Maharashtra raises alarm over dip in proportion of grants from Centre to states

Mumbai, May 8 (IANS) The Maharashtra government on Thursday during its meeting with the visiting 16th Finance Commission led by Arvind Panagariya has raised alarm over reduction in the proportion of grants from the Centre to the states. The grants in aid from the Central government in 2022-23 were Rs 51,414 crore which fell to Rs 36,045 crore in 2023-24 and further reduced to Rs 31,830 crore in 2024-25.

The government in its memorandum said: "The reduction was due to the fact that some of the Centrally Sponsored Schemes (CSS) were discontinued and the Centre-State share of remaining CSS were revised with an increased burden on the state. The revenue expenditure of these schemes further increased due to enhanced remuneration given to contractual employees involved in implementation of CSS.”

Against this backdrop, the state government has argued that the enhanced fiscal support from the 16th Finance Commission is not just desirable but it is imperative.

"Agriculture continues to support over half the population contributing to 12 per cent of gross state value added (GSVA). Maharashtra is the national leader in horticulture exports. It's a formidable infrastructure network including two major ports and 48 minor ports, supports trade dominance, with the Jawaharlal Nehru Port Authority along handling 56 per cent of India’s total container cargo. As a renewable energy frontrunner, the state has installed 17.53 GW of capacity, growing 52 per cent in six years. Yet significant challenges persist such as inter district disparities, agriculture’s dependency on monsoon, the strains of rapid urbanisation and an aging population,” said the government in its memorandum.

The government further stated: “Maharashtra requires sustained gross state domestic product growth, underpinned by robust public and private investment, to achieve the vision of becoming a $1 trillion economy by 2030.”

Amid the Supreme Court’s recent order asking the state government to complete the elections to the local bodies in four months, the state government has sought a significant increase in local body grants to 5 per cent of the divisible pool along with the continuation of the current inter state distribution formula (90 per cent population and 10 per cent area).

The state government has urged the Finance Commission to consider performance linked grants and support for neonatal health and assistance from the National Municipal Infrastructure Fund to the urban local bodies. Maharashtra has 396 urban local bodies (ULBs) and nearly 28,000 Panchayat Raj Institutions.

However, the abolition of octroi and local body tax with the implementation of GST has eroded urban fiscal capacity necessitating sustained compensation.

Further, amid climate change and global warming, the state government said that Maharashtra as one of the most disaster prone states faces recurring droughts, floods and urban calamities.

"The Disaster Risk Index of Maharashtra is the highest in the country. The government seeks an increase in allocation to the State Disaster Response Fund, a more equitable Centre-State sharing ratio of 90:10 and dedicated funds for climate adaptation and urban flood resilience. It also proposes exploring innovative instruments such as a catastrophe bonds to enhance fiscal resilience,” said the government in its memorandum.

--IANS

sj/pgh