Feb. 28: Finance minister Arun Jaitley today proposed "special assistance" to Bengal and Bihar in an attempt to help the eastern states "grow even faster".

Details of the assistance have not been disclosed but the minister said it would be modelled on what Andhra was given when the state was bifurcated.

"Both Bihar and West Bengal are going to be amongst the biggest beneficiaries of the recommendations of the Finance Commission. Yet, the eastern states have to be given an opportunity to grow even faster. I, therefore, propose to give similar special assistance to Bihar and West Bengal as has been provided by the Government of India in the case of Andhra Pradesh," Jaitley announced in his budget proposals.

Bengal and Bihar are expected to get special central assistance out of a Rs 20,000-crore corpus that will be managed by the Niti Aayog "for interventions as special assistance".

The announcement of the special fund was tucked away in a corner of the medium-term fiscal policy statement, a document that forms part of the budget papers.

Analysts said it was unlikely that Bengal and Bihar would share the entire corpus and Niti would probably use a part of the fund to help hill states and the Northeast as well. It couldn't be immediately determined how much Bengal and Bihar would get.

For Andhra, the Centre had provided Rs 850 crore. Around Rs 350 crore was given for a special development package for Rayalseema and the six north coastal districts in the state.

In addition, it has provided an ad hoc support of Rs 500 crore for the current financial year to Andhra, pending the recommendations of an inter-ministerial committee formed under the ministry of home affairs.

Special concessions are also being provided to companies looking to establish new bases in Andhra. These include an additional 15 per cent depreciation on new plant and machinery in the first year of installation and an additional 15 per cent investment allowance for industries setting up units in backward regions.

Moreover, the higher depreciation and investment allowance will be provided without insisting on a minimum investment of Rs 25 crore.

Officials in the finance ministry said no decision had been taken on extending the same benefits to entrepreneurs looking to set up new units in Bengal and Bihar.

On the Finance Commission's recommendations, Jaitley said the devolution to the states would be to the order of Rs 5.24 lakh crore in 2015-16 against Rs 3.38 lakh crore as per the revised estimates of 2014-15.

"Another Rs 3.04 lakh crore would be transferred by way of grants and plan transfers. Thus, total transfer to the states will be about 62 per cent of the total tax receipts of the country," he said.

Hoax, says Mitra

In Calcutta, Bengal finance minister Amit Mitra said he was not sure whether the fund would at all be helpful for Bengal.

"A sum of Rs 840 crore will be divided between Bengal and Bihar.... I don't know how much we will get. Whatever amount we will get is much less that what was deducted from our state exchequer over the past three years," Mitra said.

Mitra criticised the Union budget, too. "The Centre has cut down allotments under several crucial projects meant for the poor people. So, a higher devolution of central taxes would not be helpful for the state government," he said.

The Bengal finance minister said the Centre had spent 61.88 per cent of the total central taxes for devolution of taxes and centrally sponsored schemes in 2014-15 while the figure was 62 per cent for 2015-16. "It is clear that the claim of higher devolution is just a hoax," Mitra added.

Mitra pointed out that allotments under the Sarva Siksha Abhiyan, the Integrated Child Development Scheme and the National Rural Livelihood Mission has been slashed in this year's budget.

"These projects are directly linked with the benefit of rural people.... This is why I am terming it as an anti-people budget," Mitra added.

Nitish thanks

The announcement for a special package was welcomed by Bihar chief minister Nitish Kumar, who thanked Jaitley not once, but six times at a news conference in Patna. The package for Bihar follows a dinner meeting Nitish had with Jaitley on Thursday night at the finance minister's home in New Delhi. "I would like to thank the finance minister for redressing my two concerns," Nitish said.

With the Bihar Assembly polls scheduled for later in the year, Nitish also took a dig at the budget. "The increase in service tax will jack up prices and the middle class has been hit directly," he said.