REPORT

OF
THE ELEVENTH FINANCE
COMMISSION

(FOR 2000-2005)

JUNE, 2000
 REPORT
OF
THE ELEVENTH FINANCE
COMMISSION

(FOR 2000-2005)

JUNE, 2000
 CONTENTS

CHAPTER PAGE

I Introduction 1-5
II Issues and Approach 6 - 17
III Restructuring Public Finances 18 - 37
IV Assessment of Centre’s Resources 38 - 42
V Assessment of States’ Resources 43 - 52
VI Sharing Union Tax Revenues 53 - 60
VII Upgradation and Special Problem Grants 61 - 70
VIII Local Bodies 71 - 85
IX Calamity Relief 86 - 94
X Grants-in-aid to the States 95 - 99
XI Debt Position of the States and Corrective Measures 100 - 107
XII General Observations 108 - 109
XIII Concluding Observations 110 - 111
XIV Summary of Findings and Recommendations 112 - 117
Notes
Note of Shri N.C. Jain, Member 118 - 120
Note of Dr. A. Bagchi, Member 121 - 122

ANNEXURES
I.1 President’s Order dated 28th December, 1999 regarding first extension 123
I.1A President’s Order dated 28th April, 2000 regarding Additional Term of Reference 124
I.1B President’s Order dated 21st June, 2000 regarding second extension 125
I.2 Memoranda submitted to the Commission during the visit to the States 126 – 128
I.2A Memorandum received from Individuals/Organisations 129
I.3 List of the eminent economists who met the Commission on 26th August, 1998
and 4th December, 1998 130
1.3A Meetings with the Planning Commission 130
I.4 Details of Studies Commissioned 131
I.5 List of the Members of the Group on Panchayats 131
I.6 List of the Members of the Group on Municipalities 132
I.7 List of the Members of the Group on Defence 132
I.8 Dates of discussions with State Governments at State Headquarters/Field Visits 133
I.9A List of Participants who attended the discussions with Principal
Accountants General during the visits of the Finance Commission 133 – 134
I.9B List of Chief Ministers/Ministers/State Government officials who met the
Commission during visits 135 – 147
I.9C List of Political Parties/Economists and Associations who met the
Commission during visits 148 – 156
I.9D List of Participants who attended the discussions with Rural & Urban
Local Bodies during the State visits of the Finance Commission 157 – 163
I.9E List of Participants who attended the discussions with Autonomous
Councils during the visits of the Finance Commission 164
I.10 List of Secretaries to the Government of India and other Senior
Officials who met the Commission 165 – 166
I.11 Meeting with the Ministry of Railways 167
I.12 Meeting with the Director, Intelligence Bureau and State Directors General of Police 167
I.13 Note on Terms of Reference by Shri J.C. Jetli, Member, Finance Commission 168 – 169
(i)
 (ii)
ANNEXURES PAGE
I.14 Letter to Finance Secretary alongwith the Note on Interpretation of the word
‘State’ used in Chapter-I of Part-XII of Constitution and especially in Article - 280(3)
of the Constitution – whether the word ‘State’ includes ‘Union Territories’ 170 – 173
I.15 Letter of response from the Ministry of Finance regarding clarification as to
whether word ‘State’ used in Chapter-I of Part-XII of Constitution and Article-280(3)
of the Constitution includes ‘Union Territories’ 174 – 175
I.16 List of International Organizations/Teams which met the Commission 176
I.17 List of other Meetings of the Commission 176
II.1 Revenue and Expenditure of the Centre (As % of GDP - Old and New Series) 177
II.2 Revenue and Expenditure of All States, consolidated (As % of GDP - Old and New Series) 178
II.3 Revenue Surplus/Deficit as percentage of GDP 179
II.4 Revenue Deficit and Fiscal Deficit of States (As % of GSDP) 180 – 183
II.5 Interest payments as % of Revenue Receipts 184
II.6 Annual Growth rate of Pension of States 185
II.7 Composition of Revenue Transfers to States (As per cent of total transfer) 186
II.8 Plan Revenue Expenditure as % of Plan Outlay 187
II.9 Transfers as % of Gross Revenue Receipts of the Centre 188
III.1 Outstanding Debt of Centre and States 189
III.2 Indian Macro Economy at the Millennium Threshold: Key Indicators 190
III.3 Outstanding Government Guarantees (outstanding as at end-March) 191
IV.1 Central Public Sector Undertakings – Performance Highlights 192
IV.2 Profile of Central Finances as per Assessment 193
IV.3 Central Government: Fiscal Profile 2000-01 to 2004-05 194
IV.4 Centre’s Revenue Transfers to States 195
IV.5 Difference between Assessment and Central Forecast 196
V.1 Additional Tax Revenues Assessed for the Base Year – normative assessment 197
V.2 Amount of Interest excluded in the base year – normative assessment 197
V.3 Buoyancy based growth rates of tax revenues (2000-05) 197
V.4 Estimated Net Return on Investments by States in the Power Sector 198
V.5 Estimated Net Return on the Investments by State Government in the Transport Sector 199 – 200
V.6 Maintenance Expenditure Provided for Major and Medium Irrigation (2701) 200
V.7 Maintenance Expenditure Provided for Minor Irrigation (2702) 201
V.8 Maintenance Expenditure provided for Roads & Bridges (MH-3054) 202
V.9 Maintenance Expenditure provided for Buildings (MH-2059 & 2216) 203
V.10 Provision for Committed Liabilities for maintenance of Plan Scheme 203
V.11 to
V.35 State-wise Assessed Own Revenue Receipts and Non Plan Revenue Expenditure 204 – 216
VI.1 Devolution of Central Taxes to States – 1980 to 2000 recommended by the
successive Finance Commissions 217
VI.2 Population of States 218
VI.3 Per Capita GSDP of States – Comparable Estimates: New Series 218
VI.4 Area of States 218
VI.5 Index of Social and Economic Infrastructure 218
VI.6 Tax GSDP Ratio 219
VI.7 Index of Fiscal Self-Reliance 219
VI.8 States’ Share in Central Tax Revenues as per Assessment 219
VII.1 Overview of States’ Demands for Upgradation and Special Problem Grants for 2000-05 220
VII.2 Basic data used for determination of upgradation grants 221
VII.3 Upgradation and Special Problem Grants for 2000-05 222
VII.4 Year-wise phasing of the grants for upgradation and special problems 223
VII.5 Estimates for setting up a new State/Regional Forensic Science Laboratory 224
VII.6 Upgradation and Special Problem Grants under the Awards of the Ninth and
the Tenth Finance Commissions- Recommendations, Approvals, and Releases thereof 225
 (iii)
ANNEXURES PAGE
VIII.1 Constitution and submission of SFC Reports and Action Taken thereon 226
VIII.2A State-wise Revenue and Expenditure of Panchayati Raj Institutions (all tiers) 227 – 231
VIII.2B Statement of Revenue and Expenditure of Panchayats at Village level 232 – 236
VIII.2C Statement of Revenue and Expenditure of Panchayats at Intermediate level 237 – 240
VIII.2D Statement of Revenue and Expenditure of Panchayats at District level 241 – 244
VIII.3A Statement of Revenue and Expenditure of Urban Local Bodies 245 – 249
VIII.3B Statement of Revenue and Expenditure of Nagar Panchayats 250 – 252
VIII.3C Statement of Revenue and Expenditure of Municipalities 253 – 256
VIII.3D Statement of Revenue and Expenditure of Municipal Corporations 257 – 260
VIII.4 Share of States in allocation for panchayats 261
VIII.5 Share of States in allocation for municipalities 262
VIII.6 Population and Geographical Area of the Fifth Schedule Areas, Sixth
Schedule Areas and Hills Districts (Manipur) Areas – 1991 263
VIII.7 Structure and Size of Rural Local Bodies in India 264 – 266
VIII.8 Structure and Size of Urban Local Bodies in India 267 – 268
VIII.9A Letter from Ministry of Urban Affairs and Employment (Department of
Urban Development) on the issue of taxation of Central Government Properties 269 – 270
VIII.9B Letter from Ministry of Finance to Ministry of Urban Affairs and Employment
(Department of Urban Development) on the issue of taxation of Central
Government Properties 271
VIII.10A Letter from Ministry of Finance to the Chief Secretaries to the Governments
of all Part ‘A’ and ‘B’ States (except Jammu & Kashmir) on payment of service
charges to local bodies in respect of Central Government Properties
dated 10th May, 1954 272 – 273
VIII.10B Letter from Ministry of Finance to the Chief Secretaries of all States on payment
of service charges to local bodies in respect of Central Government Properties
dated 29th March, 1967 274 – 275
VIII.10C Letter from Ministry of Finance to the Chief Secretaries of all States on payment
of service charges to local bodies in respect of Central Government Properties
dated 28th May, 1976 276
VIII.10D Letter from Ministry of Finance to the Chief Secretaries of all States on payment
of service charges to local bodies in respect of Central Government Properties
dated 26th August, 1986 277 – 278
IX.1 Calamity Relief Fund during 2000-05 279
IX.2 Calamity Relief Fund during 2000-05 (Centre’s Share) 280
IX.3 Calamity Relief Fund during 2000-05 (States’ Share) 281
XI.1 Composition of State Government Debt as on March 31, 1999 282
XI.2 Composition of State Government Debt as on March 31, 2000 283
XI.3 Outstanding Long Term Debt of the State Governments (as on March 31) 284
XI.4 Repayments of Central Loans during 2000-05 285
XI.5 Debt as percentage of GSDP 286
XI.6 Share of each State in total Debt of All States as on 31st March 287
XI.7 Rates of Interest on Central Loans (Other than Small Savings Loans): Plan and Non-Plan 288
XI.8 Rates of Interest on Loans to States against Small Savings Collections 288
XI.9 Interest as percentage of Total Revenue Receipts 289
XI.10 Statement Showing Amounts of Debt Reliefs sanctioned to Various
State Governments in Pursuance of TFC Recommendations 290
XI.11 Profile of Amounts of Fresh Loans received from the Centre during1994-99
and Outstanding as on March 31, 1999 291
XI.12 Repayments of Central Loans during 2000-05 292
XI.13 Schedule of Repayment of Principal and Interest of Special Term Loans of
Punjab from 2000-01 to 2004-05 292
 (iv)
APPENDICES PAGE
I.1 Interim Report 293 – 297
III.1 Finances of Centre and States: Base and Reform Scenarios 298 – 304
VII.1 A scheme proposed by Shri N.C. Jain, Member, Finance Commission, on
clearance of the backlog of pending cases 305 – 306
VII.1.A State-wise details of civil and criminal cases instituted, disposed and balance,
in 1998 and average rate of disposal during 1995-98 307
VII.1.B Proposals of States submitted to EFC for Upgradation of Judicial Administration
during 2000-05 308
VII.1.C Requirement for an additional Sessions Court 309
VII.2 Scheme for utilisation of the upgradation grants provided towards computer
training for school children 309
VIII.1 Methodology adopted for determining the allocation to States towards Panchayats 310 – 311
VIII.2 Methodology adopted for determining the allocation to States towards
Urban Local Bodies 312 – 313
XI.1 Improvement in Fiscal Performance: Scheme of Debt Relief 314
ANNEXURES
APPENDICES
 Chapter I
Introduction

1.1 The Finance Commission was constituted by an Order of the President [SO No.557 (E) dated July 3, 1998], which
read as follows:
“In pursuance of the provisions of article 280 of the Constitution of India, and of the Finance Commission
(Miscellaneous Provisions) Act, 1951 (33 of 1951), the President is pleased to constitute a Finance Commission consisting
of Prof. A.M. Khusro, former Ambassador and Vice-Chancellor, as the Chairman and the following four other Members,
namely:-
1. Shri N.C. Jain, former Advocate General of Madhya Pradesh - Member
2. Shri J.C. Jetly, IAS (Retd.), former Secretary to Government of India - Member
3. Dr. Amaresh Bagchi, former Director of the National Institute of Public
Finance and Policy - Member
4. Shri T.N. Srivastava, IAS - Member-Secretary

