FM asks states to undertake more infrastructure investment

Finance Minister Arun Jaitely asked the states to put more expenditure as they are now well empowered after greater devolution from 14th Finance Commission transfers. The FM was speaking at the pre-budget meeting of state finance ministers.

Jut few weeks into the budget, Jaitely has reminded that centre’s ability to make mega investment is curtailed due to more resource transfer to states. The Fourteenth Finance Commission has provided 42% of central tax revenue to states as tax share. Total resource transfer from centre to states now stands at 62% of the central revenue.

Already, many of the central projects are transferred to states and state’s share in many programes has increased.

Some of the schemes from which the centre has withdrawn include the SSA or Sarva Shiksha Abhiyan- the scheme for the promotion of primary education. As per the last budget 12 programmes were delinked from central support whereas in twenty three programmes centre has reduced its contribution.

Experts point out that transferring programme to states without proper compulsions will make the infrastructure programmes unattended. It is already reported that many states are using development funds for revenue expenditure purposes.

Though the next budget is expected to give boost to critical spending like infrastructure, existing revenue pattern indicate that the centre’s ability to make mega projects are very limited. With just 38% of the revenue created by it, centre is facing fund scarcity at a time when cumulative infra spending requirement is targeted at $1000 bn for the next five years.