Finance Commission for sympathetic treatment to Jharkhand due to its peculiarities, reasserts its independence with respect to Centre and States

The full Potential of Jharkhand’s economy is nowhere near realisation, said the Chairman Sh. N. K. Singh, Chairman of the visiting Fifteenth Finance Commission at a Press Conference in Ranchi. Expectations with which the State was created for it to achieve fast growth and rapidly catch up with India’s fast growing economy remains an unfulfilled dream, irrespective of the factors responsible for it.On the question of independent decision making, the Chairman reasserted the Constitutional Position of the Commission and the ensuing autonomy. The Commission has faced no interference in its independent approach from any stakeholder in the discharge of its Constitutional obligations. The Terms of Reference of the Commission are determined by the Hon’ble President of India in its notification and the Commission is expected to address them in a manner it considers appropriate.He further stated that both the Centre and States are equal applicants before the Commission and are expected to submit an independent memorandum for the Commission’s consideration.

Poverty numbers in absolute terms remain alarmingly high with wide inter-district disparities. The Chairman noted that in last few years, some significant improvement with respect to key indices of Human Resource Development, Infant Mortality Rate, Education index and composition of expenditure like Capital vs Revenue expenditure.

The Commission also noted, that till 2010-11, there has been a broad adherence to the FRBM Act. However, in the last 3 Years, there has been deterioration in both Fiscal Deficit as well as Debt-to-GDP Ratio. The Commission recognised that the State Government was seeking to address the challenges of the Jharkhand Economy. The measures taken to boost growth rates higher than the national average, if the gap between Per-Capita Income of Jharkhand & the rest of the country is to be bridged, will remain challenging and an on-going process.The State must seek to grow at over double digits for at least a decade to make a tangible difference on development outcome and make a difference HDI.

The Commission took cognizance of the fact that the State Government & administration has recognised the need for environmental management in line with Sustainable Development Goals along with high rates of growth. They recognized that Fiscal Deficit and Debt-to-GDP Ratio needs to be moderated with a suitable medium-term fiscal management path. The Issue of UDAY Bonds needs to be addressed by enhancing the performance in collection and billing cycle.  Issues of uncertainties of revenues due to GST need more data to analyse as to why the State is not in a position to achieve growth in GST numbers as compared to the country as a whole.

The Commission noted all the suggestions made by the State Govt. with respect to higher vertical devolution and different weightage for horizontal devolution. In particular, the way calibration is done for the geographical areas, forest areas, environment and high density of tribal population. Commission recognised that it requires sympathetic treatment by the Finance Commission and to come up with solutions in terms of combining the virtues of rewarding efficient use of resources while addressing the endemic issues of backwardness even while recognising the special characteristics of a State like Jharkhand which has a high tribal population and in seeking to counter the challenges of ecological and environmental degradation while sustaining growth momentum. The Commission was sympathetic to the special challenges of Jharkhand particularly the legitimate aspirations of its high tribal community.

Chief Ministerurges Commission to consider ground realities before arriving at a decision.

Chief Minister Shri Raghubar Das, in his welcome remarks highlighted the growth momentum in the State after its start with a low base at the time of its creation. He reminded the Commission about the peculiarities associated with the tribal population and it’s Culture, which needs a customized approach to their development. He also urged the Commission to consider the historical factors which did not allow the State to get its due benefits from its mineral resources. He said that the negative externalities borne by the mining States should be taken into account so as to provide them with adequate compensation. The benefit of access accrues largelyto those States thatuse minerals as input for their industrial activities.

State Govt. officials in their presentation highlighted the need to include the share of tribal population as well as the contribution of mining activities in the GSDP for horizontal devolution. They further urged the Commission to be guided by the principle of Equalization based on the equity and efficiency. They suggested the Commission to replace the revenue deficit grants with unconditional Basic Grants based on needs of the state and the ‘Development Deficit’.

The Chief Minister on behalf of the Government of Jharkhand submitted a detailed Memorandum to the Commission.The Chairman complemented the Govt. of Jharkhand for making an analytical presentation and stated that the issues raised would receive appropriate, balanced and rational consideration during deliberations in the Commission.

XVth Finance Commission which is on a 3 day visit to Jharkhand also sought views of the leaders from various political parties and local bodies.Representatives of Rural Local bodies submitted a Joint Memorandum on behalf of all the Panchayats. They highlighted the issues related to the constitution of State Finance Commission affecting their capability and giving funds to middle and upper tiers also in addition to the Panchayats among others. They demanded basic grants mainly based on developmental needs.The Chairman appreciated their awareness and the views expressed with can dour and objectivity.

Commission was thankful for the warm hospitality extended by the State Govt. The Commission also looked forward to continuing interaction with the State Government based on today’s meaningful discussion. The Commission will finalise its recommendations by October 2019 after completing its discussions with all the State Governments, the Government of India and relevant stakeholders.