Hyderabad: Economists have pointed out to the team of officials from the 15th Finance Commission, which is on a three-day visit to the state, that public account funds for states were not being allocated and instead, a provisional fund was being created by the Centre, which was not constitutionally correct.
A team of economists had gathered on Wednesday at the Indian School of Business, headed by former RBI governor and economist Dr Y.V. Reddy, to discuss the route map the new commission must take.
The economists stressed on the need for a taking a holistic view which would engage with reality in terms of meeting the fiscal needs of different states in the country.
Compensation cess, which is to be given by the Central government to the states, was a point of discussion. It was pointed out that of the '62,000 crore that was collected in 2017-18, only Rs 56,000 crore was disbursed. In 2018-19, Rs 38,000 crore was not disbursed to the states.
It was also noted that no state had clearly looked into these details and no questions were raised in the interim budget. Dr Reddy and other panellists questioned how such a large outlay of funds was stagnated in the provisional account.
Mr Prem Chand, a senior economist, said, “Populist expenditure, which are time and again taken by Central and state governments, are not allowing for providing funds for education, health and maintenance of public infrastructure, which is seeing a decline. This is reason to worry and there must be budget allocations for important sectors which must be fixed. Another problem we see is that there is disparity between developed and backward states. This will be a point for the commission to look into as there is a need to balance the outlay of funds to the different states.”
The role of the state government today has changed as industries are no longer dependent on the Centre. For an industry to develop, good roads, water, and electricity are required and if that can be provided, industries are willing to come and set up shop.
Dr Reddy said, “There is a need of centralisation wherever possible as that will help industries and also governments. There is a need for practice impaired theory so that the financial outlays are realistic.”
With no adequate data on the contingent liabilities which are presently being faced by public sector undertakings there is a need for a road map as it is high time a data pool was generated to comprehend these liabilities.
