By Our Staff Reporter
Dehradun, 19 May: The 16th Finance Commission, currently visiting Uttarakhand, has praised the state’s fiscal management. At a press conference addressed at the Secretariat Media Centre here, today, Finance Commission Chairman Dr Arvind Panagariya asserted that maintaining a balanced level of fiscal deficit in a developing state is not necessarily negative but stressed on the importance of avoiding excessive deficits. He also acknowledged Uttarakhand’s awareness of its financial challenges and lauded its proactive approach to addressing them, citing the state’s efforts and potential for revenue growth.
Dr Panagariya also reminded that Uttarakhand’s per capita income is strong and above the national average, with further scope for expansion. He assured that past finance commissions have consistently factored in the unique geographical challenges faced by Himalayan states while shaping their recommendations. On this occasion, Panagariya also shared with the media, the tax revenue sharing mechanism between the centre and the states. He noted that the Finance Commission formulates distribution methods and formulas in alignment with constitutional provisions and requirements.
Panagariya further outlined the proposed formula for tax devolution, detailing the criteria used to allocate revenue shares. These include demographic performance, weighted at 12.5 percent; income gap at 45 percent; population and area at 15 percent each; forest and ecology at ten percent; and tax and fiscal management at 2.5 percent. Responding to a query on budget allocations for local bodies and panchayats, he assured that adequate considerations are made while noting that effective budget utilisation depends on individual states.
