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Central Tax Share Lessens

In coming years, Odisha will be getting less share from Central Taxes, which will pose serious problem for the State, which has risen its spending in Development Sector in a big way. This has turned out a cause of worriness for the State Administration, officials admit.

With Fifteeenth Finance Commission (FFC) has given its recommendations for 2020-21, Central Government has already curtailed its Grants to the State and official sources said atleast Rs.3000 Crore less Central Grant Odisha will receive during 2019-20.

In coming years, share of Central Grants for Odisha will be lessend as FFC has adopted 2011 Population figure as its mandate replacing 1971 Population crieteria for determining devolution of Central Taxes, official admit.

This is because, Odisha’s share of the total population of India has declined to 3.53 Percent in 2011, which was 4.04 Percent in 1971. So Odisha will get less share from Central Taxes, which will pose serious problem for the State, officials express concern.

XV Finance Commission has presented its First Report for the year 2020-21 and now indications are clear that the state is likely to receive lower share from Central Taxes.

When FFC will present its Full Report things will be more clear, however Centre has already started curtailing funding to the State, admit officials.

However, in the earlier recomendation, Odisha got 4.641 per cent, under the revised formula of FFC, Odisha gets 4.629 per cent.

During the last financial year, the state was to receive around Rs 37,000 crore from the divisible pool of Central taxes, it expects significantly less this year.


While Odisha is a mineral rich state, non revision of mining royalty for years together is forcing the state to lose heavily. Officials say Royalty on Coal, Iron Ore Manganese and other major minerals are not revised after repeated request by the State Government.

In fact Mining roryalty is 25 percent of States’ Own Revenue and due to non-revision State is losing heavily.

Secondly, with Mining Blocks being auctioned and for operations it will take time for which State is likely to get less royalty.

Under this backdrop, Odisha will have to work out strategy for generating more revenue from own sources as State’s spending has gone up very high.

Secondly State will have to opt for more Market Borrowings and it will be worked out as to how much the State will be able to sustain.

While Appropriation Bill for 2020-21 will be apporved on 31 March, Mandarins engaged in fiscal exercise are trying hard to find out ways and means to increase more revenue for the State to finance Developmental Spending, said sources.
 


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