The 16th Finance Commission should recommend an increase in the share of States in the divisible pool, K.N. Harilal, chairman of the 7th State Finance Commission, has said.
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Professor Harilal was addressing a national seminar on ‘16th Finance Commission and cooperative federalism in India: issues, challenges and concerns’ organised under the aegis of the Public Policy Research Institute (PPRI), an autonomous research institute under the State government, this week.
Revenue sharing
While the Centre gets 63% of the total revenues, it bears only 37% of the expenditure, Prof. Harilal said. The 15th Finance Commission had recommended 41% of the divisible pool as the share of States. But the Centre sought to increase its revenues through cesses and surcharges, which do not form part of the divisible pool to be shared with States. The Centre’s revenues also saw a significant increase through the disinvestment of public sector undertakings and RBI dividend, he said.
PPRI director S. Mohanakumar urged the 16th Finance Commission headed by Arvind Panagariya, which is scheduled to visit Kerala in December, to finalise the criteria on which it will base its recommendations by overhauling those followed by the 15th Commission. Such a restructuring of criteria, Professor Mohanakumar said, must be based on scientific studies. “The criteria should be inclusive, taking into account the peculiarities of each State,” he said.
State Planning Board member K. Ravi Raman inaugurated the seminar. A galaxy of economists and policy experts including Pinaki Chakraborty, chair, National Institute of Public Finance and Policy; Sukhpal Singh of the Indian Institute of Management - Ahmedabad; State Statistical Commission chairman P.C. Mohanan, Gulati Institute of Finance and Taxation director K.J. Joseph and Madras Institute of Development Studies director M. Suresh Babu, presented papers at the seminar.