NEW DELHI, March 7 � Notwithstanding the Assam Government�s murmur of protest, the State is projected to be a revenue surplus State by 2017-2018, according to the Fourteenth Finance Commission (FFC).
According to post-devolution revenue estimates, Assam would remain revenue deficit only for two fiscals of 2015-2016 (Rs 2,191 crore) and 2016-2017 (Rs 1,188 crore). However, from the next fiscal Assam would be surplus by Rs 210 crore (2017-2018), Rs 1,953 crore (2018-2019) and Rs 3,387 crore (2019-2020).
As reported by this newspaper, Assam will get grants-in-aid of Rs 3,379 crore. However, the entire sum will be paid in two instalments in 2015-2016 and 2016-2017 financial years.
In comparison, the 13th Finance Commission had been more generous and recommended grants-in-aid totalling Rs 5,512.10 crore to Assam.
At a recent briefing, Union Finance Minister Arun Jaitley, when asked why Assam�s grants were being limited to two instalments, confirmed that the State would cease to be a revenue deficit State. The deficit states in the North-east include Assam, Meghalaya, Mizoram, Manipur, Nagaland and Tripura. Assam will get two instalments of Rs 2,191 crore and Rs 1,188 crore. In contrast, Himachal Pradesh will get grants-in-aid of over Rs 40,000 crore.
Chief Minister Tarun Gogoi had recently called upon MLAs in the Legislative Assembly to unanimously �voice concern� over the FFC�s recommendations, pointing out that the State would be a big loser due to the slashing of grants-in-aid.
�We will oppose the recommendations of the FFC, which has given very little grant to a state with special needs like Assam,� Gogoi had told the Assam Assembly. The Assembly later passed a resolution in this regard.
Meanwhile, the Finance Commission has said most of the NE states have stated that the scope for increasing tax revenue is very limited due to low levels of commercial activity and low level of consumption. A few of them have proposed that different growth rates should be applied for them while projecting their tax revenues. They suggested that the growth rate applied for them while making revenue projections in their case should be lower than that of the general category states. All these hill states have also pointed out that the severe disadvantages they faced due to cost disabilities need to be kept in view while undertaking assessment.
Meanwhile, the hue and cry over the raw deal given by the Finance Commission does not find reflection in its report, as the panel has trained its focus on inter-state infrastructure projects. The proposed new institutional arrangement should have a special focus on the north-eastern states, particularly in terms of making investments in infrastructure.
The FFC has suggested new institutional arrangements also to consider taking up issues related to identifying and recommending resources for inter-state infrastructure schemes in the NE.
�Our Transfer of Revenue (ToR) also requires us not only to take into consideration the objective of balancing the revenue account, but also that of generating surpluses for capital investment. In this regard, we noted the high dependence of the states in the North-east on Central transfers, particularly for meeting their capital expenditure needs,� the FFC report said.
�Most of the states are faced with significant deficits in their infrastructure. The relatively small sizes of GDP imply that market borrowings would continue for financing their deficits. We have also noted the inter-State issues and coordinated actions by these states that play an important role in determining the viability of investments in the region,� it said.
�In our assessment of state finances, we have analysed the states without any categorisation, but have taken into account the revenue expenditure requirement under both Plan and non-Plan heads. More important, we have built into the devolution formula serious revenue and cost-disabilities, to the extent, supplemented by post devolution deficit grants.�
The FFC has observed that the NE states have several unique features that have a bearing on federal fiscal relations, as these states are characterised by low level of economic activity and consequential low revenue capacity, disability arising from large forest cover and hilly terrain, infrastructure deficit, internal borders and law-and-order problems due to persistent insurgency problem, high level of expenditure on public administration and police, relative to the overall gross State Domestic Products of the state and large proportion of government employment.
What would hurt Assam and other NE states is the decision of the FFC to keep areas under VI Schedule outside the ambit of the measure recommended for panchayat and municipalities. Ares under VI Schedule include Assam, Meghalaya, Mizoram, Tripura, hill districts of Manipur, besides rural areas of Nagaland and Mizoram.
�However, we note that the Constitution mandates the Union Government to play a direct role in supporting the development of these areas. However, going by the quantum of the assistance given over the years to the region by the Union Government, we note that the intervention of the Centre has been very limited.�
