Business

‘No progressive trend in releasing non-Plan surpluses’

KOCHI: A study by Kochi-based Centre for Socio-economic and Environmental Studies (CSES) has said that the distribution of non-Plan surpluses among States after devolution and grants does not show a progressive trend.

The study was jointly conducted by K.K. George, chairman of CSES, and K.K. Krishnakumar, Fellow of CSES. The study was titled “Regaining the Constitutional identity of the Finance Commission: A Daunting Task for the Thirteenth Commission.”

The study noted that transfer of funds by the Finance Commission by way of tax sharing and grants determines the surpluses in the non-Plan revenue account of states. The Finance Commissions leave little or no surplus in the non-Plan revenue account of many States after devolution and gap grants and they start with an initial handicap with regard to balance on current revenue, the nucleus for financing the States’ plans, it noted.

The distribution of non-plan surpluses does not show a progressive trend. The per capita non-plan revenue surplus of Assam, Bihar, Orissa, Rajasthan, Uttar Pradesh and Madhya Pradesh under the award of the Twelfth Finance Commission was much less than that of Haryana, Karnataka, Gujarat, Tamil Nadu, Maharashtra and Andhra Pradesh.

Thus the relatively backward States face a major handicap with respect to their Plan financing as a result of the Twelfth Finance Commission’s award. Among the fifteen major States, the per capita non-plan revenue surplus of Kerala was the third lowest after Punjab and Haryana.

The study concludes that the Thirteenth Finance Commission has got to assert itself and carve out its own track if it does not want to remain a shadow of its Constitutional self.

It should ignore those terms of reference which are not mandated by the Constitution as well as those which have become obsolete with the onset of recession in the economy.

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