2. The Chairman and the other Members of the Commission shall hold office from the date on which they
respectively assume office up to the 31st day of December, 1999.
3. The Commission shall make recommendations as to the following matters:-
(a) the distribution between the Union and the States of the net proceeds of taxes which are to be, or may
be, divided between them under Chapter 1 of Part XII of the Constitution and the allocation between
the States of the respective shares of such proceeds;
(b) the principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated
Fund of India and the sums to be paid to the States which are in need of assistance by way of grants-
in-aid of their revenues under article 275 of the Constitution for purposes other than those specified in
the provisos to clause (1) of that article;
(c) the measures needed to augment the Consolidated Fund of a State to supplement the resources of the
Panchayats in the State on the basis of the recommendations made by the Finance Commission of the
State;
(d) the measures needed to augment the Consolidated Fund of a State to supplement the resources of the
Municipalities in the State on the basis of the recommendations made by the Finance Commission of
the State.
4. The Commission shall review the state of the finances of the Union and the States and suggest ways and
means by which the governments, collectively and severally, may bring about a restructuring of the public finances so as
to restore budgetary balance and maintain macro economic stability.
5. In making its recommendations, the Commission shall have regard, among other considerations, to:-
(i) the resources of the Central Government and the demands thereon, in particular, on account of
expenditure on civil administration, defence and border security, debt-servicing and other committed
expenditure or liabilities;
(ii) revenue resources of the States for the five years commencing on 1st April, 2000, on the basis of the
levels of taxation possible to be reached in 1998-99, targets set for additional resources mobilisation
for the Plan and the potential for raising additional taxes;
(iii) the requirement of the States for meeting the Plan and non-Plan revenue expenditure; keeping in view
the need for generating surplus for capital investment and reducing fiscal deficit;
(iv) the maintenance and upkeep of capital assets and maintenance expenditure of plan schemes to be
completed by 31st March, 2000 and the norms on the basis of which specified amounts are
recommended for the maintenance of the capital assets and the manner of monitoring such expenditure;
(v) the requirements of States for upgradation of standards in non-developmental and social sectors and
services particularly of States which are backward in general administration with a view to modernise
and rationalise the administrative set up in the interest of speed, efficiency and sound fiscal management;
(vi) the need for ensuring reasonable returns on investment by the States in irrigation projects, power
projects, state transport undertakings, departmental commercial undertakings, public sector enterprises,
etc.;
(vii) such provisions for emoluments and terminal benefits of Government employees including teachers
 2
and other employees of aided institutions as obtaining on a specified date as the Commission deems
it proper and with reference to appropriate objective criteria rather than in terms of actual increases
that may have been given effect to;
(viii) the scope for better fiscal management consistent with efficiency and economy in expenditure including
the incentives that need to be provided for better realisations of tax and non-tax revenue.
6. In the case of local bodies -
(a) the commission shall take into account the recommendations of the State Finance Commissions; and
(b) where the State Finance Commissions have not been constituted as yet, or have not submitted their
report giving recommendations, the Commission will make its own assessment about the manner and
extent of augmentation of Consolidated Fund of the State to supplement the resources of the Panchayats
and Municipalities in the State. While making such assessment, the Commission —
(i) shall take into account the provisions required to be made for the emoluments and terminal benefits
of the employees of local bodies including those of teachers;
(ii) shall take into account the existing powers of the Panchayats and Municipalities to raise financial
resources including those by way of raising additional taxes by the Panchayats and Municipalities;
and
(iii) the powers, authority and responsibility transferred to Panchayats and Municipalities under Article
243 G and 243 W of the constitution read with Schedules Eleven and Twelve.
7. The commission may suggest changes, if any, to be made in the principles governing the distribution amongst
the states of—
(a) the net proceeds in any financial year of the additional duties of excise leviable under the Additional
Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) in lieu of the sales tax levied
formerly by the State Governments, and
(b) the grants to be made available to the States in lieu of the tax under the repealed Railway Passenger
Fares Tax Act, 1957 (25 of 1957).
8. In making its recommendations on the various matters aforesaid, the Commission shall adopt the population
figures of 1971 in all cases where population is regarded as a factor for determination of devolution of taxes and duties
and grants-in-aid.
9. The Commission may make an assessment of the debt position of the States as on 31st day of March, 1999
and suggest such corrective measures as are deemed necessary, keeping in view the long term sustainability for both the
Centre and the States.
10. The Commission may review the present scheme of Calamity Relief Fund and may make appropriate
recommendations thereon.
11. The Commission shall make its report available by the 31st day of December, 1999 on each of the matters
aforesaid, covering a period of five years commencing on the 1st day of April, 2000.
12. The Commission shall indicate the basis on which it has arrived at its findings and make available the State-
wise estimates of receipts and expenditure.”
1.2 The Chairman and all the Members including the Member Secretary served the Commission on a full time basis
for the entire period.
1.3 The Commission started its work as soon as its appointment was notified. Chairman wrote letters to the Chief
Ministers of the States and various other eminent persons seeking their views on the terms of reference (ToR) of the
Commission. The Member Secretary wrote letters to the Chief Secretaries of the States and the Secretaries of the Union
Government to give their views on the ToR and on any issue, pertaining to their Ministries and Departments. The State
Chief Secretaries were also requested to send their forecast of the revenue receipts and expenditure for each of the five
years commencing from the financial year 2000-01 to 2004-05. Constant interaction with the State Governments helped
in expediting the flow of information which enabled the Commission to start the visits of the States from January, 1999 for
holding discussions. However, the process was disrupted due to the premature dissolution of the Lok Sabha in April,
1999 and consequential declaration of elections which were held in September/October, 1999. Unavoidably, the
Commission, had to make a request for an extension of time for submission of report. The President was pleased to grant
this extension up to 30th June, 2000 and further directed that the Commission will give an interim report by 15thJanuary,
2000 for enabling provisional arrangements to be made for devolution of share in the Central taxes and other grants-in-aid
to the States during the year commencing April 1, 2000. A copy of this Order is at Annexure I.1. The Commission,
accordingly, submitted its Interim Report, as required, to the President on January 15, 2000. A copy of this Report is at
Appendix I.1.
 3
1.4 The Commission issued a Press Note in the month of August, 1998 inviting the general public to give their views
on the issues before the Commission. A number of institutions and individuals submitted their representations and
memoranda, a list of which is given in Annexure I.2 and I.2A. The Commission held discussions with some of these
persons at its headquarters in New Delhi and during its visits to various States.
1.5 The Comptroller and Auditor General of India (C&AG), at our request, issued instructions to the Accountants
General of the States to furnish information and data relating to our work and to assist us, as and when required. Our
discussions with the Accountants General, during our visits to the States, have been very helpful in forming our views
about the budgetary position of the States. We are thankful to them for the assistance extended to us.
1.6 The Commission started the process of consultation with the States by holding a Conference of State Finance
Ministers on September 2, 1998. Since this Commission was required to make recommendations, for the first time, for the
augmentation of the Consolidated Fund of the States for the supplementation of resources of panchayats and municipalities,
conferences of State Ministers in charge of panchayats and municipalities were separately held on September 9, 1998
and September 16, 1998 respectively. The discussions in these Conferences were useful in focussing attention to the
core issues in the ToR relating to the local bodies and helped in expediting the submission of information, memoranda and
the forecast from the States. On the suggestion made in the conference of the State Finance Ministers, a separate
meeting of the Finance Ministers of the special category States, namely, Arunachal Pradesh, Assam, Himachal Pradesh,
Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim and Tripura was held on November 11, 1998 to
discuss the peculiar problems of these States and the difficulties that they face in generating and harnessing their own
financial and physical resources.
1.7 This Commission, for the first time, was required to review the state of the finances of the Union and the States
and suggest ways and means by which the governments, collectively and severally, may bring about restructuring of the
public finances so as to restore budgetary balance and maintain macro economic stability. We felt that consultations with
economists and economic administrators would be essential for defining the scope of this term of reference for the
purpose of making recommendations. Accordingly, the Commission held two meetings of the economists and economic
administrators on August 26, 1998 and December 4, 1998. A list of those who participated in these meetings is given in
Annexure I.3.
1.8 We held a couple of meetings with the Deputy Chairman, Planning Commission and Members of the Planning
Commission. Our Member Secretary had interactions with the Secretary, Planning Commission separately. The interaction
helped us in getting an idea of the perception of the Planning Commission on the availability of financial resources and
developmental needs (Annexure I.3A).
1.9 At the behest of the Commission, the National Institute of Public Finance and Policy organised a seminar on the
issues before the Finance Commission. Eminent economists and economic administrators were invited to attend this
seminar. Shri Yashwant Sinha, Finance Minister, Dr. Manmohan Singh, M.P. and former Finance Minister, Shri P.
Chidambaram, former Finance Minister and Dr. C. Rangarajan, Governor of Andhra have been very useful. The proceedings
of the seminar have since been brought out in a volume by the National Institute of Public Finance and Policy.
1.10 The Commission entrusted a number of studies to prominent national academic institutions on the various Terms
of Reference. A list of the institutions along with the subject matter of the study done by them is given in Annexure I.4.
Some of the reports of these studies were focussed and were found to be quite useful by the Commission in formulating
its views. We are thankful to these institutions for undertaking these studies.
1.11 Keeping in view the terms of reference on local bodies the Commission constituted two advisory groups – one on
panchayats and the other on municipalities. The list of members of these groups are given in Annexures I.5 and I.6. The
Commission held a couple of meetings with these advisory groups to delineate and define the scope of the terms of
reference in regard to rural and urban local bodies. Based on the advice given in these meetings, the studies on these
subjects were commissioned. Another group on Defence was constituted to have an idea of the security environment and
the needs of defence. The list of members of this group is given in Annexure I.7. Based on the discussion in the group,
a study on the issue relating to the defence expenditure including the scope for economy was commissioned.
1.12 We visited all the State capitals for holding discussions with the State Chief Ministers, Finance Ministers, other
Ministers and officials of the State Governments on the various issues relating to the terms of reference and on the
forecast and memorandum submitted by them. We also held discussions separately with the representatives of urban
local bodies and rural local bodies, Ministers in-charge of urban local bodies and rural local bodies, eminent economists,
representatives of the various chambers of commerce and industry, representatives of political parties and other eminent
persons on the issues relating to terms of reference. We also made field visits to get a first hand information of the
problems of the local people in as many States as it was possible to do within the limited time available with us. The
process of formal consultations with the States was completed by our visit to the State of Jammu and Kashmir on 15 - 16
May, 2000. A list of dates of visits to the States and a list of persons met by us is given in Annexures I.8 and I.9A - 9E.
1.13 We had a series of discussions with the Union Finance Secretary and other Secretaries of the Ministry of Finance
to get an idea of the budgetary needs of the Central Government including those relating to internal security, defence and
development. These discussions were useful in making an assessment of the Centre’s revenue receipts and the revenue
 4
expenditure during the period 2000-01 to 2004-05. We also held discussions with the Secretaries of Ministries/Departments
of Rural Development, Urban Development, Defence, Defence Production, Petroleum, Fertilizers, Education, Coal, Power,
Family Welfare, Agriculture, Public Distribution. We also held discussions with the Secretary, Department of Statistics and
Director General, Central Statistical Organisation on the quality and availability of data on the various subjects as also the
possibility of making projections. The list of Secretaries and other officials met by the Commission is given in Annexure
I.10.
1.14 The Ministry of Railways gave a separate memorandum on the grants given to the State Governments in lieu of
tax on railway passenger fares. Chairman, Railway Board and other officials held discussions with the Commission on
this matter and other related issues. A list of officials from the Railways who met the Commission is given in Annexure
I.11.
1.15 The Director, Intelligence Bureau and some Directors General of Police of the States held a meeting with the
Commission to discuss the problems of the police in the States. A memorandum prepared by the Bureau of Police
Research and Development on the operational needs of the police was given to the Commission in this meeting. In
particular, the discussion concentrated on the operational problems faced by the police in the changing internal security
situation and the need to equip it to face the new challenges. A list of officials who met the Commission is given in
Annexure I.12.
1.16 Mid-way through our work, Shri J.C. Jetli, Member gave a note on the terms of reference stating that the term
‘State’ includes Union Territories (UTs) and, therefore, the Commission is required to give a report for devolution of
resources to the Union Territories and to the urban and rural local bodies in the UTs. In terms of article 280 of the
Constitution, the Commission has to get the views of Union Territories on the terms of reference, hold consultations with
them and give recommendations. A copy of the note of Shri Jetli is given in Annexure I.13. The matter was examined by
the Secretariat of the Commission and since the matter was important having a bearing on the interpretation of the
Constitution and the work of the Commission, it was referred to the Union Ministry of Finance along with a detailed note
on the subject for clarification. A copy of the reference along with the detailed note is given in Annexure I.14. The Ministry
of Finance informed the Commission that the word ‘State’ used in Chapter I, Part XII of the Constitution and article 280 (3)
do not include Union Territories. The Ministry of Finance sent the clarification along with a copy of the opinion of the
Department of Legal Affairs on the subject. These are given as Annexure I.15. In view of the clarification given by the
Union Ministry of Finance, the matter was not pursued further.
1.17 The Commission had the benefit of a visit by the Chairman of the Fiscal and Finance Commission, South Africa.
The Commission extended hospitality to the Chairman during his stay in India and held useful discussions on the various
matters relating to our Finance Commission and the experience of the working of the South African Fiscal and Finance
Commission. In addition, a four member study team on devolution of financial powers between the Centre and States of
the Ministry of Economic Development and Cooperation, Government of Ethiopia also visited the Commission and held
discussions with the Member Secretary and officials of the Commission on the various issues relating to fiscal federalism.
The staff mission of the International Monetary Fund, on their visit to India, also held discussions with the officials of the
Commission. The list of foreign visitors along with the dates is given in Annexure I.16.
1.18 A number of eminent persons as also the representatives of national level organisations met the Commission,
and gave their view on the terms of reference. The interaction with them was quite useful in formulating our views. A list
of these persons is given in Annexure I.17.
1.19 We also met the Law Secretaries of a few States on April 4, 2000 to discuss the financial administration. Discussion
with them helped us in appreciating the difficulties in speeding up the disposal of cases in district courts. The suggestions
given by them were very useful.
1.20 At the stage of finalisation of recommendations and preparation of report, two important developments took
place which had a bearing on the work of the Commission. An additional term of reference was added by the Presidential
Order dated April 28, 2000 (Annexure I.1A) as follows:
“In particular, the Commission shall draw a monitorable fiscal reforms programme aimed at reduction of revenue
deficit of the States and recommend the manner in which the grants to States to cover the assessed deficit in
their Non-plan Revenue account may be linked to progress in implementing the programme”.
1.21 Formulation of a fiscally monitorable reforms programme required another round of consultations with the States,
and the Union Ministry of Finance. The Commission, therefore, sought an extension of time upto August 31, 2000 for
submission of its report. Simultaneously, it started the process of consultations with the State Governments. Our Member
Secretary wrote letters to the Chief Secretaries of the States requesting them to send the views of the State Government
on this term of reference by May 15, 2000. The Union Finance Secretary was also requested to give views on this
subject. The Commission also convened a meeting of the State Finance Ministers on May 22, 2000 to hold discussions
with them.
1.22 The second important development related to the enactment of the Constitution (Eightieth Amendment) Act,
2000 by the Parliament which received the assent of the President on June 9, 2000. This amendment provides for
sharing of the net proceeds of all Union taxes and duties with the State. It has also drastically changed article 269 of the
 5
Constitution, which earlier provided for levy and collection of some taxes by the Government of India but which were
assigned to the States. The amendments made in the Constitution necessitated changes in the terms of reference.
These were modified by the Presidential Order dated June 19, 2000. By this Order, para 7 of the terms of reference was
deleted. This para required the Commission to suggest changes, if any, in the principles governing the devolution amongst
the States of the net proceeds of the additional excise duties leviable under the Additional Duties of Excise (Goods of
Special Importance) Act, 1957 in lieu of the sales tax formerly levied by the State Governments, and the grants to be
made available to the states in lieu of the tax under the repealed Railway Passenger Fares Act, 1957. The Commission
was required to give a report by June 30, 2000 on each of the terms of reference contained in the Order dated 3rd July,
1998 (excluding para 7), and further a report by 31st August, 2000 on the term of reference notified in the order dated 28th
April, 2000. A copy of the notification is given in Annexure I.1B.
1.23 Accordingly, we are giving this report addressing the terms of reference contained in the Presidential Order of
July 3, 1998 (excluding paragraph 7). We will submit another report on the term of reference notified in the Order dated
April 28, 2000 by August 31, 2000.
1.24 We would like to place on record our deep appreciation of the contributions made by Dr. D.K. Srivastava, our
Principal Consultant, in the preparation of this report. The work done by him helped us in formulating our views on some
of the critical issues arising from the terms of reference given to us and we are thankful to him for his efforts.
1.25 We would also like to thank Shri K.M. Thomas, Economic Adviser, who continued to help us even after retirement,
and the two Joint Secretaries – Shri S. Vijayaraghavan and Shri Sudhir Krishna, for the hard work put in by both of them
in preparing the briefs and notes on various issues on the subjects entrusted to them. They also took the additional
responsibilities in other areas. The Directors – Smt. Sudarshana Talapatra, Dr. S. Rohini, Shri R.B. Sinha, who left on
promotion and Shri B. Nayak were also not far behind. Apart from taking work from the research teams working under
their guidance they also made their own contributions in preparing the briefs on specific subjects. We are thankful to them
for their contribution. The entire research team consisting of the Joint Directors, Dr. C. Bhujanga Rao, Ms. Ruchika Govil,
Shri A. Maitra and Dr. G.K. Arora, Deputy Directors – Smt. Madhumita Hari, Shri R.N. Tewari, Shri Deepak Israni and Shri
Yashvir Singh; Assistant Directors - Dr. O.P. Bohra, Shri V. Srikant, Shri Jasvinder Singh, Shri S. Pradhan, Ms. Nalini
Pathak and Shri Ranjan Mukherjee (left the Commission on promotion) and the whole research staff consisting of
Consultants, Senior Economic Investigators, Economic Investigators and Computors working under them did an excellent
job. Shri R.K. Gaur and Shri Rakesh Sharma, Deputy Directors, Shri H.S. Bhalla, Assistant Director, Shri S.S. Panwar,
AAO and the entire staff with them did the house keeping job and looked after the needs of each one of us. We are
thankful to all of them. We are thankful to all the Principal Private Secretaries, Private Secretaries and Personal Assistants
who did an excellent job behind the desk. In particular, we would like to thank Shri Praveen Kumar, Shri S. Ananda
Raman, Ms. Anita S. Dahara, Shri P. Suresh and Shri R. Ravichandran who did the final job of bringing the report in shape
and making it ready for presentation. We would like to thank the National Informatics Centre and, in particular, Shri V.
Manivannan, Systems Analyst, for helping us in creating a database in the Commission with a local area network in a
short time. Shri Manivannan provided excellent support to our research units and to each one of us. Lastly, we would like
to thank the Bank of Baroda for making available the accommodation and the necessary logistic support from time to time.
 Chapter II
Issues and Approach

