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State rejects Finance Commission findings, gives own data

The Maharashtra government has issued a strong rebuttal to the observations made by the 15th Finance Commission (FFC) on the State’s dwindling financial and socio-economic indicators. The government has not only questioned the sourcing of data by the N.K. Singh-led commission, but has also provided an alternative interpretation of data, rejecting most of its findings on the devolution of power, human development index and debt.

40% devolution

In response to charges that the government did not implement recommendations of the Fourth State Finance Commission (SFC), Maharashtra has claimed devolution, as suggested by the commission, was not possible under the prevailing financial situation. “The key recommendation of the Fourth SFC was a flat 40% devolution, which, considering the resources of the government and the salary and other grants being given to local bodies, was found to be unacceptable,” the State memorandum to the FFC reads. The memorandum will be presented to the commission members on Wednesday.

Other facts presented by the Maharashtra government to counter the FFC claims include data showing high growth translating to a Human Development Index (HDI) increase of 0.629 in 2011-12, making the State thefifth best amongst all states. The HDI has been steadily growing from 0.504 in 1983 to 0.583 in 2004-05. “We are of the view that per capita income figures and data sourced by them for 14 backward districts of the State is not in order,” a bureaucrat said.

Defending the debt position and claims that it was using most of it on “revenue expenditures”, the State has said 70% of the net debt is being set aside only for capital outlay. “The State is following a prudent fiscal management system.”

It further told to the panel that committed expenditure has reduced to 54% in 2017-18 from 64% in 2013-14. The FFC had claimed the State’s revenue expenditure shows rigiditiesdue to the presence of high levels of salary and interest payment.

Land irrigation

The State government has also flatly denied the commission’s claims that only 18% of Maharashtra’s total cultivable land is irrigated while the national average is over 35%. The government has said it is assured of touching the 34% mark following completion of major projects.

The FFC has said the State could not maintain the momentum of growth of revenue receipts during 2009-13 to 2014-17. The trend growth declined from 17.69% during 2009-13 to 11.05% in 2014-17. The trend growth of the State’s own-tax revenue declined from 19.44% in 2009-13 to 8.16% in 2014-17. But the State’s figures claim receipts dropped to just 13.80% in 2014-18 from 14.67% in 2009-14. “The own-tax revenue has only declined to 13.40% in 2014-18 from 14.67% in 2009-14.”

The commission had raised concerns over Maharashtra’s reluctance to devolve greater power as part of its constitutional responsibility to strengthen local governance. The commission will conclude a two-day visit to the State on Wednesday, where issues of inter-regional disparity, slow pace of decentralisation, rigidity in revenue expenditure and debt sustainability, among other concerns related to financial and socio economic areas, were discussed.

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