NEW DELHI : Finance Minister Nirmala Sitharaman on Monday agreed to shift tax revenues owed to states one month in advance to help increase infrastructure spending and boost economic growth.
This was decided in a virtual meeting attended by 15 Chief Ministers, three Deputy Chief Ministers, Lieutenant Governors of Union Territories and State Finance Ministers. The finance minister called the meeting to think about ways to push India’s economic growth towards double digits.
“After the second wave, we see robust growth. We are, however, looking for ideas to get growth as close as possible to the double digits. For this, States and the Center must work in close collaboration. We also sought ideas from states on how to speed up investment and manufacturing activities, ”Sitharaman told reporters after the meeting.
Speaking about requests and issues raised by states, Sitharaman said some states have requested approvals for projects, better dispute resolution mechanisms after contract award, and better road connectivity. “The northeastern states have called for help with immediate job creation and international trade policies for the region. The need for a policy for offshore wind power generation was also underlined during the meeting, ”Sitharaman said.
Sitharaman said that although the Center paid GST compensation for the full 2022 fiscal year to states in early November, some chief ministers said that to increase capital spending, it would be really helpful to get part of the tax devolution for the current year in advance. “I have asked the finance secretary who is also in charge of the expenses to do so immediately so that in this exceptional year the states are not short of cash as we all press for the spending of infrastructure are taken care of by them. I suggested to the finance secretary that November 22, instead of the normal monthly payment of the amount of deconcentration, which is a total of ??47,541 crore, a total of ??95,082 crore be returned to the states, ”Sitharaman said.
The share of states in central taxes – at the aggregate level of 41% – was decided by the 15th Finance Committee. Typically, this is transferred in 14 installments during a fiscal year. The adjustment between the budget estimate and the revised estimate of these transfers is made in March. In November, instead of delegating one tranche out of 14, two tranches will be transferred.
Sitharaman urged states to help the country become the fastest growing economy in the coming years by making it easier to attract investments and implementing ease of doing business measures, and by undertaking energy reforms to reduce electricity losses.
She further pointed out that with land being one of the main bottlenecks in many cases, states should relax land acquisition procedures and create land banks that can be operated at the time of investment, according to her. a press release from the Ministry of Finance.
The finance minister also urged states to strengthen their urban local bodies, as they now receive a larger allocation of funds and are increasingly encouraged to continue resource mobilization.
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