2.1 A sound system of intergovernmental fiscal transfers constitutes the cornerstone of a strong and stable federal
polity. Transfers serve a two-fold purpose: one, to address the vertical imbalance – the inadequacy of revenues of sub-
national governments to meet their expenditure liabilities, arising from asymmetrical assignment of functional responsibilities
and financial powers among different governmental levels, and two, to alleviate horizontal imbalances, the disparities in
the revenue capacity of the constituent units of the federation – the States and local bodies in our case – in order that all
of them may be in a position to provide basic public services to their citizens at a reasonable level. In recognition of the
need to redress these imbalances in a fair and orderly fashion, the Indian Constitution provides for devolution of a part of
the Centre’s revenue to the States mandatorily. Further, in order that the dependence of the recipient governments on
flow of funds from above does not undermine their autonomy, the Constitution sought to entrust the task of mediating the
devolution of the revenues of the Union to the States to an independent panel – the Finance Commission – to be appointed
by the President. Similarly, Finance Commissions are now required to be set up at the State level to guide the devolution
of funds to local bodies.
2.2 The Presidential Order appointing this Finance Commission (EFC) like those of its predecessors incorporates
the mandate contained in article 280 of the Constitution centering around the tasks of determining the appropriate share
of the States in the divisible taxes of the Union government and their inter se allocation, and formulating principles to
govern the grants-in-aid to States in need of assistance. However, as noted in our Interim Report, the Terms of Reference
(ToR) given to us have several distinguishing features. In addition to the task of apportioning an appropriate share of the
Centre’s divisible revenues among the States in the form of tax devolution and grants, we have been asked to recommend
suitable measures to augment the resources of the States to supplement those of their local bodies, the panchayats and
the municipalities. Following the pattern of the past, the ToR set for us also enumerate a number of considerations to be
kept in view while making our recommendations. As pointed out in the Interim Report, these too contain some significant
new features, but they relate essentially to the function of deciding the dimensions and design of the transfers from the
Centre to the States through tax sharing and grants, with an extended mandate this time to suggest measures to strengthen
the finances of the States keeping in view the need to supplement the resources of their local bodies in the context of the
73rd and 74th amendments of the Constitution.
2.3 What marks a striking departure from the past in the ToR referred to us is the enlargement of the Commission’s
tasks by the insertion of paragraph 4 in the ToR whereby we have been asked to review the state of finances of the Union
and the States and suggest ways and means whereby the governments, collectively and severally, may bring about a
restructuring of the public finances so as to restore budgetary balance and maintain macroeconomic stability. Even
otherwise, in deciding how much of the Centre’s revenues can be devolved to the States, the Finance Commission has to
undertake a review of the current state of finances of the respective governments and the likely scenario for the five years
for which they are required to make the allocations. The mandate to suggest measures for restructuring adds a new
dimension to our tasks, reflecting a two-fold concern viz., the persistence of unsustainably large deficits in the government
budgets at both levels and the deterioration in the composition of government expenditure with a disproportionately large
share of the receipts getting pre-empted by interest payments and unproductive expenditure, leaving too little for the
social sectors and much needed investments. The reference in Para 5 of the ToR setting out the considerations that we
are expected to keep in view, to the need for generating surplus for capital investment and upgradation of standards in
public services in the social and other sectors underscores these concerns. The ToR also wants us to pay attention to the
scope for better fiscal management consistent with efficiency and economy in expenditure.
2.4 The mandate to suggest measures for restructuring having regard to considerations of efficiency, economy and
composition of expenditure implies that revenue sharing between the Centre and the States cannot be decided in isolation
but must be anchored to a macro framework defined by parameters of fiscal adjustment in the desired directions along
with incentives to induce prudent and efficient fiscal management. This involves in the first instance visualising a macro
scenario in terms of key macro-economic variables including budget variables, that is, the level of revenue (tax and non-
tax) and expenditure (revenue and capital) and the permissible size of deficits that would be consistent with the requirement
of growth and stability and also the goals of public policy like provision of basic services to all at a minimum level and
balanced regional development. Restructuring would need disaggregating the budget targets derived for different levels
of government contrasting with those of the base year, and specification of their adjustment path. It also calls for spelling
out the directions of reform over a wide front spanning not only fiscal policy, budgetary practices and design of
intergovernmental transfers but also the monetary, legal and administrative systems within which budgets operate, in
order to facilitate the implementation of the restructuring plan. A supplement to the ToR issued towards the end of our
tenure has called upon us to evolve a monitorable fiscal reform programme to accompany the grants-in-aid that may be
recommended by us. For a Commission with limited time and resources, this poses a formidable agenda. Nevertheless,
it has been our endeavour to address our tasks as best as we can. The details of our proposals for restructuring and
recommendations regarding revenue sharing, grants-in-aid and other matters referred to us are contained in the chapters

