To enable the State to overcome financial challenges and ensure a stable growth, Punjab Chief Minister Parkash Singh Badal on Saturday urged 14th Finance Commission to recommend State specific grants of Rs 9,639 crore, besides fully funding the agricultural diversification plan worth Rs 8,775 crore and a debt relief grant to the tune of Rs 24, 813 crore.
After submission of memorandum before 14th Finance Commission led by its chairman YV Reddy here at Punjab Bhawan, the Chief Minister apprised the Commission that the Centre had referred the issue of debt stressed States of Kerala, Punjab and West Bengal to 14th Finance Commission and thus demanded Rs 24, 813 crore as Debt Relief Grant towards outstanding Small Savings and Government of India (GoI) loans.
He mentioned that the then Prime Minister IK Gujral had waived the entire special term loan raised during the militancy in Punjab. However, Badal lamented that when it came to implementation, only the outstanding balance on that date was waived therefore he impressed upon the Commission to grant a ‘Special Term’ loan and interest already paid by the state amounting to Rs 2694 crore at current prices.
The Chief Minister gave a brief account of how the state had been meted out a step motherly treatment by the Centre despite being the ‘Sword Arm’ and ‘Granary’ of the nation. “The state faced the brunt of Partition, besides our people paying huge price during the Indo-Pak wars. Subsequently, we faced long years of militancy and Punjab remained under President’s Rule. No additional sources were raised and substantial resources were diverted to fighting militancy, pushing a revenue-surplus State into a vicious debt trap,” said Badal.
Pleading to recast the federal structure in the true sense, the Chief Minister urged the Commission to make comprehensive recommendations for decentralisation of planning process besides evolving fair and justifiable formula for sharing of resources. He said that the States should be allowed to decide their own plan priorities as per their local needs adding that funds should be given in an “untied” manner.
The Chief Minister bemoaned that by and large the states’ expenditure in development has been rising while their share in revenue was readily declining whereas the scenario in Center situation was absolutely opposite as it was accumulating far more revenue than actually incurring expenditure on development. Therefore he requested the Commission to fix the share of states in central taxes at 50 percent and also to bring cess, surcharge and royalties to the shareable pool. To substantiate his claim, Badal cited that since the Fifth Finance Commission, state’s share in central taxes has been reduced from 2.450 per cent to just 1.389 per cent now.
Ridiculing Centre’s discriminatory approach for devolution of funds amongst the states, Badal said that over the years such formulas had been against the fiscal interests of the progressive and better performing states like Punjab. Due weightage should be given to the Gross State Domestic Product (GSDP) and to the proportion of SC/ST population, which was the highest amongst the states in the country.
Referring to Industrial Tax concessions given to neighboring states by Central Government, he said that this discriminatory policy has dealt a severe blow to state’s economy resulting in stoppage of fresh investment. He asked the GoI to grant tax concessions to Punjab, at par with those granted to the neighbouring states, to compensate the state for the losses suffered by the flight of industry.
Badal also sought Rs 3000 crore for promoting industry in Punjab by creating new and upgrading the existing infrastructure in the form of Industrial Focal points, Integrated Textile Parks, Food Parks, SEZs etc. In addition to this, we need Rs 500 crore to build and strengthen infrastructure in the border areas to make use of the increased trade with Pakistan. Outlining the state’s Agricultural Diversification Plan of Rs 8775 crores, the Chief Minister said that it was all the more important now with the Centre Government mulling to do away with the MSP regime.
To further give due importance to the component of SC/ST population, he suggested the Commission for introducing the element of equity, an additional weightage of 15 percent should be given to the states as they undertake substantial expenditure for the upliftment and welfare of these sections of society. likewise, Badal also said that the weightage of the areas must be increased from existing 10 to 15 percent in the devolution criteria to meet the higher administrative costs to deliver similar level of public service across the country.