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Higher tax share for states to offer financial flexibility
July, 24th 2015

The increased tax devolution to states will give them more financial flexibility to utilise untied resources, Parliament was informed today.

"By increasing the tax devolution from 32 per cent to 42 per cent, states have been given more financial flexibility to utilise the untied resources," Minister of State For Planning Rao Inderjit Singh said in a written reply to the Rajya Sabha.

The government in the Budget 2015-16 delinked eight centrally-sponsored schemes (CSS) from the Centre's support network, leaving it to states to take a call on their continuation after the 14th Finance Commission recommended higher resources for them, he said.
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"These recommendations have come in support of the laudable objective of cooperative federalism emphasising the need and role of strong states in our federal polity.

"There is no doubt that states have to assume a much larger and more important role in nation's development," he said.

He said one-size-fits-all approach does "grave injustice" to the diversity of the country, and states time and again have stressed on necessity of more resources, greater freedom and stronger voice for them.

"... it is believed that each state government will make best and efficient use of untied funds available to them in different schemes transferred to them," Singh said.

In a separate reply to the Upper House, the Minister said that NITI Aayog is working on the details of SETU (Self-Employment and Talent Utilisation), which was announced by Finance Minister Arun Jaitley in the Budget Speech 2015-16.

SETU is slated to be a techno-financial, incubation and facilitation programme to support all aspects of start-up businesses and other self-employment activities, particularly in technology driven areas.

 
 
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