6
 7
that follow. In this chapter, we outline the critical issues that in our view arise for consideration in the context of our ToR,
the approach adopted by us in addressing them and their rationale.
State of Government Finances in India: An Overview
Budget Imbalance: The Broad Magnitudes and Recent Trends
2.5 For an idea of the dimensions of the tasks on hand, and as mandated by the ToR, before setting out to formulate
our proposals we undertook a review of the current trends in the finances of the Union and the State governments. As
indicated briefly in the Interim Report, the picture that emerged is a matter of deep concern. The secular decline in the
fiscal balance of the economy that had set in during the eighties, marking the transition of a revenue surplus economy to
one of deficits, to which pointed attention was drawn by the Tenth Finance Commission, has not only persisted but got
accentuated in the closing years of the nineties, with some of the key deficit indicators climbing to unprecedented “highs”.
The economic reform programme launched in the wake of the balance of payments crisis of 1991 with fiscal reform as a
key component, led to a number of corrective initiatives on the fiscal front, producing some promising results in the first
two years. Expenditure growth was reined in and the deficits were down, but only for a while, it would appear. After
remaining subdued at a relatively moderate level, the budget imbalances widened as the decade was coming to a close,
with fiscal stress turning acute in 1998-99. The budget for 1999-00 seemed to hold out some promise of a turnaround.
This, however, does not seem to have been fulfilled, judging by the available revised estimates. The fact of the matter is
that, no sustained improvement can come about unless the root causes of the malaise that afflicts our public finances are
correctly diagnosed and addressed frontally with a carefully designed plan of action.
2.6 Table 2.1 sets out the budgetary outcomes of the Centre and the States, and also their combined picture in terms
of fiscal deficit (FD)1 and revenue deficit (RD) as a proportion of Gross Domestic Product (GDP) over the decade of the
nineties. The table also gives the ratios of primary or non-interest fiscal deficit (PD) to GDP, another key deficit indicator
that reflects the sustainability of current fiscal operations. It will be seen that fiscal deficits of the Centre which were
already large (over 6 per cent of GDP) in the first half of the eighties, widened further in the second half (vide Annexures
II.1 and II.2) reaching almost 9 per cent in 1986-87 and stood at 8.3 per cent in 1990-91. With the States’ FD at 3.3 per
cent, the combined FD of the Centre and the States measured 9.6 per cent of GDP in 1990-91. However, the FD
registered an appreciable decline in the next two years going down to 7.4 per cent in 1992-93. There was a setback in
1993-94 with the combined deficit level moving up to 8.7 per cent of GDP (old series). The subsequent three years saw
a resumption of the correction trail and the combined FD fell below 7 per cent for two consecutive years, 1995-96 and
1996-97, but started creeping up again thereafter, reaching 7.7 per cent in 1997-98. In 1998-99, on a comparable basis
the combined FD stood at 9.5 per cent of GDP, reaching almost the level that prevailed in the crisis year 1990-91.
2.7 The reduction in the combined FD that took place in the first two years of the reforms came about largely through
a contraction in the Centre’s budget, complemented by a downward trend in the deficits of the States as well (taking all
States in a consolidated picture). After suffering a set-back in 1993-94, the Centre’s FD went down further reaching 5.23
per cent in 1996-97. Although the deficits in the Centre’s budget registered a rise subsequently, the accentuation of fiscal
stress in 1998-99, is attributable mainly to the widening of the deficits in the State budgets. Of the combined FD of 9.5 per
cent recorded in 1998-99, 4.47 percentage points emanated from the States. Evidently, fiscal consolidation has not made
much headway in the States.
Table 2.1: Centre and States: Aggregate Budgetary Balance
[% of GDP Old Series]
Year Fiscal deficit Revenue Deficit Primary Deficit
Centre States Combined Centre States Combined Centre States Combined

1990-91 8.33 3.28 9.64 3.47 0.84 4.31 4.32 1.69 5.00
1991-92 5.89 2.93 7.17 2.64 0.81 3.45 1.58 1.19 2.19
1992-93 5.69 2.92 7.38 2.63 0.72 3.36 1.29 1.06 2.23
1993-94 7.43 2.49 8.68 4.04 0.47 4.51 2.90 0.56 3.39
1994-95 5.99 2.86 7.36 3.22 0.73 3.95 1.42 0.84 1.93
1995-96 5.38 2.75 6.81 2.66 0.77 3.43 0.91 0.86 1.61
1996-97 5.23 2.97 6.82 2.56 1.43 3.98 0.57 0.97 1.35
1997-98 6.21 3.10 7.74 3.24 1.29 4.53 1.63 1.00 1.40
1998-99 6.80 4.47 9.50 4.08 2.72 6.80 2.13 2.34 3.23
1999-2000(RE/BE) 5.96 4.98 10.40 4.03 3.13 7.16 0.96 2.55 2.13
1993-94 7.01 2.35 8.19 3.81 0.45 4.25 2.74 0.52 3.20
1994-95 5.71 2.73 7.02 3.07 0.70 3.77 1.35 0.80 1.84
1995-96 5.10 2.60 6.44 2.52 0.73 3.25 0.86 0.81 1.52
1996-97 4.90 2.79 6.40 2.40 1.34 3.73 0.53 0.91 1.26
1997-98 5.87 2.93 7.32 3.06 1.22 4.28 1.54 0.94 1.33
1998-99 6.43 4.23 8.99 3.85 2.57 6.43 2.01 2.22 3.06
1999-2000(RE/BE) 5.64 4.71 9.84 3.81 2.96 6.77 0.90 2.41 2.02
Note: Figures in italics indicate deficits as per cent of GDP (New Series). Old series for 1997-98 to 1999-00 have been derived from the New Series
by using a conversion factor 1.0577. For 1999-00, FD and PD of the Centre exclude the States’ and UTs’ share of small savings.
Source (Basic data): Finance Accounts and Budget Documents.
 8
2.8 A particularly worrisome feature of the fiscal scene as it emerged in the latter half of the nineties is that the fiscal
deficits are being driven more and more by deficits on revenue account of the budget (‘revenue deficit’ as they are called).
There was a time when revenue deficits were a rare phenomenon in India’s public finances, and the revenue budgets
used to turn out some surplus, though not large, yet of the order of 1 to 2 per cent of GDP (vide table at Annexure II.3). A
turning point for the Centre came in 1979-80 and for the States (taken as a whole) in 1986-87, with the revenue budgets
of governments at both levels showing deficits of varying order every year thereafter. Even so, the revenue deficits of the
Centre averaged 1.11 per cent of GDP in the first half of the eighties; in 1998-99, RD of the Centre measured 3.85 per cent
of GDP (new series). In 1990-91, RD formed less than 50 per cent of the Centre’s FD; in 1999-00 the proportion touched,
according to revised estimates, 67.5 per cent. In the States too, RDs now constitute the main propeller of FD. In 1990-91,
RD of the States accounted for no more than 26 per cent of their FD; in 1998-99, the proportion stood at about 61 per cent.
2.9 The deterioration in the fiscal situation of the States in the nineties, especially in the latter half, has, in fact been
more acute than what would appear from the consolidated deficit figures of all States narrated above. The frequency
distribution of the States according to their RD and FD as proportion of respective Gross State Domestic Product (GSDP),
shows that in 1990-91, the majority of the States had RD of less than 1 per cent; and 8 of them (6 belonging to the special
category) had a revenue surplus. In 1998-99, 14 out of the 25 States had RD of over 3 per cent, and in 2 of them RD
exceeded 7 per cent of the GSDP. In 1990-91, for the majority of the States, FD was less than 5 per cent; in 1998-99, as
many as 19 States had FD of more than 5 per cent; and in 8, FD exceeded 7 per cent. Going by 1999-00 budget
estimates, the majority of the States had fiscal deficit of more than 7 per cent (Table 2.2).

Table 2.2: Frequency Distribution of States according to size of

Revenue Surplus/Deficit and Fiscal Deficit [as % of GSDP]

Surplus/ 1990-91 1995-96 1998-99 1999-2000

Deficit (-) BE
(% of GSDP) RS/RD FD RS/RD FD RS/RD FD RS/RD FD
Surplus 8 2 9 0 6 0 4 0
0 to –1 7 0 5 0 1 0 1 1
-1 to –2 4 0 7 3 2 1 7 0
-2 to –3 5 6 2 5 2 0 2 0
-3 to –5 1 5 1 10 9 5 7 8
-5 to –7 0 6 1 3 3 11 2 3
<-7 0 6 0 4 2 8 2 13
Total 25 25 25 25 25 25 25 25

For details, vide Annexure II.4.

