: Uttar Pradesh has demanded over ₹5-lakh crore from the 16th Finance Commission for 11 sectors, apart from an increase in the states’ share in the divisible pool of the Centre’s tax revenue.
₹5-lakh crore from 16th Finance Commission” title=”Uttar Pradesh seeks over ₹5-lakh crore from 16th Finance Commission” />Out of the total of ₹5,19,232 crore demanded by Uttar Pradesh, the major share is for panchayati raj institutions ( ₹2,10,100 crore) and urban development ( ₹1,29,400 crore) followed by the energy sector ( ₹78,921 crore) and health ( ₹26,344 crore).
It is the first time U.P. has put up demands before the finance commission department wise, following the example of other states.
A majority of the 28 states, including Uttar Pradesh, had demanded that the 16th Finance Commission should recommend an increase in the states’ share in the divisible pool (of the Centre’s tax revenue) from 41% to 50%, the commission’s chairman Arvind Panagariya had said during a visit to Uttar Pradesh on June 4 and 5.
Though Uttar Pradesh had got the largest share among the states, its portion in the divisible pool came down marginally from 17.959% to 17.931% (for 2021-2026) as the 15th Finance Commission recommended the share of states to be 41% (against 42% by the 14th Finance Commission) with an adjustment of 1% made to provide for the then newly formed Union Territories of Jammu and Kashmir and Ladakh.
The recommendations made by the Finance Commission are for a period of five years.
The 15th Finance Commission had introduced the demographic performance of states in the six-point criteria recommended for horizontal devolution. The commission gave 15% weight to population, 15% to area, 10% to forest and ecology, 45% to income distance, 12.5% to demographic performance and 2.5% for tax effort.
For the energy sector, the demand for funds has been raised for improving the high tension lines and transformers. In basic education, funds have been sought for infrastructure reform. The state government also aims to shore up infrastructure and facilities in the health sector and increase green cover in the forest sector. The panchayati raj department plans to improve panchayat bhavans, community toilet facilities, schools and rural roads.
The states put up demands for grants before the Finance Commission to cover revenue deficits and fund local bodies, among other needs. The Finance Commission, a constitutional body, recommends how central tax revenues should be shared with the states and how grants should be allocated to finance their various responsibilities and programs.
The 14th Finance Commission had given 17.5% weight to the population of 1971 and 10% weight to the population of 2011. It gave 15% weight to area, 7.5% to forest cover and 50% to income.
Arvind Mohan, senior professor at the department of economics, University of Lucknow and dean, faculty of arts, said the finance commission takes a call on the state’s share in centre taxes, which is 42%. Against the demand by the state for various sectors, the commission might give an additional allocation to Uttar Pradesh, he added.
“The finance commission can lay down principles for additional allocation to Uttar Pradesh. I had been in one meeting and believe the commission is willing to give U.P. more share as this will improve physical resources in the state. Maybe not all what U.P. demanded, but even if a part of it is accepted, it will boost the economy,” Prof Mohan said.
