States had become vulnerable and this restricted the scope for development.

“After the party Congress, we will consult the Chief Ministers of other States on what action can be taken,” he said. The party would first take this issue to the States ruled by the Left front. Then the others would be consulted in phases.

The party was of the view that the States must get a one-third share initially, which must be raised to 50 per cent. At the same time, it was the right of the States to raise taxes. At present, they were dependent on devolution of funds from the Centre.

The party Congress noted with concern the deterioration in the Centre-State relations in recent years in all spheres involving administrative, legislative and especially financial issues.

It was on the pressure of public opinion created by the Left and democratic forces led by the CPI (M) that the Central government constituted the Sarkaria Commission.

The United Progressive Alliance government had now constituted a new commission to go into the Centre-State relations. But, even after over two decades, practically none of its recommendations were implemented. The expectations created by the UPA on this front had been belied, the resolution noted.

On other aspects of Centre-State relations, the resolution said there was a new and alarming tendency of misinterpreting the provisions of Article 355 and sending of armed forces to the States by the Centre unilaterally. On the other hand, when the States asked for deployment of such forces, there was undue delay in meeting the request.