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Asim asks for 1 lakh crore

Calcutta, July 24: The state government today demanded Rs 1.14 lakh crore of assistance from the 12th Finance Commission.

The aid is meant for the period from 2005-06 to 2009-10. The government had demanded Rs 88,000 crore from the 11th Finance Commission. It got Rs 34,000 crore from the Centre.

Addressing a news conference after making a presentation to Finance Commission chairman C. Rangarajan, finance minister Asim Dasgupta said: “The state, which is currently passing through a financial crisis, has worked out a well-contoured programme to stem the crisis. We have placed that before the commission.”

Recognising the need to clean up its balance sheet, the finance minister announced that the Left Front government will levy user charges to bring down the subsidy bill and lessen the burden on the exchequer.

Dasgupta said the state would levy user charges in sectors like irrigation and power. “This year, we have decided to bring down the subsidy burden from Rs 1,191 crore to Rs 915 crore,” he said.

The finance minister said the imbalance between the constitutional responsibilities of the states for development expenditure and their inadequate resource-raising powers were the main reasons behind the cash crunch.

“Injustice” was done to the states when it was decided on the basis of recommendations of the 11th commission that 29.5 per cent of the divisible pool of central taxes will be shared with the states, said Dasgupta.

The finance minister pleaded Rangarajan, a former RBI governor, to increase the central pool share from 29.5 per cent to at least 50 per cent. He suggested to Rangarajan that the resources can be mobilised by mounting a Centre-state initiative to unearth black money.

Dasgupta quoted figures from a National Institute of Public Finance and Policy study and said an estimated Rs 1 lakh crore escapes the tax net every year. “If at least half of this amount is unearthed, 50 per cent of the taxes generated from the state can be shared from the central pool without straining the Union budget,” Dasgupta said.

The finance minister also demanded that the state governments be allowed to access markets to raise funds at a lower interest. “The central government is raising money at an interest rate of 6 per cent while they are lending money to the states at a rate as high as 10.5 per cent,” he said.

The government has urged the Finance Commission to provide a debt relief to bring down interest burden on the state, as a percentage of revenue receipt, from 49 per cent to 25.

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