Past Finance Commissions considered special conditions of Himalayan States: Panagariya

PIONEER NEWS SERVICE/ Dehradun

The chairman of the 16th Finance Commission Arvind Panagariya has said that the Finance Commissions in the past have been generous toward the Himalayan and the north eastern States. He said that the FCs have made arrangements keeping in mind the specific geographical conditions of the Himalayan and north eastern states.

 Interacting with the media persons here on Monday, Panagariya said that the Finance Commission determines the method and formula to divide the income obtained from tax between the Centre  and the states in accordance with the constitutional system and requirements. 

In response to a question, he said that if any developing State has a balanced fiscal deficit, then it is not a bad situation. He added that it is important to ensure that this deficit does not increase too much. Praising the financial management of Uttarakhand, he said that the State is aware of the financial challenges and is working in the right manner. He said that the State is making efforts to increase its income. 

 Panagariya said that the per capita income of Uttarakhand is good and it is more than the national average and it can be increased further. 

He said that in the formula presented by the Commission for tax division between the Centre and the states, parameters have been set for determining the revenue share.  The Chairman informed that 12.5 per cent has been kept for demographic performance (based on low fertility rate), 45 per cent for income difference, 15 per cent each for population and area, 10 per cent for forest and ecology, 2.5 per cent for tax and fiscal management.