Devolution of Central taxes to Maharashtra shrinks to 5%

Mumbai, March 23 | Updated: Mar 24 2005, 05:30am hrs
Maharashtras share in the central devolution of taxes has been falling over the years. The share, which was 15.97% in the second finance commission (FC) period (1957-62), declined to 6.126% in the 10th FC (1995-2000).

The 11th FC reduced it to 4.632% and hence the state had suffered a loss of Rs 5,600 crore during the period (2000-05). According to the states economic survey, Maharashtras share in central taxes as per the 12th FC has been fixed at 4.997% and the state would get Rs 30,663.19 crore. The state would also receive the grants-in-aid of Rs 5,531.06 crore.

Aggregate resource flow from the Centre to the state has been fluctuating. It was Rs 10,470 crore in 2001-02, Rs 4,733 crore in 2002-03 and Rs 8,771 crore in 2003-04. However, it is expected to come down to Rs 8,597 crore in the budget year 2004-05.

The state finance department sources told FE while population and collection were the main criteria in the first seven FCs, different parameters were considered from the 8th FC onwards. For the first time a distance criterion from the highest per capita income and inverse income criterion of per capita income were considered in the 8th FC, and together given a weight of 75%. The 9th FC introduced an index of infrastructure and brought back the collection criteria. The 10th FC ignored collection but introduced area and tax efforts as two additional criteria.

The 11th FC introduced fiscal discipline as sixth criterion for determining the amount to be received by states in the sharable revenue. Sources said Maharashtra had a peculiar problem which was not faced by other states.

This is the existence of an island of prosperity in a sea of deprivation. What we are referring is Mumbai. If Mumbai is removed from the calculation of Maharashtras gross state domestic product, the figures would give a much more accurate picture of what actually exists, sources said.