2.10 Another manifestation of the deterioration in the imbalances in State budgets is the spurt in post-devolution
deficits in all States in 1997-98 and 1998-99. Although few among the States ever showed a surplus in the budget without
the Central transfers, with tax devolution there were at least some whose revenue budgets yielded a surplus even though
small. In 1998-99, none but one (Karnataka) had a post-devolution non-plan revenue surplus. Even States which earlier
showed handsome post-devolution surplus regularly (Gujarat, Maharashtra, Goa, Kerala and Tamil Nadu), turned in a
revenue deficit even after tax devolution in 1998-99. As plan grants invariably fall short of plan revenue expenditure, plan
revenue accounts of all States are routinely in deficit. With the disappearance of post-devolution surpluses in non-plan
account combined with deficits in plan revenue account 2 , overall revenue deficit went up to levels never witnessed bef ore
(Annexure II.4). Although capital expenditure underwent continuous compression, fiscal deficits – reflecting the State
Governments’ borrowing requirement – also went up to unprecedented levels in 1998-99.
2.11 The only fiscal balance indicator that seems to have registered some improvement following the reforms of the
nineties is the primary (or non-interest) deficit. From 5 per cent of GDP in 1990-91, the combined primary deficit of the
Centre and the States decreased to 2.19 per cent in 1991-92 and remained below 3 per cent in the next six years except
for 1993-94. However, in 1998-99, like in other deficit indicators, there was a surge in primary deficit too with the combined
PD moving up to 3.23 per cent of GDP again originating both from the Centre and the States. In any case, failure to
turnaround primary deficits and generate primary surpluses reveals the structural weakness of the government finances
and raises questions about their viability in the long term.
2.12 With both the Centre and the States resorting to borrowing over the last two decades to finance even a part of
their current expenditure, the level of indebtedness of the government has gone up significantly and stood at a little above
65 per cent of GDP in 1999-00. The growth of domestic debt of the government had slowed down in the nineties following
the fiscal correction in the early years of the reforms with a narrowing of the wide gap between debt growth and the
nominal GDP growth that prevailed in the eighties (19.4 per cent as against 14.9 per cent). Yet, domestic debt growth
continued to outpace growth in GDP in the nineties as well (15.2 per cent as against 12.5 per cent)3 , pointing to the
unsustainability of the fiscal deficits.
 9
2.13 Account should be taken in this context also of the contingent liabilities assumed by the governments (both by the
Centre and the States) over the years. As a proportion of GDP, outstanding government guarantees as at the end of
March 1998 measured 9.4 per cent of GDP. Of this, 4.7 per cent is on account of the guarantees given by the State
governments4 . While this marks a decline from the level that prevailed in 1992, such liabilities also go into the assessment
of the country’s creditworthiness and sustainability of debt. Besides, in several States, there has been a tendency to
resort to borrowing “off-budget”, routing them through State-owned corporations. Though not a part of the States’ debt,
the liabilities of these corporations ultimately fall on the State government. Such practices raise questions about the
transparency of the budgets of the State governments and create doubts about their solvency even if the debt-GDP ratio
shows some stability over a few years.
2.14 Concerns at the persistence of large fiscal deficits arise from several other considerations. Deficits in government
budgets pose problems in macro-economic management, creating pressures on interest rates and prices and tend to
jeopardise external balance. Revenue deficits in particular imply pre-emption of private savings for government consumption
and tend to crowd out private investment without a corresponding increase in the capital spending by the government.
With RDs accounting for an increasingly large part of the FD, it is not surprising that the Central government’s capital
expenditure as a proportion of GDP has declined from over 6 per cent in the eighties to an average of about 4.6 per cent
in the first half of the nineties and 2.6 per cent now as of 1999-00 (Annexure II.1). Continuous accumulation of debt has
entailed growing burden of debt servicing, with interest payments accounting for 52 per cent of the net revenue receipts of
the Centre and 22.7 per cent in the case of general category States in 1998-99 (Annexure II.5). The proportion of
developmental expenditure in the total expenditure of the States has gone down from over 70 per cent in the late eighties
to 60 per cent now (as of 1999-00)5 .
2.15 The year 1999-00 saw some fresh initiatives towards fiscal consolidation on the part of both the Centre and the
States. With a medium term objective of bringing down the Centre’s FD to 2 per cent and eliminating RD altogether, the
Union budget for 1999-00 aimed at an FD of Rs.79,955 crore and RD of Rs.54,147 crore to contain the Centre’s FD at 4
per cent and bring down its RD to 2.7 per cent of GDP. Revised estimates for the year, however, show that the budget has
overshot both these targets with FD at Rs.1,08,898 crore and RD at Rs.73,532 crore measuring 5.64 per cent and 3.81
per cent of GDP (New Series), respectively. That a borrowing programme of this order could be carried through without
any visible impact on prices or on interest rates during the year should not lead to any complacency, since, as observed
by the Governor, Reserve Bank of India (RBI) in his Statement on Monetary and Credit Policy for 2000-01, this was
possible because of the depressed conditions of the economy during the year.
2.16 State budgets for 1999-00 also aimed at restraining the levels of both RD and FD. The revised figures for 1999-
00, however belie the budget projections. According to latest available information, in 1999-00, RD of the States taken
together measured nearly 3 per cent of GDP and FD, 4.71 per cent. Thus the expected deceleration in the growth of
deficits has not come about. On the contrary, combined RD of the Centre and the States soared to an all time high of 6.77
per cent of GDP in 1999-00 constituting over 70 per cent of the aggregate FD which now stands at almost the same level
as at the end of the eighties that presaged the economic crisis of 1991. In some ways, the extent of imbalance is even
more acute than reflected in the deficit ratios because the budgets, particularly of the States do not fully reflect the true
state of affairs as many liabilities go unrecorded in the governments’ accounts, with loans incurred “off budget” through
Special Purpose Vehicles and bonds floated through State corporations.
Underlying causes
2.17 Factors that led to the deterioration of fiscal situation in 1997-98 and their further worsening in 1998-99, are
several. Some were passing or temporary in nature while others were systemic and persistent. Two proximate causes
were: one, the fallout of the revision of the salaries and pensions of government employees in the wake of the Fifth Central
Pay Commission driving up revenue expenditure all round and two, the cyclical recession in economic activity retarding
the growth of tax revenues at both levels of government.
2.18 The immediate impact of the pay and pension revision of employees of Central government ministries and
departments including defence services (excluding Telecom, Post and Railways) was a rise in their salary bill by 33.6 per
cent and pension bill by 35 per cent in 1997-98. Salaries and pensions as a percentage of the revenue receipts of the
Centre in 1998-99 worked out to 20.8 as against 17.4 per cent prior to the revisions 6 . In the case of the States, the impact
has been even more severe, as the revisions were extended not only to employees of the government administration but
also to those of aided institutions and local bodies. This has been further aggravated, as in some States, pay-scales are
higher than the pay-scales of the Central government employees of certain categories. While reliable and comprehensive
figures of payments under the head salaries and pensions for the States are not available, in several States, salary related
expenditure absorb over two-thirds and in some (e.g., Maharashtra), nearly three-fourths, of their revenue receipts. Apart
from aggravating the budget imbalances, the sharp rise in salaries has resulted in inadequate provision for spending on
materials essential for running public services efficiently and maintaining assets in workable conditions. Salary intensity
in social services went up in all States leaving too little for efficient delivery of services in vital areas like healthcare and
education.
2.19 The impact of pay and pension revision on the budget was compounded by the slowdown in the growth of
revenue receipts. In 1997-98 the net revenue receipts of the Centre increased by a mere 6 per cent while revenue
expenditure grew by 13.5 per cent. In 1998-99, the respective growth rates were 11.7 per cent and 20.6 per cent.
 10
Revenue receipts of the States also registered a growth of only 2.8 per cent in 1998-99 while their revenue expenditure
increased by 17 per cent. The budget for 1999-00 anticipated a revenue growth of 21.9 per cent and expenditure increase
of 17.9 per cent but these estimates are unlikely to have materialised.
2.20 The slump in the growth of tax revenue was, in some measure, due to recession in the economy with industrial
production growth decelerating sharply and exports showing a negative growth in 1998-99. Difficulties faced in achieving
the deficit targets projected in the budget in 1999-00 have arisen in the case of the Centre also from unanticipated
occurrences like the Orissa cyclone and requirements of security arising out of the Kargil operations. The Centre’s
problems had their reflection in the State budgets too. The drop in the growth of Central taxes affected the flow of tax
devolution. However, it will not be correct to ascribe the resurgence of deficits in the last three years of the nineties to
cyclical or temporary factors alone.
2.21 According to an analysis carried out in the RBI, factors influencing the budget outcomes in India are mainly
structural, and not cyclical. Structural deficit, defined as a product of “the discretionary policy actions of an expansionary
fiscal stance of the government” measured as a proportion of GDP registered an increase during the 1980s accounting for
more than 100 per cent of the FD of the Centre in the late eighties. Following the reforms initiated in the wake of the
balance of payments crisis of 1991, the structural deficit went down, yet accounted for over 86 per cent of the FD.
Structural factors were found to be dominant in the case of the States also7 .
2.22 Looking at the long-term trend in the Central government finances, the RBI study avers that the structural weakness
of Centre’s finances has its genesis essentially in inadequate revenue growth in the face of rising expenditure. Long run
structural weaknesses of the States are identified as expenditure growth tending to outpace the growth of revenues. The
gap between the two that had surfaced in the eighties widened in the mid-nineties with stagnating revenue growth and fast
expansion of expenditure. It was reduced partly by cutting back on developmental expenditure and investments but met
ultimately through large-scale borrowing, adding to the debt-servicing burden and casting shadows on the budgets of the
future.
2.23 Even allowing for its limitations, the RBI study, by sifting the cyclical from the structural components of the deficits,
provides valuable insight into the character of the imbalance in the public finances in India. It brings out clearly that deficits
in the budgets of government, at both levels are predominantly structural and not just a cyclical phenomenon. In fact, the
causalities run deep into the system. Critical among them are the following:
a. On the revenue side,
i) erosion of the tax-GDP ratio in the 1980s, and more visibly in the 1990s; and
ii) virtual stagnation in the level of non-tax revenues.
b. On the expenditure side,
i) periodic upward revision of the emoluments of government employees without adequate consideration
of the ability of the public sector to bear the burden and the convergence of salary structures of Central
and State governments on the one hand and of local governments, and aided institutions on the other;
ii) upward shift of interest rates on government borrowings resulting from near alignment with the market
and change in the composition of government liabilities with greater reliance on market borrowings;
and
iii) burgeoning subsidies, explicit and implicit.
Unsustainable expenditure growth has been fuelled also by competitive populism of governments resulting in needless
subsidies, and ad hoc announcement of packages by governments to placate particular regions and sections without
commensurate effort to raise the required resources. Other contributory factors have been poor project management,
thin dispersal of available funds over too many programmes and long gestation periods.
2.24 It is relevant to note that revenue growth had decelerated in the nineties even before the onset of the recessionary
phase of the economy. The tax-GDP ratios had slumped even earlier. The buoyancy of tax revenue of both the Centre and
the States which had been declining in the eighties, as compared to the earlier two decades went down further in the
nineties (Vide Table 2.3).
Table 2.3: Tax Buoyancies – of Centre and States
Total Tax Revenue Centre’s Gross Tax States’ Own Tax
(Combined) Revenue Revenue
1950-51 to 1959-60 1.38 1.38 1.39
1960-61 to 1969-70 1.16 1.15 1.17
1970-71 to 1979-80 1.30 1.27 1.35
1980-81 to 1989-90 1.14 1.15 1.12
1990-91 to 1998-99 0.96 0.91 1.04
Note: Relevant t-values indicate that the coefficients are statistically significant in all cases.
Source: (Basic Data), Indian Public Finance Statistics (various issues).
 11
The buoyancy of gross tax revenue of the Centre with respect to GDP works out to 0.91 during the nineties, as compared
to 1.15 in the eighties. In the case of the States, the buoyancy coefficients were 1.04 in the nineties as against 1.12 in the
eighties. The slump in the buoyancy of Central taxes in the nineties occurred despite a smart rise in the growth of revenue
from direct taxes, as the revenue growth from the two major indirect taxes – customs and Union excises – sharply
decelerated. Tax reform, while no doubt helping to introduce some rationality in the tax structure apparently had a dampening
effect on the Centre’s revenue, as the impressive growth of direct taxes could not fully compensate for the drop in customs
and Union excises that took place in the post-reform period. On the States’ side, the dip in tax buoyancy occurred as
revenue from sales tax, the principal component of their own tax sources, showed a declining growth trend owing to tax
competition among the States to attract trade and industry.
2.25 Non-tax revenues of the Centre as a proportion of GDP registered an increase during the nineties, but the
increase has been far from adequate to neutralise the adverse impact of the fall in tax revenue growth. Non-tax revenues
of the States as a proportion of GDP on the other hand registered a decline in the nineties. There was an upward trend for
two years, 1994-95 and 1995-96, but it was short-lived. On the whole, non-tax revenue growth has practically stagnated
at both levels of government during the nineties (Vide Annexures II.1 and II.2).
2.26 Two principal sources of non-tax revenue are (i) return on investments of the government; and (ii) recovery of cost
of public services. Poor financial performance of public sector enterprises has been a most debilitating drag on the public
finances of our country. A large amount of budgetary funds are locked in public sector enterprises in India. Investment in
these enterprises takes the form of equity as well as loans. In Central public sector enterprises (CPSEs), total investment
had exceeded Rs.2,30,000 crore at the end of 1998-99. In the States, nearly Rs.75,000 crore has been invested in
statutory corporations and nearly Rs.42,000 crore has been invested in the government companies. Together, investment
in public enterprises amounts to about Rs.3,50,000 crore. On this investment, the rate of return generated by the State
level public enterprises is nearly zero. It is difficult to obtain a firm figure of the rate of return in the aggregate, because the
State level public enterprises are heavily in arrears in finalising their accounts. Whatever accounts are available show that
the rates of return of most of the PSEs of the States do not cover even a fraction of their cost of funds.
2.27 Data compiled in the Planning Commission show that the average rate of return on capital invested in State
Electricity Boards (SEBs) that account for the bulk of the States’ investments in PSEs has been persistently negative. Far
from yielding the 3 per cent rate of return on their net fixed assets as stipulated in the Electricity (Supply) Act, 1948, the
SEBs registered a negative return of 18.7 per cent on their capital in 1998-99, revealing a steady deterioration over the
nineties. State road transport undertakings (SRTUs), the other major enterprise of the States, also has been a drag on
their budgets. During 1997-98, the losses of all the SRTUs taken together were reported to be Rs.1282 crore, reflecting
organisational inefficiencies on the one hand and the uncompensated burden of social obligations on the other. While
there has been some improvement in their physical performance of late, the loss per bus per day has increased from
Rs.425 in 1997-98 to Rs.565 in 1998-99. In several States the SRTUs are in extremely bad shape, with the bulk of their
fleet of buses off the road and employees going without pay for years.
2.28 As far as the finalisation of accounts is concerned, the CPSEs do better, with their accounts being far more up-to-
date. In 1998-99, only 83 CPSEs declared dividends. One hundred and twenty-seven CPSEs made profits but there were
also 106 loss making CPSEs. By way of dividend and interest, the return on Central government investment amounted to
5.21 per cent in 1998-99. The profit making enterprises are mostly in petroleum, telecommunication and financial sectors.
Overall, the return on investment in CPSEs is below the cost of funds. It is evident that the low returns and draft on
budgetary resources by the PSUs have been one of the structural factors underlying our weak public finances.
2.29 Another basic malaise of our public finances is the poor cost recovery of public services. According to a study
carried out at the National Institute of Public Finance and Policy (NIPFP), for the years 1995-96 and 1996-97, recovery
