Patna, Dec. 11: Bihar could face a financial crisis owing to changes in the pattern of central funding and the implementation of the 7th Pay Commission recommendations according to finance minister Abdul Bari Siddiqui.

Releasing "Memoranda to the 14th Finance Commission" prepared by Centre for Economic Policy and Public Finance at Asian Development Research Institute (ADRI) today, Siddiqui said: "The state will face a financial crisis in the coming days owing to three major reasons - it has to implement all the programmes or schemes announced earlier, the change in the funding pattern of several Centre-sponsored schemes from 90:10 (share ratio of Centre and state) to 60:40 and the impending implementation of the 7th Pay Commission recommendations in Bihar too."

Siddiqui said Bihar had scanty resources as its economy was agrarian and was a consumer state of products instead of being a producing one. This made it even more necessary to find out new ways to increase revenue.

"The 14th Finance Commission should have considered the ground reality of states and thought about Bihar's development while making recommendations," he added.

Siddiqui, flanked by energy and commercial minister Bijendra Prasad Yadav, former state finance commissioner Rameshwar Singh, Planning Board member Gulrez Hoda, ADRI member-secretary Shaibal Gupta and many others expressed happiness at the way almost all parties in the state came together to protest the Finance Commission recommendations.

Bijendra said finance commissions provide recommendations every five years but show without detailed work and documentary support.

Former state finance commissioner Rameshwar Singh rooted for a study on the overall investment pattern of the Centre so that Bihar could focus on the agenda of inclusive development and seek more funds. Gulrez suggested the formation of an expenditure management commission, which can look into the government expenditure and raise income by saving unnecessary outlay.

Gupta said the Finance Commission had cut the share of Bihar from 10.92 per cent to 9.7 per cent of its kitty, a loss of over one percentage point. "This could run into a loss of several thousand crores for the state and it is highly recommended that the Centre compensate the loss for development's sake," he added.