New Delhi, November 16
Punjab and Haryana have opposed a demand by the hill states of Himachal Pradesh, Uttarakhand and Jammu and Kashmir for a tax holiday on setting up industry in the states.

The issue came to the fore at the meeting of Finance Minister P Chidambaram with the Chief Ministers of the northern states and CEOs of PSU banks to monitor flow of bank credit, financial inclusion and progress of centrally sponsored schemes. The meeting was attend by Chief Ministers of J&K, Delhi, Uttarakhand, Haryana, Punjab Finance Minister Parminder Singh Dhindsa and representatives from the Uttar Pradesh government.

The tax holiday had earlier been given to the hill states. This was, however, opposed by Punjab and Haryana who argued that they suffer due to the tax holiday as there is a migration of industry from their states in search of tax incentives. This, they said results in their growth suffering. Therefore, a tax holiday should not be given.

Addressing a press conference after the meeting, Minister of State for Finance, Namo Narain Meena said the basic purpose of the meeting was to ensure easy credit to all sections of the economy, especially the poor and vulnerable sections. Meena added that cooperation of the states is solicited to ensure implementation of the Central schemes.

He said banks have been asked to boost agriculture credit in the northern region and a special drive will be launched by the banks to extend educational loans. In addition, Meena added special focus will be on expansion of branches to boost financial inclusion in the districts which lacked banks.

He added that the banks have also been asked to complete opening of bank accounts for the rollout of Aadhar-based cash transfer before January 1. The first phase of the rollout will begin in 51 districts in 16 states, including the northern states.

Sources said that the Finance Minister in his remarks pointed out that while there are many demands and pressures from the states there is a need to focus on the fact that banks remain healthy and robust. He said that the Indian banks have been robust whereas several banks across the world have been facing problems. He also focused on ensuring recovery of loans that are extended so that banks can lend more and also their financial health is preserved.

In the meeting, it was stressed that state-level bank committees meet regularly and coordinate to ensure proper flow of credit.