rates were as low as 8.4 per cent of the costs for social services provided by the Centre and 16.6 per cent for economic
services implying subsidisation varying from 91 to 83 per cent of the costs8 . Nearly 60 per cent of the subsidies were for
services in the non-merit category. The level of cost recovery is still lower in the case of the States. It is 2.15 per cent for
social services and 10.75 per cent for economic services (as of 1994-959 ). This is not surprising as the tuition and other
fees of State-run and State-aided colleges and universities remain unrevised for decades and medical services go practically
free even for those who can pay.
2.30 It may thus be seen that while recession in the economy has been a dampening factor, the sluggishness of
revenue cannot be attributed entirely to cyclical reasons.
2.31 On the expenditure side too, the abnormal growth in revenue expenditure cannot be attributed only to salary and
pension revision, though no doubt that was an immediate cause of the acute fiscal distress felt all round. Revenue
expenditure of the government at both levels are dominated by elements that are inflexible downward. Two leading items
in this category are interest and subsidies and in the case of the Centre also defence.
2.32 Among the various structural factors which accentuated budget imbalances during the 1990s, the two that stand
out in their impact are the rise in the interest rates on borrowings and change in the composition of government debt that
started in the latter half of the 1980s. With the interest rates on government securities getting aligned more and more to
 12
the market, the weighted average interest rates on Central government securities went up from 7.03 per cent in the early
eighties to 11.49 per cent by 1989-90 and further to 11.86 per cent in 1998-99. Interest rates on borrowings of State
governments also rose from 6.75 per cent in the early eighties to 12.35 per cent in 1998-99. Almost concomitantly the
share of market loans in the total outstanding domestic debt of the government increased from 31.0 per cent to 35.4 per
cent by the end of March 1999. The rate of interest on the other major constituent of domestic debt of the government
namely the liabilities on public account (small savings and provident funds) also registered a significant increase and their
share in the government debt went up from 36.9 per cent on the average in the first half of the 1980s to 42.8 per cent in the
latter half, and further to 44.9 per cent during the 1990s. The average implicit interest rates on these liabilities worked out
to 12.15 per cent in 1997-8, as against 7.22 per cent in 1980-1. The debt accumulation process gathered further momentum
as interest rates on market borrowings and other sources tended to converge. As the report of the Reserve Bank of India
on Currency and Finance for 1998-9 puts it: “Thus, the concerns on sustainability of public debt in India essentially arise
from the high stock of domestic debt, its changing composition from low cost to high cost constituents, and interest rates
on such borrowings”10 .
2.33 The other major item of expenditure that had grown steadily in the eighties is “subsidies”. Apart from the subsidies
implicit in under-pricing of public services, government budgets also provide subsidies in explicit form. These formed
1.98 per cent of GDP and 18.6 per cent of the Centre’s net revenue receipts in 1991-92. Although the level of subsidies
has come down to less than 1.5% of GDP at present (1999-00), they still form 14.3 per cent of the Centre’s revenue
receipts. The amount of subsidies provided by the States through their budgets is difficult to make out as they are shown
under several heads but from the scrappy information that is available from various heads, it is evident that the volume of
budgetary subsidies remains large. Valiant efforts to reduce the subsidies notwithstanding, they continue to account for a
sizeable slice of the government receipts. Resistance encountered by the Union government in cutting down the subsidies
in the current year’s budget and the relentless growth of interest and salary related expenditure evidence the intractability
of the problem of budget deficits.
2.34 The item that has registered very rapid growth in the government budgets in the nineties is ‘Pensions’. At the
Centre, pension expenditure grew at a compound rate of over 21 per cent per annum during the period 1990-2001. In the
army, pension expenditure now exceed the pay and allowance of serving officers. Pensions have been the fastest growing
item in the State budgets too, the growth rates recorded were 19.6 per cent in 1990-95 and 26.6 per cent in 1995-99
(Annexure II.6).
2.35 The tendency of public expenditure to multiply in response to the needs and aspirations of the people and for
governments, to resort to borrowing rather than taking hard decisions that can help to augment revenues to match the
growing volume of expenditure is not uncommon in a democratically governed developing country with decision makers
operating within short time horizons. It is commonly thought that much of our budgetary ills are, at bottom, the end
product of actions of governments motivated by short-sighted populism. However, experience shows that political
compulsions of democratically elected governments notwithstanding, it is possible to turn around budget deficits with
appropriate strategies and checks against profligacy, especially institutional reforms to strengthen the revenue base and
install effective incentives to induce fiscal discipline on the part of policy makers.
2.36 There is reason to believe that the structural weaknesses responsible for the imbalances in our public finance
stem to a large extent from the infirmities of the institutional framework that underpins the fiscal system. Institutions that
bear on the public finances include on the one hand the legal and administrative system and the political environment in
which the fiscal systems operate and the structure of inter-governmental relations on the other. Inadequacy of revenue
growth may be due as much to some inherent weaknesses of the legal structure delimiting the ambit of the tax base such
as the exclusion of services from the base of the major indirect taxes, as from discretionary policies of the government
such as providing generous concessions that benefit only some sectors of the economy. Tax enforcement may be
enfeebled not only by the inadequacy of administrative resources but also the shortcomings of the legal system in bringing
tax offenders speedily to book. The inadequacy of autonomy and accountability of management of public enterprises may
be as responsible for the poor return from public investments as pricing policies that affect their financial results. Deficiencies
of the system of budgeting and public expenditure management and absence of a binding budget constraint on governments
also constitute another source of structural weakness of the government finances in the country.
2.37 Among the institutions that play a vital role in the fiscal arena of a federal economy, a critical one is the structure
of federal fiscal relations particularly the system of intergovernmental fiscal transfers. Transfers from national to sub-
national governments are common in all federations because of the often unavoidable asymmetry in the assignment of
powers and functions among governments and uneven economic development of the constituent units causing wide
disparities in their fiscal capacity. However, it is well-recognised that, unless carefully designed, intergovernmental transfers
tend to undermine accountability by de-linking spending and taxing decisions and thereby weaken fiscal discipline and
efficient use of national resources. Limited access to tax sources can also increase the dependence of lower level
governments to those at the higher levels and erode their autonomy.
2.38 The transfer mechanism envisaged by our Constitution makers show ample awareness of the potential pitfalls.
The mandate to entrust the task of mediating the flow of federal revenues to the States to a constitutional body like the
Finance Commission appointed by the President, is a unique feature of India’s fiscal federalism. It is fair to say that the
 13
institution of the Finance Commission has served the country well, testified by the fact that the Finance Commission’s
recommendations relating to fiscal transfers are generally accepted and rarely have been departed from. However,
deficiencies have surfaced in the working of the transfer system in the last fifty years, which, unless properly remedied,
can impede the reforms required to restore budgetary balance on an enduring basis and can even debilitate both the
economy and the polity grievously. The problems with the current system have arisen among other things from:
(i) segmentation of the flow of federal revenue to the States and multiplicity of agencies dispensing Central funds;
(ii) shortcomings in the design of vertical and horizontal sharing of federal revenues; and (iii) inadequacy of institutional
arrangements for intergovernmental consultation and policy co-ordination on an operational footing.
2.39 The most serious flaw in the current system of federal transfers in India is the flow of the Centre’s revenue to the
States in segments, viz., devolution of a fraction of the Centre’s divisible taxes and grants-in-aid of revenue of States in
need of assistance under article 275 of the Constitution through the Finance Commission (FC), transfers through the
Planning Commission (PC) in the form of assistance for State Plans, transfers to implement Centrally Sponsored Schemes
(CSS) under the Central Sector Plan, and other discretionary transfers. The statutory transfers also have several
components, viz., tax devolution, revenue deficit grants, grants for upgradation and special problems and grants meant for
local bodies and calamity relief. The dominance of tax devolution in these transfer weakens the equalising capacity of
Finance Commission transfer, even though successive Finance Commissions have tried to redress the weakness by
introducing progressive elements in the devolution formula. A more complicating factor has been the emergence of plan
grants as a parallel channel of transfer of Central funds dispensed by a different agency, viz., the Planning Commission.
Some revenue transfers take place also in the form of discretionary grants administered by the Ministry of Finance. But
they constitute a small proportion of the total, currently only about 2 per cent. Statutory transfers made up of tax devolution
and grants under article 275 account for the bulk (about 65 to 70 per cent). However, plan grants also form a sizeable
proportion (about 30 to 35 per cent, vide Annexure II.7).
2.40 With the adoption of public sector led planning as the strategy of development and the creation of the Planning
Commission soon after the Constitution came into being, grants for the Plans have come to form a major component of
federal revenue transfers. At first, the plan grants were meant to assist the States in implementing their plan by supplementing
the resources available with them from their own sources and those accruing from the Finance Commission’s
recommendations, that is the statutory transfers. The need for providing a part of plan assistance in the form of grants, in
addition to loans apparently arose from the possibility that the development plans though focussed on investment in the
priority sectors, could also entail some current expenditure over a given plan period to maintain or run the assets created
through the plan and the States might need some support to bear the resulting burden. This was not too problematic from
the angle of budget balancing so long as the revenue requirements of the States were considered by the Finance
Commission, in their totality, that is, including what the execution of the plan might call for. This was the position during the
First and Second Plans as the awards of FCs covering the two Plan periods took into account the requirements for
revenue expenditure on account of the Plans as well. Things changed with the third FC, whose award period coincided
with the Third Five Year Plan. The ToR of subsequent FCs except the Ninth, called upon them to take care of the needs
of the States on the non-plan revenue account only. Grants for meeting plan revenue expenditure were dealt with by the
Planning Commission. Revenue balance could still be ensured so long as reliable estimates were available for the
revenue expenditure component of the contemplated plan and the Planning Commission, while assessing the needs on
account of the plan for purposes of determining the plan grant for a State, took note of the likely overall scenario of its
revenue and expenditure.
2.41 Figuring out the revenue part of the plan was simple when, as was the practice in the beginning, the plan was
approved by the Planning Commission, scheme-wise. Even when the system was changed and approval was given to
the annual plan outlay made up of available balance from current revenues and borrowings from various sources, leaving
plan grants to be guided by a formula - the Gadgil formula – it was possible to see that the revenue expenditure were not
stretched too much and the focus of the plan remained on investment in physical capital creation. With increasing emphasis
on social sectors like health, education and poverty alleviation, borrowing was permitted for financing revenue expenditure
as well. Revenue deficits could still be kept in check if their dimensions were known in advance. Such checks ceased to
apply when approval was accorded to the plan outlay without specification of the revenue part, allowing Plan revenue
expenditure to emerge ex post as and when the plan got implemented.
2.42 On an average, as much as 50 to 60 per cent of the plan expenditure of the States is currently made up of revenue
expenditure (vide Annexure II.8) while available Plan grants meet only a part of it. This is because, under the Gadgil
formula, for States not belonging to the “special category” only 30 per cent of Central assistance for the State Plans is
given as grants and the rest as loan. Central assistance is extended in the form of grant also for the implementation of
certain plan programmes, viz. Centrally Sponsored Schemes and Central plans but in the end all States are left with large
deficits in their plan revenue account. In reality plan grants as a whole do not match plan revenue expenditure in any State
now (other than those in the special category) as may be seen from Annexure II.4 and so a good part of the revenue
expenditure incurred under the plans is met out of borrowing in most States. The debt-servicing burden thrown up in this
process encumbers the non-plan revenue account beyond what it can bear and so borrowing is resorted to for meeting
non-plan revenue deficits as well in many States. Special category States usually have relatively large surplus in their
plan revenue account, the surplus going up in some States to over 10 per cent of the GSDP because, in their case, normal
 14
plan assistance is carved out separately and given mainly (90 per cent) in the form of grant. Nevertheless, their budgets
show fiscal deficits of varying orders while in some States, the deficit went beyond 10 per cent of their GSDP in 1998-99.
Consequently, the debt burden in their case too has grown enormously and tended to wear down the surplus in their
revenue budget.
2.43 The non-plan revenue budget of the States for a plan period has also to bear the burden of running the assets
created during the earlier plans. Routinely the liabilities arising out of this process is presented to successive Finance
Commissions as “committed” expenditure, to be taken into account while assessing the needs of the States. Thus,
contrary to the common belief, the impetus for the growth of non-plan revenue expenditure comes not from the so called
non-developmental expenditure alone but as the aftermath of the plans in which revenue expenditure are met to a large
extent by borrowing, pushing the burden of debt servicing on the non-plan side. With the blurring of the distinction
between revenue and capital in the plan outlay and enlargement of the revenue component in the actual plan expenditure
that cannot be predicted in advance the budget estimates lose credibility and controls over the budget are rendered
difficult. The practice of mingling revenue and capital parts in plan outlay and financing a large part of plan revenue
expenditure by borrowing is now well recognised as a major factor underlying the imbalance in the country’s public
finances. To quote the Tenth Finance Commission:
There is a revenue Plan, which ought to be covered by revenue receipts. The clubbing of the revenue and capital
components in one category termed the Plan outlay has generated a tendency to use borrowings to finance
revenue expenditure. It is imperative to match the revenue resources separately with the revenue component of
the Plan. Failure to appreciate this basic requirement of fiscal discipline is one of the main causes of the endemic
fiscal disequilibrium.
2.44 The disequilibrium gets accentuated as the States try to obtain approval for larger and larger plan outlay from the
PC every year, even while the revenue position happens to be tight, implying ever-increasing reliance on borrowing.
Article 293 of the Constitution provides a mechanism for the Centre to keep a check on borrowing of States already in debt
to the Centre. But the check does not apply to certain borrowing sources viz., the small savings and provident fund of
employees. Then they have access to ways and means advances and facility of overdraft from the RBI, though subject to
certain limits. In breach of article 293 and to circumvent, certain States use PSEs to borrow rather than accessing the
market for loans directly. The tendency on the part of the States to seek approval for large plan outlays is noted in the
Ninth Plan document in the following words:
Many a time, the States show over-optimism regarding raising their own resources with a view of getting a higher
Plan size fixed, as compared to the previous year, even though the achievement in the previous year may be
much less than the originally fixed Plan size.
(Para 6.18, Ninth Five Year Plan, Vol. I)
Some remedial action is also indicated in the plan document. But the outlays approved still far exceed the official level
estimates in many cases while the actual expenditure falls short of the approved plans.
2.45 Another problem with the segmentation of statutory transfers arises from the manner in which the needs of the
States which require grants-in-aid after devolution are assessed. While right from the beginning, every Finance Commission
has tried to apply some objective criteria in assessing the revenue and expenditure of the States over their award period,
