Lok Sabha Question No. 1725 (UNSTARRED), answered on 2017-03-10
Subject: Powers to States
Ministry: FINANCE
Asked by: RAYAPATI SAMBASIVA RAO

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF EXPENDITURE

## LOK SABHA UNSTARRED QUESTION NO. 1725

TO BE ANSWERED ON Friday, March 10, 2017/Phalguna 19, 1938 (Saka)

## Powers to States

## 1725. SHRI RAYAPATI SAMBASIVA RAO:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  the  Government  proposes  to  devolve  more  powers  to  the  States  to improve their financial status;
- (b)  if so, the details thereof;
- (c)   whether any proposals of the Government of Andhra Pradesh are pending with the Union Government; and
- (d)  if so, the details thereof along with the present status of these proposals of Andhra Pradesh?

## ANSWER

## MINISTER OF STATE IN MINISTRY OF FINANCE (SHRI ARJUN RAM MEGHWAL)

(a)  &  (b):  Adequate  provisions  are  available  in  the  Constitution  of  India  wherein  the financial interests of the states are safeguarded.  Part XII of the Constitution under Articles 268 to 281 provides for distribution of revenues between  the Union and the States. The Finance Commissions constituted under Article 280 of the Constitution recommend to the Union Government regarding distribution of net proceeds of taxes between Centre and the States  and  allocation  of  shares  of  such  proceeds  between  the  respective  states.    The Finance Commissions also recommend principles which should govern the grants-in-aid of the  revenues  of  the  states  out  of  the  Consolidated  Fund  of  India.  The  14 th FC  has substantially enhanced the share of the States in the Central divisible pool from 32 % to 42 %, which is the biggest ever increase in vertical tax devolution. Besides share of central taxes, the 14 th FC has recommended grants- in -aid to cover Revenue Deficit of States, local  body  grants  (both  to  rural  and  urban  local  bodies)  and  grants  for  augmenting  the State's Disaster Response Fund (SDRF. Substantial increase in tax devolution and grantsin-aid recommended by 14 th FC is expected to add substantially to spending capacity of States  and  thus  give  fiscal  autonomy  to  the  States  allowing  them  to  prioritise  their schemes and improve their financial status.

(c)  &  (d):  The  Government  of  Andhra  Pradesh  has  requested  for  release  of  funds  as mandated under Andhra Pradesh Reorganisation Act, 2014. The Government of India has so  far  released  Rs.10,461.04  crore  to  the  state.  The  released  amount  includes  Rs. 3979.50  crore  for  bridging  the  resource  gap  for  the  financial  year  2014-2015,  Rs.1050 crore  @  Rs.  50  crore  per  district  for  the  development  of  7  backward  districts  covering Rayalaseema & North Coastal region, Rs.2500 crore  assistance for the capital city and Rs.2931.54 crore for the Polavaram Irrigation Project. In respect of Polavaram Project the Union  Government  has  agreed  to  provide  100%  of  the  remaining  cost  of  the  irrigation component of Polavaram project for the period starting from 1.4.2014, to the extent of the cost  of  the  irrigation  component  on  that  date.  Further,  over  and  above  the  assistance provided under Andhra Pradesh Reorganisation Act, 2014, the Central Government has agreed to give a special assistance measure to the Government of Andhra Pradesh for five years i.e. 2015-16 to 2019-20, which would make up for the additional Central share the State might have received during these years as Special Category State. This will be in the form of Central Government funding for externally aided projects for the state for Andhra Pradesh signed and disbursed during these years.

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