Lok Sabha Question No. 2934 (UNSTARRED), answered on 2016-12-02
Subject: Allocation to States
Ministry: FINANCE
Asked by: PONNUSAMY VENUGOPAL, DODDAALAHALLI KEMPEGOWDA SURESH

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 2934 TO BE ANSWERED ON FRIDAY 2 nd  December, 2016

[11 Agrahayana, 1938 (SAKA)]

'Allocation to States'

## No. 2934. DR. P. VENUGOPAL: SHRI D. K. SURESH:

Will the MINISTER OF FINANCE be pleased to state:

- (a) whether the Government has increase the share of States/UTs in the Central Taxes after the implementation  of  14 th Finance  Commission  and  if  so,  the  details  thereof  along  with  the amount released/utilised during the last three years and the current year, State/UT-wise;
- (b)  whether as per the new directives of 14 th Finance Commission the States/UTs have to limit their fiscal deficits to three per cent of their GDP and if so, the details thereof;
- (c) whether  the  Government  has  received  representations  from  States/UTs  with  regard  to reduction in Central assistance to States/UTs; and
- (d)  if so, the details thereof and the steps taken by the Government to redress their grievances?

## ANSWER

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

- (a) The Fourteenth Finance Commission (FFC) after considering all factors, recommended enhancement in the share of the States in the divisible pool of Central Taxes and Duties from 32% to 42% with effect from 2015-16, which was accepted by the  Union  Government.  Union  Territories  do  not  falls  under  the  jurisdiction  of Finance Commission. The State-wise detail of releases made during the period from the year 2013-14 to 2016-17 (up to November, 2016) is shown in Annex 'A'.
- (b) The Fourteenth Finance Commission (FFC) has prescribed the Fiscal Roadmap for each State for its award period 2015-20 and anchored Fiscal Deficit of all States to an annual  limit  of  3%  of  States'  Gross  State  Domestic  Product  (GSDP).  The  Net Borrowing Ceiling of the States has been fixed for 2015-16 and 2016-17 based on the formulation prescribed by FFC.

Further, as recommended by FFC, the Central Government has approved year-to-year flexibility for additional fiscal deficit to the States for the period 2016-17 to 2019-20 to a maximum of 0.5% over and above the normal fiscal deficit limit of 3% in any given  year  subject  to  the  States  maintaining  the  debt-GSDP  ratio  within  25%  and interest payments-revenue receipts ratio within 10% in the previous year. However, the flexibility in availing the additional fiscal deficit will be available to State if there is  no  revenue  deficit  in  the  year  in  which  borrowing  limits  are  to  be  fixed  and immediately preceding year.

- (c) & (d) The  Government  received  representations  from  various  states  regarding  lesser funding due to changed  pattern of  the  Centrally  Sponsored  Schemes  (CSS). Therefore, Government set up a Sub-group in NITI Aayog under the convenorship of Sh. Shivraj Singh Chauhan, Hon'ble Chief Minister, Madhya Pradesh consisting of 12 members, including 10 Chief Ministers of various states, to examine the current Centrally Sponsored Schemes (CSS) framework and recommend sharing pattern and measures  for  streamlining,  flexibility,  reforms  in  Centrally  Sponsored  Schemes  & coordination  between  the  Centre  and  States  for  achieving  the  objective  of  the Schemes.

The  Government  has  accepted  the  recommendations  of  the  Sub-group  and  NITI Aayog  on  17 th August  2016  has  issued  modalities  regarding  rationalization  of Centrally  Sponsored  Schemes (CSS) including their funding pattern. The approved funding pattern of the Centrally Sponsored Schemes (CSS) is as follows:

- i. The existing funding pattern will continue for Core of the Core schemes.
- ii. For Core Schemes, the funding pattern for the 8 North Eastern States and Himalayan States of Uttarakhand, Himachal Pradesh and Jammu & Kashmir shall be Centre: 90% and State: 10%, whereas for the rest of the States this ratio shall be Centre: 60% and State: 40%.
- iii. For  Optional  Schemes,  the  funding  pattern  for  the  8  North  Eastern  States and  Himalayan  States  of  Uttarakhand,  Himachal  Pradesh  and  Jammu  & Kashmir shall be Centre: 80% and State: 20%, whereas for the rest of the States this ratio shall be Centre: 50% and State: 50%.
- iv. Ordinarily, no CSS will be sanctioned where the central share is less than 50%.
- v. However,  all  the  sharing  patterns  indicated  above  shall  be  subject  to  the proviso that if the central share is already below that indicated in the sharing pattern, then the Centre's share would remain capped at their present level.'

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