these have remained mostly confined to the growth rates relied upon to project the various items in the non-plan revenue
budget. The assessments made by the FCs are rarely adhered to by the States. At the end of each 5-year period
preceding the formation of a new FC, the actuals are presented to form the base for the estimates for the next five years.
In other words, the normative approach which is essential for equity and efficiency, has also not been fully operative.
2.46 Absence of arrangements for regular consultation and policy co-ordination is another shortcoming of the institutions
that underpin our federal financial relations. The Constitution provides for a mechanism for such consultation in the form
of Inter-State Council. In fact, this forum should have been utilised for evolving national consensus on economic and other
matter. But little effective use was made of that forum in the past. There are many issues of common interest and
externalities among the States as between the Centre and the States that can be sorted out only through interaction
among them. The Indian federal system has been gravely deficient in this regard, as a result of which there has been a
runaway increase in government expenditure both at the Centre and in the States. Further, the States have engaged in
tax competition by offering low rates of sales tax and other concessions to attract trade and business. There is also tax
exportation, that is taxation by a State of which the incidence falls on citizens of other States, as for example through tax
on inter-State sales. All these affect the potency of the tax sources of every State, reflecting the institutional weakness of
our federal system.
2.47 The strategy of restructuring of the public finances that we are devising aims at rectifying the deficiencies
enumerated above, addressing in particular the complications created by segmentation of transfer channels, reformulating
the principles governing the transfers and installing potent incentives for fiscal discipline and efficiency, and activating the
institutions of intergovernmental consultation and policy co-ordination. In redesigning the transfer system however, due
regard would need to be paid to equity and autonomy of the States as well. In the context of para 4 of our ToR, considerations
of sustainability also must be kept in view, which implies that the transfers should be consistent with the macro-parameters
indicating the sustainable size of the public sector and the permissible level of deficits in the government budget. These
have been the guiding aims underlying our approach.
 15
Approach to Restructuring: The Broad Thrusts
2.48 Restructuring requires in the first instance defining the goals in terms of budget outcomes and the key budget
variables viz., the level of revenue, expenditure and deficit. The goals need to be set in a macro frame with disaggregation
for the two levels of government under the aggregate budget heads of receipts and expenditure oriented to achieve fiscal
balance and ensure economic stability consistent with growth and equity.
2.49 The scheme we have in view seeks to restore budget balance in the medium terms by reducing the fiscal deficit
substantially and eliminating the revenue deficit at the State level. At the same time, the composition of government
expenditure will undergo a change in favour of the social sector and capital expenditure. The adjustments that would be
needed to reach the contemplated targets are, in our judgement, not too ambitious though it will require earnest effort on
the part of the governments at both levels to raise the revenue-GDP ratio. We believe there is considerable slack in tax and
non-tax revenue realisation and the drop in revenue-GDP ratio that has occurred in the nineties can be made up without
hurting the economy. We have tried to identify some of the principal impediments to improving the revenue productivity of
the tax system and our recommendations contain suggestions for wide ranging reforms including some Constitutional
amendments.
2.50 The package of federal transfers by way of tax devolution and grants recommended by us in this report is predicated
on the expectation that the growth of revenue and expenditure of the government at both levels will occur as contemplated.
Transfers constitute a major item of outgo for the Centre and a vital revenue source for the States, and so have to be so
designed as to underpin the parameters of revenue and expenditure of both levels of government envisaged in the
restructuring plan. This necessitates setting the norms for transfers as a proportion of Central revenues (tax and non-tax
taken together) in the aggregate terms leaving the components to be determined separately but keeping within the overall
ceiling.
2.51 A notable implication of this strategy is that in deciding the level of revenue transfers, all transfers have to be taken
in their totality and their components like tax devolution, grants-in-aid and grants in other forms like Plan grants, should be
decided in the light of the overall ceiling. Accordingly, after working out the likely profile of the revenue and expenditure of
the Centre for the five years 2000-05, we have set a notional limit on the overall revenue transfers, taking into account the
legitimate needs of the Centre to meet its revenue expenditure liabilities. In setting this ceiling, we have taken note of the
level of transfers that have taken place as a proportion of Centre’s revenues in recent years (Annexure II.9) and postulated
a proportion of 37.5 per cent in order that there is no disruption in government finances at the two levels. This will serve
to raise the volume of resource flow to the States over what has been prevailing of late but not beyond what can be
accommodated within the Centre’s resource profile, and the contemplated deficit levels.
2.52 We have proceeded next to determine the share of the Central taxes that may devolve on the States and their
inter se allocation among the States. Here again, while suggesting some change, in the interests of certainty and stability
of the system, we have taken care not to depart too much from the pattern that has evolved in recent years although for
strengthening the equalising effort of the transfers, a reduction of the share of devolution and larger grants-in-aid would
have been preferable. The next step was to figure out the likely non-plan revenue gap of the States based on our
assessment of their revenue and expenditure scenario and the share in Central taxes likely to accrue to each State
through devolution. The grants-in-aid on non-plan revenue account have been designed to see that no State is left with
any deficit after receiving these grants. The balance of the aggregate transfers warranted by the overall notional ceiling
after allowing for tax devolution and grants-in-aid, emerges as potential plan grants. It may be added that in our scheme,
the grants-in-aid include revenue deficit grants on non-plan account and grants meant for local bodies and grants meant
for calamity relief.
2.53 In assessing the revenue gaps of the States, we have tried to follow the normative approach as far as possible.
Although elements of normative approach have been implicit in the assessments made by the FCs in the past, since we
are proposing to use the norms more extensively than before, a brief discussion on its rationale and contents would be in
order.
Strengthening the Normative Approach
2.54 In deciding what would be the appropriate sums to be paid to States as grants-in-aid, the FC assesses the “need”
of each State after taking into account what they can raise on their own by exercising the tax powers available with them,
and the share of Central taxes to devolve to each State as per the formula prescribed by the Commission. The Commission
also takes into account the expenditure likely to be incurred by them over the award period by applying growth rates which
they consider appropriate. But the growth rates are usually applied to the revenue and expenditure of the base year, that
is, the year preceding the first year of the five-yearly award period. Although the growth rates applied to the base year
figures are chosen by the FC which, in their judgement, would be reasonable, the base year figures reflect the result of
the discretionary actions of the States in the matter of revenue raising and expenditure priorities of their own.
2.55 Projections that proceed from the actuals of the base year create a tendency among the States to incur expenditure
in excess of available revenue, and resort to borrowing, in the expectation that the resulting burden of “committed” expenditure
including the debt servicing would go into the FC’s assessment of expenditure liability for working out the likely revenue
gap for the subsequent years. This process puts the States who observe the rules of prudence and show no deficit in their
non-plan revenue account at a disadvantage, in that they do not qualify for any grants-in-aid, while those who produce
 16
unbalanced budgets get away with their profligacy. This practice is both iniquitous and detrimental to efficiency in fiscal
management. For the transfer system to be equitable and conducive to efficiency, the States should not be assessed on
what a State actually practises but on what it should practise, given its resource base and what it can legitimately expect
from the Centre, in other words, on the basis of some objective norms.
2.56 While, conceptually, norms to determine relative taxable capacity can be set up through econometric techniques
such as by using the representative tax system method or the regression approach, application of the normative principle
in practice presents formidable difficulty because of the heterogeneity of the States that affect their tax potential and also
because of paucity of data. However, some approximation is possible. This is what we have tried to do on the revenue
side. Assessment of expenditure requirement on a normative basis is also fraught with difficulties. It is not possible for the
Finance Commission to decide what is the legitimate expenditure of the State objectively. Every State has its own
priorities. Even going by averages also may not be very satisfactory because when all States violate the rules of fiscal
prudence, the average tends to go beyond what can be sustained by transfers from the Centre. But since we are not
starting from a clean slate, there is no alternative but to start from the existing situation. Nevertheless, we have made an
attempt to introduce the normative principle a little more systematically than before, by adjusting the base year figures in
the light of some norms and also estimating the revenues and expenditure for the five year reference period by using
some normative growth rates. This forms the basis of our identification of States in need of assistance and determination
of sums that may be given to them as grants-in-aid.
Incentives for Fiscal Discipline
2.57 In order to strengthen the incentives for fiscal discipline, our scheme of debt relief widens the reward for reducing
the debt ratio. As a way of checking the tendency on the part of the governments to borrow while expanding their
expenditure, several countries have, of late, introduced certain fiscal policy rules through legislation, setting a ceiling for
the debt-GDP ratio. The question of tying a part of fiscal transfers to observance of fiscal policy rules or an agreed fiscal
reform programme will be considered in our report dealing with the added term of reference in para 4 of the ToR. Meanwhile,
the transfer proposed in this report is designed to encourage discipline and facilitate fiscal adjustment by laying down a
ceiling beyond which deficit will not be underwritten by the FC or Central transfers and any State going beyond this limit
would have to find resources on its own. The success of any such scheme depends crucially on strict observance of the
rules of fiscal discipline by both the Centre and the States in letter and spirit.
Federal Transfers: Need for a Holistic Approach
2.58 As already noted, an important implication of our approach is that potential Plan revenue grants emerge as a
residual in the transfer package. Once the ceiling on transfers is laid down and the amounts to flow as tax devolution and
grants-in-aid specified, the balance remaining out of the total overall may flow as plan grant. Consistent with our macro
scenario, these are the amounts which can devolve to the States by way of plan revenue grants.
2.59 Our ToR also require us to take into account the total revenue expenditure of the States on account of both plan
and non-plan. The Ministry of Finance in their memorandum to us also urged that the devolution package should be
based on an integrated view of the transfers so that the impact on the Central budget becomes transparent and amenable
to control. We accept this contention and in order to correct the deficiencies in the transfer scheme arising from the
segmentation of Central revenue transfer into non-plan deficit grants and plan grants have taken a holistic approach to
work out a transfer package consisting of all components of revenue transfer from the Centre to the States. Viewing the
plan and non-plan grants in tandem is, in our view, essential for restructuring of public finances and restoration of budget
balance.
2.60 As argued earlier, if the practice of borrowing to finance revenue expenditure is to be discouraged and public
services provided efficiently the requirements of revenue expenditure have to be assessed in their totality without leaving
the revenue component of the plan to be decided separately. This apparently is the consideration underlying the reference
in our ToR to the need to take into account the requirement of the States for meeting the plan and non-plan revenue
expenditure. Even otherwise, it is not possible to evolve any scheme of restructuring without looking at the revenue
expenditure in their totality.
2.61 There are, however, practical difficulties for the Finance Commission in assessing the requirements of revenue
expenditure under the plans. The Finance Commission, having been a fixed-term body appointed periodically cannot be
in a position to determine the developmental requirements of each State individually. The practice of excluding Plan
revenue expenditure from the purview of the Finance Commission has come to be followed since the Third Plan was thus
not without some merit. Moreover, in order that the macro-picture is not lost sight of and the States do not overestimate
their resources while asking for a larger Plan, incompatible with the revenue scenario, they present before the Finance
Commissions, a link between the Planning Commission and the Finance Commission was established through a common
Member. That practice ended with the Tenth Finance Commission, thereby closing the avenue of effective co-ordination
between Planning Commission and the Finance Commission.
2.62 Another difficulty in integrating plan and non-plan components in the revenue expenditure has arisen from the
desynchronisation of the reference periods of the Finance Commission with the Five Year Plan periods. For the first six
Finance Commissions, the two periods were co-terminus. The break that occurred with the Eighth Commission was
restored with the Ninth Finance Commission being asked to report for two periods, one for a single year and the other for
 17
the next five years coinciding with the Seventh Plan. The delay in the commencement of the Ninth Plan again broke the
link. The desynchronisation continues.
2.63 The point that bears reiteration is that restructuring towards fiscal balance is not possible unless the expenditure
needs of the Centre and the States are looked at in their totality and not segregated into compartments like plan and non-
plan. Even if the distinction is maintained, budgeting for expenditure should keep in view the macro-parameters while
fixing the size of the plan. Looking at the present system, one cannot help feeling that the size of the plan revenue budget
of the States remains indeterminate at the planning stage and is financed to a larger extent by borrowing than is sustainable.
Even if a part of the plan revenue expenditure is to be financed by borrowing, at least at the State level, there should be no
revenue deficit. The Centre’s grants should be tailored accordingly. The revenue transfer scheme designed by us is
guided essentially by these considerations.
2.64 In deference to the requirement enjoined under para 6 of the ToR, we have tried to formulate measures for the
augmentation of the Consolidated Fund of the States to supplement the resources of the Panchayats and Municipalities
on the basis of the reports of the State Finance Commissions (SFC). Our aim in this endeavour has been two-fold:
i) to help achieve the objective underlying the 73rd and 74th amendments of the Constitution by enabling the
local bodies to function truly as institutions of self-government; and
ii) to ease the burden that the State exchequers may face in nurturing the local bodies to help them attain their
potential and discharge their appointed functions.
2.65 For an enduring solution to the problem of budget deficits, attention needs to be paid to the system of budgeting
and budgetary control. The newly constituted Expenditure Reforms Commission will, no doubt, go into the system of
budgetary practices and control and make recommendations for reforms that may be needed for improvement of the
system. However, we too have made some suggestions in this regard.
2.66 Lastly, while it might be expected that the fiscal stress may ease in the coming years, with the economy picking up
and interest rates softening, for budget balance to be restored on a sustainable basis, some of the basic structural
weaknesses of the fiscal system would need mending. Among them is the dysfunctional assignment of tax powers
between the Centre and the States and the fragmentation of the base of income tax and excise duties. Another is the
ballooning of pension liabilities of the public sector, a “ticking time bomb”, as some would say. The former may need a
change in the Seventh Schedule to the Constitution and the latter, some viable scheme of pension funding.
2.67 In conclusion, we would like to stress that public finances are a mirror of the collective choice of the people in
regard to the size of the public sector and its contents, and the manner of its financing. However, viability of public
finances depends crucially on the awareness on the part of the people themselves regarding the options and trade-offs
involved. In a federal economy, intergovernmental transfers play a critical role in holding a balance between revenues and
expenditure at different levels of government. The balancing cannot be achieved without the collective will of the people.
We would feel rewarded if our scheme helps to generate greater awareness among the people and the policy-makers of
the need for bringing the public finances into balance on a sustainable basis.

