Govt backs more fiscal and legislative space to states, says Watal

The Finance Commission has also brought about a compositional shift allowing states to set their own priorities

NEW DELHI: After accepting the recommendations of the 14th Finance Commission for increasing the share of states in central taxes to 42% last year, finance secretary Ratan Watal said “the focus of the present government is unique... as it allows more fiscal and legislative space to the states.”

Coming a week before the budget presentation, his remarks are seen as an indication that the government will continue to allocate more funds to states in the budget.

In Budget 2015-16, the finance ministry had made a provision of ` 5.24 lakh crore under devolution of taxes to states as compared to ` 3.38 lakh crore in 2014-15.

“The present government is fully committed to the principle of cooperative federalism both in letter and spirit,” Watal said in an interview to finance ministry’s YouTube channel. “More untied grants are now being given to states.”

“Over ` 4.11 lakh crore (78.56% of budget estimates) has been released to states by way of tax devolution and three more instalments will be released in March based on tax collections till then.”

Watal said the states have been demanding more freedom in utilisation of the funds allocated to them under Centrally Sponsored Schemes (CSS) as well.

The number of flagship schemes has been reduced from 33 to 17 with a 60:40 funding pattern. Schemes prioritised by state governments would be funded on a 50:50 pattern, he said.

On t he transition f rom Planning Commission to NITI Aayog, Watal said the coming year would be the last year of the 12th Five Year Plan.

“However, planning still remains vital and the role of NITI Aayog extends beyond the 12th plan,” he said. “Planning exercises have been held at the level of Prime Minister’s Office where 50-60 secretaries have been put into different groups.”

RATAN WATAL, finance secretary