Lok Sabha Question No. 3369 (UNSTARRED), answered on 2016-08-05
Subject: Grants-in-Aid to States
Ministry: FINANCE
Asked by: PRATHAP SIMHA

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF ECONOMIC AFFAIRS

## LOK SABHA

## UNSTARRED QUESTION NO. 3369

## TO BE ANSWERED ON FRIDAY 5 th  August, 2016 [14 Shravana, 1938 (SAKA)]

## 'Grants-in-Aid to States'

## No. 3369, SHRI PRATHAP SIMHA;

Will the MINISTER OF FINANCE be pleased to state:

- (a) the steps taken to mitigate the effect of higher share to States in tax revenue during 201516 and in the current fiscal year;
- (b) whether the Government has been cutting back on essential transfers to States, made in the form of grants-in-aid and tax devolution and if so, the details thereof along with the reasons thereof;
- (c) whether  inspite  of  a  transfer  of  6.3  percent  of  GDP  being  budgeted,  revised  estimates pointed  to  a  lower  figure  of  6.1  percent  in  2015-16  and  if  so,  the  reaction  of  the Government thereto;
- (d) whether the Government took away 8.1 percent of tax revenues in 2015-16 as against 6.1 percent in 2014-15 by way of surcharge and cess, which do not devolve to States and if so, the reasons therefor;
- (e) whether as against the budgeted 2.9 percent grants-in-aid worked out to just 2.4 percent of GDP in 2015-16 and if so, the reasons therefor; and
- (f) the  measures  taken  by  the  Union  Government  to  allow  States  greater  autonomy  in financing and designing schemes, as per the acceptance of the recommendations of 14 th Finance Commission?

## ANSWER

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

- (a) In  view  of  acceptance  of  the  Fourteenth  Finance  Commission's  recommendation  of increasing  States'  share  in  Central  Taxes  and  Duties  to  42%  from  32%,  the  Union Government  has  changed  the  funding  pattern  of  Centrally  Sponsored  Schemes  in accordance with the recommendation of the Sub-group of Chief Ministers constituted by NITI Aayog.
- (b) No, Sir.
- (c) No, Sir. The Union Government proposed resources to be transferred to States at 6.21% of Gross  Domestic  Product  (GDP)  in  Budget  Estimates  2015-16,  which  was  subsequently increased to 6.42% of GDP in Revised Estimates 2015-16.
- (d) During  2014-15,  the  collection  on  account  of  surcharges  &  cesses  was  6.07%  of  Tax Revenue, which had increased at 8.10% of Tax Revenue in the Revised Estimates 2015-16. This enhancement is due to increase in surcharge on Corporation Tax / Income Tax and introduction of 'Swachh Bharat Cess' on Service Tax during 2015-16.
- (e) No, Sir.  The Grants-in-aid  to  States  was  estimated  at  2.16%  of  Gross  Domestic  Product (GDP) in Budget Estimates 2015-16, which had increased to 2.31% of GDP in Revised Estimates 2015-16.
- (f) The Fourteenth Finance Commission recommended enhancement in the share of the States in the divisible pool of Central Taxes and Duties from 32% to 42% with effect from 201516,  which  was  accepted  by  the  Union  Government.  This  makes  available  greater  untied resources to the State Governments, who can use it in accordance with the local needs.

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