Bhubaneswar: The Comptroller and Auditor General of India (CAG) has noticed a decrease in funding flow from the Central Government to Odisha during the past few years.
In its report on State Finances for the year ended March 2022, the CAG said the Union Government transfers funds to States in two ways: (i) Devolution of Central taxes to States and (ii) Grants-in-aid given by the Centre.
The central taxes devolved to States are untied funds, and states can spend them according to their discretion, whereas grants given by the Centre to States and local bodies are meant for specific purposes and are to be used only for the specified scheme or purpose.
The transfers to States are dependent on the tax collection of the Government of India (GoI) and the States get their share as per the percentage recommended by the respective Finance Commissions.
Trends in transfers from Centre, for the last five years, shows that Central transfers as percentage of Revenue Receipts, have been consistently decreasing from 57 per cent in 2017-18 to 38 per cent in 2021-22. However, in terms of absolute figures, Central Transfer had increased by Rs 7,443 crore during 2021-22 over the previous year, the CAG said.
The Budget Estimation (BE) for Central Tax Transfer was Rs 30,137 crore, while the actual receipt was Rs 38,144 crore during 2021-22. Similarly, the BE for Grants-in-Aid from Government of India was Rs 37,963 crore, while the actual receipts were only Rs 19,910 crore.
State’s Share of Union Taxes and Duties State’s share of Union taxes recommended by Fourteenth Finance Commission (FFC) (2015-16 to 2019-20) and Fifteenth Finance Commission (2020-21 to 2025-26).
It said the actual tax devolution to the State fell short of Finance Commission Report projections from 2015-16 to 2020-21. However, during 2021-22, the actual devolution exceeded the FCR by Rs 8,323 crore, the auditor said.
Similarly, the CAG said State’s share of Union taxes, as a percentage of revenue receipts of the State, has been continuously decreasing from 2018-19 to 2021-22.
The Government of India has decided to give effect to the merger of plan/ non-plan provisions in the Estimates for Budget 2017-18, after the conclusion of the 12th Plan period (2012-17).
With the removal of the Plan and Non Plan distinction, Grants-in-Aid from Centre comprises only of: (i) Finance Commission recommended grants for Local Bodies, (in) grants for Disaster Response and (in) grants for the Central share of Central Sector and Centrally Sponsored Schemes.
The records show that Grants-in-Aid received from the Government of India, in absolute figures, as well as percentage to Revenue Receipts, have also been decreasing since 2019-20.
c) Finance Commission Grants
The 73rd Constitutional Amendment requires both the Centre and the States to help Panchayati Raj Institutions to evolve as units of self-governance, by assigning them funds, functions and functionaries. Finance Commission Grants are the funds provided by the Centre to local bodies, as well as state disaster relief funds and these compensate any revenue loss to states after devolution of taxes. Details of Finance Commission Recommendations (FCR) vis-a-vis actual receipts
Grants under the Fifteenth Finance Commission recommendations, for the year 2021-22, under Rural Local Bodies and Urban Local Bodies, substantially decreased over the previous year, by 26 per cent and 24 per cent, respectively, the Top Auditor noticed.
