Panagariya asks AP to increase its vertical devolution from 41% to 50%
The commission will meet the representatives of political parties.
Vijayawada:16th Finance Commission chairman Dr. Arvind Panagariya said their major task is to recommend to the union government vertical devolution of share to states and how that share is divided among states.
Speaking to media, Dr. Panagariya structured his address into three parts, explaining the Finance Commission's mandate, the current status of their work, and their interactions with states, including Andhra Pradesh. He explained how the divisible pool should be divided between the central government and states, and how the state should subsequently distribute its share among the 28 districts.
Referring to previous allocations, Dr. Panagariya noted that the 15th Finance Commission recommended that 41 per cent should go to the states. Further, all local grants or disaster relief should come from the central government budget. This means that the share is not limited to just 41per cent, but is higher.
On Andhra Pradesh's specific recommendations to the commission, Dr. Panagariya said the state sought an increase in vertical devolution from 41 per cent to 50 per cent. Regarding horizontal devolution, the state suggested reducing the weight given to population from 15 per cent to 5 per cent, area from 15 per cent to 5 per cent, and modifying the forest and ecology criteria from 10 per cent to 5 per cent while adding a 15 per cent weight for increase in forest cover.
Regarding demographic performance, Dr. Panagariya noted that Andhra Pradesh recommended increasing the weight from 12.5 per cent to 20 per cent, while taking a more holistic approach, which recognises that states may need encouragement for population increase beyond a certain point. He said similar concerns had been raised by Assam and Tamil Nadu.
Dr. Panagariya addressed questions about special category status, explaining that this classification had been used by the Planning Commission earlier. But it became defunct when the Planning Commission had been replaced by the NITI Aayog. He confirmed that the Commission would consider Andhra Pradesh's post-bifurcation challenges.
The Finance Commission chairman said: "The Chief Minister talked at length about that, saying they inherited fewer resources, more people, less GSDP. All that had an impact on the long-run finances of the state. It also had an impact on the debt that the state inherited.”
On the Commission's decision-making timeline, Dr. Panagariya emphasised, "No decisions have been made. This cannot be done by definition until we have visited all these states. Even then, a lot of discussions will have to happen."
Those present at the press conference included additional secretary (Finance) Nivas Janardhan, and commission members Dr. Manoj Panda, Anne George Matthew, secretary Ritvik Pandey and joint secretary K.K. Mishra.
