New Delhi, February 25
The Union government has accepted recommendations of the 13th Finance Commission, which has asked the Centre to cut its fiscal deficit to three per cent of the GDP by the end of fiscal year 2013-14 and eliminate its revenue deficit in 2014-15. Also, it has asked for greater share of states in central tax proceeds, despite strains on its finances.
“Government of India, despite the strains, has accepted recommendations of the Finance Commission,” Finance Minister Pranab Mukherjee told reporters here today.
In its report tabled in Parliament, the commission recommended increase in share of states to 32 per cent of central tax proceeds from the current 30.5 per cent. The fiscal deficit is estimated at 5.7 per cent in the year ending on March 2011, and will fall further to 4.8 per cent in the year 2011-12.
The report of the 13th Finance Commission said that the fiscal deficit should drop to 4.2 per cent in 2012-13 and to three per cent in 2013-14. The Centre must cap its total debt at 68 per cent of the GDP by the end of financial year 2014-15, the report stated. Mukherjee said Rs 3.19 lakh crore will be additional grant payment to states during the five-year period 2010-11 to 2014-15.
Besides, the commission, headed by former finance secretary Vijay Kelkar, also recommended that states and local bodies be given shares in central tax proceeds, the burden of which will be Rs 87,000 crore, he said. Kelkar said the commission also provided specific grants to states for priority areas and local, urban and rural bodies will for the first time get a percentage of shares of union taxes. The Finance Minister welcomed the compensation for the states for implementing goods and services tax architecture, which is estimated to be to the tune of Rs 50,000 crore.
He said the Finance Commission also laid down a fiscal road map for the Centre and the states separately, which will benefit the government.
