Pre-budget meet: Hike in states’ fiscal deficit limit, IGST dues among chief demands

Syllabus subtopic: Functions and responsibilities of the Union and the States, issues and challenges pertaining to the federal structure, devolution of powers and finances up to local levels and challenges therein.

Prelims and Mains focus: about the key issues raised by the states in the meeting, Ayushmaan Bharat

News: In a pre-Budget consultation held with the Centre on Wednesday, state finance ministers pitched for more funds, relaxation in fiscal deficit target and settlement of pending Integrated Goods and Services Tax (IGST) payments.

Who attented the meeting?

The meeting was attended by Chief Ministers of Goa, Haryana and Puducherry, Deputy Chief Ministers of Arunachal Pradesh, Bihar, Delhi, Tamil Nadu and Tripura as well as 17 Finance Ministers/Ministers representing their states. Union Minister of State for Finance & Corporate Affairs Anurag Singh Thakur also attended the meeting.

Issues raised by various States

Both Bihar and Kerala had suggested raising the fiscal deficit limit for states to 4 per cent, while Delhi raised the issue of stagnation of share in central taxes for union territories with legislature since 2001-02, and West Bengal flagged the issue of budgetary resources amounting to Rs 7,300 crore for cyclone relief not having reached the state.

Delhi has also asked for augmentation of financial assistance to tackle the issue of stubble burning in Punjab, Haryana, Uttar Pradesh and Delhi, which has an impact on air pollution in the region.

Key takeaways from the meeting

The biggest take home from pre-Budget discussion of FMs is suggestion by Bihar and Kerala to raise the fiscal deficit limit to 4 per cent. It was agreed to large number of states. In current year real expenditure of states will decline — a crazy macro outcome in time of recession.

Cutting across political divide State FMs demanded raising fiscal deficit, larger central allocation for programs Ayushman Bharat, social pensions and MGNREGS, support to farmers, interest subvention to SHGs and streamlining of central devolution to avoid ways and means crisis.

Ayushmaan Bharat

Source: Indian Express

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