Gujarat unit of Bhartiya Janata Party demanded more allocation of funds to Gujarat from Central taxes and submitted memorandum to the visiting 14th Finance Commission team on Monday.
In the memorandum, BJP said that there is growing tendency of Central Government to utilise revenues for Union Government-sponsored schemes, which leads to lesser allocation to States.
“The allocation made by the Central Government under Central-assisted schemes is not transparent in most of the cases. These funds are likely to be utilised to gain political control on States by imposing various conditions relating to use of the funds. Therefore the Finance Commission should increase the share of the States in the divisible pool of the Central tax revenue to at least 50 per cent,” said the memorandum.
It said that BJP believes that strong States make strong nation. The current economic situation has created an atmosphere of uncertainty and apprehensions on investors and common men. The economic situation in the country has obviously impacted every State to varying degrees. Gujarat being a major manufacturing State continues to do better in terms of growth because of its strong base in infrastructure and a tradition of good governance, which has been emphasised in the last decade. Yet, Gujarat too would feel the impact of the country level economic slowdown.
Under CM Narendra Modi, Gujarat contributes almost 17 per cent to the national manufacturing output and 24 per cent to the exports. Therefore, it becomes far more critical to ensure that the pace of the growth in Gujarat is maintained, so that, the State continues to contribute to the nation at an increasing rate, said the memorandum.
“Gujarat has one of the most efficient VAT systems. Being a thriving economy the revenue from VAT has been growing at a healthy rate. VAT revenues contribute almost 70 per cent of the tax revenues of the State. At the same time of shifting from sales tax to VAT regime, the Government of India had promised to compensate the State for reducing the rate of CST. While the rates of CST have been reduced from 4 per cent to 2 per cent the CST compensation is yet to be received in full by the State,” said the memorandum.
States like Gujarat which are performing well in terms of economic growth and financial management should not be made to suffer through inadequate share in the allocation of Central tax revenues. Against the share of 5 per cent, Gujarat receives just about 3 per cent of the share. looking to all these facts, Gujarat BJP urged the Commission to carefully consider various aspects in allocation of Central taxes.