Punjab Newspaper

Dr. Vijay L. Kelkar, Chairman, Shri B.K. Chaturvedi, Dr. Indira Rajaraman, Prof. Atul Sarma and Dr. Sanjiv Misra, Members of Thirteenth Finance Commission, and Shri Sumit Bose, Secretary are visiting the state of Punjab from December 4, 2008 to December 5, 2008 as part of consultations with the State Government and key stake holders.
The Commission today met with the Hon’ble Chief Minister, some members of the Cabinet and senior officials of the State Government. It also interacted with representatives of Political parties, Urban and Rural Local Bodies and Trade and Industry Associations. On 5th December, the Commission will visit Lambi to inspect Rajasthan and Sirhind Feeders and interact with residents of village Channo and Kot Bhai for an on the spot study of water logging and drinking water problems. Besides the commission will visit PHC Kartarpur, village Bidhipur and Khet Bathor and interact with local people to study their problems.
Before its visit to the State, the Commission held a meeting with Principal Accountant General (Audit) of Punjab on Tuesday, the 25th November, 2008 in its office at New Delhi.
In his opening address, the Chief Minister highlighted the vital role played by Punjab in ensuring the nation’s food security. He pointed out that the state was battling against a burdensome legacy inherited from the eighties which has resulted in it becoming one of the slowest growing States in India today. Its industrial base has been eroded due to tax concessions given to neighboring states. Its canal system requires intensive rehabilitation. Its agriculture productivity is affected by water logging in some areas and overdrawal of ground water in other areas. The strong commitment of the state to improve the lot of the Scheduled Castes, who form 35 percent of its population makes additional demands on the fisc. Consequently the state which was at one time the fastest growing state in the country is now growing far below the national average.
The Chief Minister requested that the Finance Commission enhance the states share of the divisible pool of taxes to 45 percent and enhance the limit of total transfers to 50%. He also suggested modification of the criteria for inter-se distribution of the pool amongst states. He urged the Finance Commission to consider enhanced support for empowerment of local bodies, calamity relief fund, rehabilitation of the irrigation projects, improvement of border areas, development of Kandi area, improvement of female literacy and addressing the adverse sex ratio. He requested the Commission for a special grant of Rs. 27,560 crores for addressing these issues.
The Finance Minister of Punjab Shri Manpreet Singh Badal highlighted the need to reduce state share of calamity relief from 25 percent to 10 percent. He requested that NSSF loans to be considered eligible for debt relief and suggested that 50 percent of the burden of the implementation of the Pay Commission be supported by the Finance Commission.
He also pointed out that Centrally Sponsored Scheme with their “one size fits all’ approach stipulated norms which were not relevant to advanced states like Punjab which had high wages, high level of road connectivity and large irrigated areas.
The Minister for Industrial and Local Bodies, Shri Manoranjan Kalia suggested that central concessions should be given to state consistent with their resource endowments. This would ensure maximum leverage of local resources and create synergies.

Chairman, Finance Commission in his response:
·        Referred to the unprecedented crisis the World economy is presently undergoing and emphasized the need for a collective response by all levels of Government in India to enable the country to rise above these challenges. This would require improving fiscal performance of State and Central Government through tax reforms, expenditure management, reform of user charges, etc.
·        While complimenting Punjab’s high per capita income and low poverty ratio pointed to the need for Punjab to take steps to keep pace with the national growth rate.
·        Expressed his concern over the declining sex ratio and offered full support of the Commission for a comprehensive plan to tackle this phenomenon.
·        Suggested that Punjab could better implement its budgetary priorities by integrating all its revenues into the budget mechanism.
·        Urged that state should take strong steps to improve its own tax and non-tax revenues while noting the strong positive impact implementation of GST would have on the economy of Punjab .
·        Suggested that expenditure monitoring and control would need to be a priority for the government to ensure that fiscal sustainability is reached as early as possible.
·        Pointed out that a major source of fiscal stress for the state were the unsustainable power subsidies and requested the Chief Minister, as a senior national leader, to take leadership role in addressing this issues.
·        Urged that the State Government focus on enhancing its financial discipline framework through better public expenditure management and improved financial reporting and audit response initiatives.
·        Suggested enhanced recourse to Private Public Partnerships to enable the state to full fill its public service obligations.
·        Welcomed views from all stakeholders on the appropriate design and structure of proposed goods and service tax, the nature and content of further fiscal reform, the issue of horizontal equity between States.
·        Reiterated that the Finance Commission would give careful consideration to all the points raised by the Government of Punjab in their Memorandum including issues relating to devolution, inter-se distribution amongst states and special grant for special areas.

Presentations were made by the Finance, Power and Irrigation Departments. These presentations focused on the status of various programmes in the Departments, the new initiatives proposed and the funding requirements posed to the Finance Commission.