Ahmedabad: Gujarat Chief Minister Mr. Vijaybhai Rupani today strongly urged the 15th Finance Commission of India, which is on the state visit, to include the states’ performance as criteria to encourage the state.

In reference to this, Mr. Rupani asserted that as a result of this the states would be inspired to perform better in the perspectives of finance, socio-economic and others; and as result to this the nation would be constantly marching ahead on the path of development.

The Finance Commission’s meeting with the Gujarat Government was chaired by its Chairman Mr. N. K. Singh, while other members are Mr. Shashikanta Das, Mr. Anup Singh, Dr. Ashok Laheri, Dr. Ramesh Chand, and its secretary Mr. Arvind Mehta. Others who attended the meeting included Deputy Chief Minister Mr. Nitinbhai Patel, Chief Secretary Dr. J. N. Singh and senior officials of the state government.

The Chief Minister said that the Constitution has given a major responsibility to the state to provide all sort of financial services to fulfil its responsibility for social services and equitable accountability for its citizens. Due to imbalance between its income and expenditures the state must rely on debt for providing these services.

In this reference, Mr. Rupani said that the recommendations of the 14th Finance Commission have shown total increase of 2.50 per cent. The state had implemented majority recommendation of the 14th Finance Commission.

He also apprised that 50 per cent population of the state is living in the urban areas and urbanization is growing at the rapid speed. For this, he emphasized that in reference to infrastructural facilities and qualitative services in the urban areas, the urbanization should be included into the criterion by the Commission.

He also pointed out that though Gujarat’s population is just 5 % of the country’s total population, yet, its contribution in the National G. D. P. is 7.5%. According to national economic survey of 2017-18, Gujarat’s contribution in services and exports of goods is 17 %.

The Chief Minister had also apprised the Commission that Gujarat has made qualitative improvement in education through Gunotsav, state-wide water grid network to supply water to over 12,000 villages, 24-hours electricity, Rs. 3080-Cr for Women and Child Welfare, Rs. 9750-Cr for health services, and allocation of maximum budget of Rs. 27,500-Cr for education. Gujarat is revenue surplus state. During 2016-17, Gujarat’s fiscal deficit was reduced to 1.42 per cent of the GSDP. He also urged the Commission to be considerate to help Gujarat for its revenue losses due to its prohibition policy.

In a presentation made by the finance department of the state government, the Commission was apprised about the achievements of various departments and shares in the central funding.

The Commission’s Chairman Mr. Singh and members had appreciated the pro-active contributions and presentation of Gujarat Government and gave their positive recommendations.

While welcoming the Commission’s Chairman and its members, Chief Secretary Dr. J. N. Singh had briefed about the meeting.

-Information

Finance Commission’s note:

Gujarat’s rapid progress in key macroeconomic parameters has been impressive and it has shown a lead to the overall economic development but GST remains one of the big challenges, said the Chairman Sh. N. K. Singh, Chairman of the visiting Fifteenth Finance Commission at a Press Conference in Ahmedabad. Commission was particularly impressed with the reduction of its Debt to GDP Ratio close to 20% (to be achieved by 2023-24) as stipulated by new FRBM Act and its Fiscal Deficit well below 3 % benchmark. He added that Gujarat’s capital expenditure has been rising and it is in full compliance in key economic parameters which contribute to long term healthy economic growth.
Recently, Gujarat is improving its expenditure in health and education – areas which deserve fuller attention over the coming years. Sh. Singh mentioned that Gujarat has shown the lead in achieving more balanced development among primary, secondary and tertiary sectors. Chairman in his remarks outlined few challenges which the state is facing –

1. One of big challenges Gujarat is facing is GST collections. Once the 14% guarantee as GST compensation by the union govt winds up, Gujarat will need to look at the GST collection projections seriously and tax buoyancy may become an issue.

2. How to restructure National Disaster Relief Fund considering Gujarat is prone to various kinds of natural disasters. State has made some suggestions in this regard.

3. Though almost all the powers have been delegated to ULBs and their accounts are in order, working of State Finance Commission needs to become more orderly and in conformity of Article 280 of the Constitution. It’s a general problem with all the states, Commission has visited till now. It needs overall improvement.

He said that commission has taken a note of the detailed presentation made by the state govt. Commission appreciated the new initiatives taken by the state of Gujarat. Continuous of this growth momentum is dependent on some exogenous uncertainties like GST while maintaining key macro-economic parameters which are good example for many states to follow.
State urges increase of devolution to over 50% , expansion of Net Divisible pool, suggests an alternative formula for devolution based on Urbanisation and Social Deprivation

Chief Minister Shri Vijay Rupani and Dy. Chief Minister and Finance Minister Shri Nitin Patel welcomed the Commission. In his welcome remarks, Chief Minister highlighted the significant progress made in social sector with multiple govt interventions and government’s commitment to overcome certain challenges remaining in child malnutrition and secondary sector education. He emphasised the state’s focus on developing infrastructure despite natural disadvantages. He also urged the commission to encourage the policy of Prohibition as adopted by the State by giving some incentive considering its positive externalities.

State govt officials in their presentation gave some innovative suggestions on vertical and horizontal devolutions. They urged the enhanced devolution by expanding the net divisible pool to remove the imbalance between revenue and expenditure responsibilities of the states, in general. They also urged the Commission to replace the revenue deficit grants with Performance grant which needs fine tuning of the performance criteria. They also highlighted the issues related to Centrally Sponsored Schemes.

The Chief Minister submitted a detailed Memorandum to the Commission. Chairman complemented the Govt. of Gujarat for making an illuminating presentation to the commission regarding the opportunities and challenges in all the sectors of the economy of the state. He also stated that the issues raised would receive appropriate consideration during deliberation in the Commission.

15th Finance Commission which is on a 3 day visit to Gujarat also sought views of the leaders from various political parties. Representatives of Local bodies requested to give some grant for backward areas in addition to performance grants, infrastructure development. They also urged to give basic grants to the local bodies without any stringent conditions which sometimes become difficult to fulfil due to some technical reasons.
During the field visits tomorrow, Commission will visit Sardar Sarovar Dam, Statue of Unity and GIFT City. The Commission will also meet Representatives of Trade and Industry tomorrow. On 25th July, it will visit Rajkot to see Aji-I reservoir, SAUNI Yojana Phase 2 and Integrated Command & Control Center (ICCC) under Smart City Project.

Commission appreciated the warm hospitality extended by the State Govt. The Commission also looked forward to continuing interaction with the State Government based on today’s meaningful discussion. The Commission will finalise its recommendations by October 2019 after completing its discussions with all the State Governments, the Government of India and relevant stakeholders.