Continue Funds for Key Plans, State Plea to Centre

The New Indian Express, May 4, 2015

BHUBANESWAR: The State Government has requested the Centre to provide Rs 3,000 crore to continue implementation of several key programmes which will face shortage of funds in the coming days due to reduction in Central assistance. Besides, it has also asked the Centre to continue funding of area specific development (ASD) plans which are being implemented in backward and Naxal-affected areas of the State.

The ASD plans include special scheme for KBK (undivided Koraput, Balangir and Kalahandi districts) region, Backward Regions Grant Fund (BRGF) and Integrated Action Plan (IAP).

The Centre’s decision to delink eight schemes from Central support and change the sharing pattern of 33 Centrally-sponsored schemes will substantially reduce the quantum of Central assistance in 2015-16. The State Government will have to provide funds from its own resources for sector specific and State specific programmes which were recommended by the Thirteenth Finance Commission (TFC). However, the Fourteenth Finance Commission (FFC) has not recommended any grants for sector and State specific programmes.

 The loss on account of reduction in Central assistance will be about Rs 8,037.26 crore. The State Government will receive an additional Rs 5,883.43 crore on account of the 10 per cent more devolution of funds recommended by the FFC. The additional liability of the State Government will be Rs 2148.83 crore in 2015-16.

 In a letter to Prime Minister Narendra Modi on Saturday, Chief Minister Naveen Patnaik has said delinking area development programmes like KBK, BRGF and IAP from Central assistance will severely affect development programmes taken up in Maoist-affected districts.

This will have an adverse impact on the socio-economic development of some of the most vulnerable and backward regions of the State, he said.

The Chief Minister has also taken up the issue of loss of Rs 1,700 crore per year from the current financial year for deferment of VAT on petroleum products for 11 years after commissioning of the oil refinery of Indian Oil Corporation Limited (IOCL) at Paradip. The State Government is exploring a suitable mechanism to minimise loss in this regard in consultation with the Centre.

However, the revenue loss will continue till some alternative mechanism is in place.