Endnotes
1
Unless otherwise specified, fiscal deficit denotes gross fiscal deficit measured as the difference between
aggregate disbursements (including loans net of recovery) and revenue receipts and non-debt capital receipts.
2
Defined as plan grants minus plan revenue expenditure.
3
Report on Currency and Finance, Reserve Bank of India, 1998-99 (Chapter V).
4
State Finances, A study of Budgets of 1999-00, Reserve Bank of India, January 2000.
5
Ibid.
6
Economic Survey 1998-99, p. 23.
7
Report on Currency and Finance, 1998-99, Reserve Bank of India, Chapter V.
8
Central Budgetary Subsidies in India by Dr. D.K. Srivastava and H.K. Amarnath (National Institute of Public
Finance and Policy, 1999).
9
Discussion Paper on Government Subsidies, Govt. of India, 1997.
10
Report on Currency and Finance, 1998-99, Reserve Bank of India, Chapter V.
 18

Chapter III
Restructuring Public Finances

3.1 Large fiscal deficits fuelled increasingly by deficits in the revenue budgets have been the bane of government
finances in India for nearly two decades now. While a part of the capital expenditure has always been financed out of
borrowing, revenue deficits signifying financing of current expenditure also by borrowing have become malefic fixtures in
the Central budgets since 1979-80, and in the all-States profile, since 1987-88. Virtually all States, first the fiscally weaker
ones and then even the better off among them, have slipped into revenue deficit. Embedded as they are in fiscal deficits
that are universally acknowledged as unsustainable, revenue deficits are only visible manifestations of multiple and deep-
seated imbalances in government finances calling for basic restructuring.
3.2 Clause 4 of our Terms of Reference (ToR), the first of its kind for a Finance Commission, brings this issue to the
fore. It requires us to review the state of finances of the Union and the States and suggest ways and means by which the
governments, collectively and severally, may bring about a restructuring of the public finances so as to restore budgetary
balance and maintain macroeconomic stability. In addressing this task, we feel it necessary to (i) consider the relevant
parameters of macroeconomic stability; (ii) based on the parameters chosen, outline the contours of the restructured
public finances of the country with suitable disaggregation between the Centre and the States needed to underpin macro-
stability; (iii) specify the contents of restructuring; and (iv) spell out the ways and means by which such restructuring can
be brought about by the Central and State governments, collectively and severally.
3.3 In the context of the task of formulating the ways and means for achieving budgetary balance, an additional term
was subsequently referred to the Commission requiring us to draw a monitorable fiscal reforms programme aimed at
reduction of revenue deficit of the States and recommend the manner in which the grants to States to cover the assessed
deficit in their non-Plan revenue account may be linked to progress in implementing the programme. We shall address this
additional term in a subsequent report.
3.4 The structure of public finances in an economy is defined by the level and composition of expenditure of the
government (current and capital) and the instruments relied upon to finance them, viz., the tax and the non-tax revenue
sources and borrowings. The excess of government expenditure over current revenues and other non-debt receipts gets
reflected in fiscal deficits financed either by way of borrowings from internal and external sources or through seignorage,
that is money printing. If expenditure persistently exceeds revenues, fiscal deficit, to the extent it is not covered by
seignorage, steadily adds to outstanding debt, resulting in increasing interest payments1. Unless met with larger revenue
receipts, this gives rise to a self-perpetuating spiral of debt and deficit. In the absence of commensurate increase in
domestic savings, deficits in government budgets tend to spill over to the external sector in the form of current account
deficit leading eventually to adverse balance of payments. This, in turn, jeopardises the macro-stability, judged by stability
of prices consistent with growth at attainable full employment levels. The solvency of the economy also comes under
doubt. A restructuring programme is called for to steer public finances away from such a spiral towards sustainable levels
of debt and deficit.
3.5 It should be noted that not all changes in a fiscal system can be regarded as structural in character. We need to
distinguish between changes that affect the very basis of inter-relations among fiscal variables and among fiscal and
other variables from those that reside at the surface, and changes that are enduring from those that are transitory.
Changes in tax rates aimed at raising the level of tax revenue, for instance, do not constitute structural change. On the
other hand, shifts in the composition of taxes seeking, say, to reduce the government’s reliance on foreign trade taxes or
move towards a non-distortionary tax regime by replacing turnover type sales tax with value added tax, is structural.
Similarly, compositional changes in government expenditure, signifying disengagement of the public sector from direct
participation in the productive activities in the economy, are structural. Also, changes in the tax base brought about by
fiscal and non-fiscal causes would qualify as structural. In a federal economy, changes in intergovernmental financial
relations comprising assignment of powers and functions among different levels of government and the system of fiscal
transfers belong to the structural category. Again, certain changes in the public finances might be called for to meet short-
term exigencies while some others might be needed from a long-term perspective. In formulating a scheme of restructuring
it has been our endeavour to identify the content of restructuring and formulate measures to achieve them keeping these
distinctions in view.
3.6 As required by our ToR, we have, in Chapter II, reviewed the state of finances of the Union and the States, and
analysed the causes of the deterioration in the public finances of the Union and State governments, both proximate and
basic. In this Chapter, we consider issues of macroeconomic stability focussing on the implications for intergovernmental
fiscal transfers. We have outlined an adjustment path for fiscal restructuring and worked out a package of ways and
means for its implementation, keeping in view a medium term goal of fiscal consolidation in the Centre as well as in the
States.

18
 19
Public Finance and Macro-economic Stability: The Interface
3.7 Public finances impact the economy in many ways, directly and indirectly, in the long as well as the short run.
Spending by government represents a draft on the national resources for public use. The size of the draft that the public,
i.e., the government sector makes to carry out its expenditure programmes, as also the instruments used for securing
them, influence the macro-economy in fundamental ways. The public sector provides services which are not catered to by
the markets such as defence, justice, public administration and needs of the social sector like primary education and
healthcare. Public sector also promotes growth by helping build basic infrastructure and creating an environment conducive
to the development and growth of the economy to its full potential. But, unless employed efficiently, the use of resources
by the public sector can retard growth in the long run. Being a component of the aggregate demand, government expenditure
constitute the major determinant of the macro-economic outcome in the short run. The manner of financing the government
expenditure also impacts the macro-economy, depending on the extent to which such expenditure are financed out of
taxation and borrowing or seignorage and the instruments used. An ill-designed tax structure can cause distortions and
inefficiencies while reliance on either borrowing or seignorage beyond a point creates problems in the form of explosive
accumulation of debt and inflation. Borrowing has its ramifications in terms of inter-generational burden of debt, pressure
on interest rates and crowding out of private investment. It also has implications for the external sector balance as deficits
in government budgets in excess of what can be met out of domestic savings entail drafts on foreign savings through
current account deficits.
3.8 It may be useful at this point to look at the conditions of macro-stability that are of general application. Commonly,
macroeconomic stability is associated with stability in prices, allowing for a moderate rate of inflation. However, price
stability can coexist with unemployed resources in the economy. Hence, for all practical purposes, macroeconomic
stability is viewed as stability of prices at full employment of available resources 2. In an open market economy, macro-
stability is attained and preserved through the behaviour and interaction of the various markets. Depending on the state of
the economy, macroeconomic instability can originate from imbalance in any one or more of the principal markets, viz.:
i) excess of aggregate demand over aggregate supply in the commodity market;
ii) excess of demand over supply in the financial markets including the market for money and foreign exchange;
iii) excess of supply over demand in the labour market; and
iv) imbalances in the market for non-financial assets.
The markets are interdependent and imbalance in one spills over into another. Fiscal stance of the government plays a
key role in maintaining or disrupting macroeconomic stability via its impact on the various markets, although policies in
other fields also influence the outcomes. For instance, physical controls over investment and production, and wage policy
can distort the incentives and retard economic growth resulting in shortages and incipient inflation. When prices are
controlled, instability may not be apparent even though supply demand imbalances persist. While public finances alone
cannot counteract imbalances in all markets, inappropriate policies in the fiscal arena can act as a source of instability.
3.9 For operational purposes, it is useful to look at macro stabilisation issues in terms of internal and external balance.
For internal balance, we require a growth trajectory whereby resources are fully employed and inflation is at a low level.
For external balance, we need to keep the current account deficit within a reasonable limit that is what can be serviced in
the long run out of export earnings and factor incomes abroad. Macro stability also depends critically on the handling of
monetary policy and the exchange rate.
3.10 A distinction needs to be made also between stabilisation in the short run and in the long run. The emphasis in the
short run has to be on counter-cyclical measures. Thus, in a period of recession, the government has to embark on an
expansionary fiscal policy even if this raises the level of fiscal deficit as a proportion of Gross Domestic Product (GDP).
Counter-cyclical stabilisation may also be helped by reduction in tax rates to stimulate private spending. On the other
hand, when the inflation rate is on the rise, fiscal stance has to be contractionary and fiscal deficit, relative to GDP, may
have to be reduced.
3.11 The long run stabilisation objectives are different and more structural in character. From a long-term perspective,
one needs to determine the right size of the government, the composition of government expenditure and the size of debt
and fiscal deficit, all in relation to attainable or potential full employment output. It would also require a tax structure
conducive to savings, investments, risk taking and work efforts. The long run stabilisation provides the necessary time
frame for all adjustments to be completed, while ensuring that the economy is on a growth path whereby the available
resources, physical and human, get fully employed. The relevant objective then is to select the size and composition of
government expenditure and the right mix of financing instruments that maximise growth and welfare, with stability. The
focus of fiscal restructuring to ensure macroeconomic stability has to be on this objective. What should be the size and
shape of the public sector in a country is ultimately a matter of public choice and, in a way, the level of public expenditure
reflects the demand of the people for public services. However, given the concerns about the sustainability of the public
sector in India in its present size and form, propped increasingly by borrowing, in addressing the task of restructuring, we
first consider the limits to which government expenditure can be financed through debt and deficit and then explore the
lines on which the public finances can be reshaped to subserve the objectives of growth with stability.
 20
Sustainable Debt and Fiscal Deficits
3.12 Government’s fiscal stance as reflected in the size of the fiscal deficit and the manner of financing it plays a critical
role in macro-stabilisation. The apparently cheapest source of finance for governments is seignorage, which adds to base
money or high powered money. As the economy grows, the demand for money also grows, and depending on the
elasticity of demand for money, some increase in money supply can be absorbed without inflation. But beyond a limit,
increases in base money can result in unacceptably high rates of inflation. It has been suggested that in developing
economies the “ratio of seignorage of much more than 2.5 per cent of GNP would not be sustainable and that even that
rate would only be possible in a rapidly growing economy”3. In India, in recent years, borrowing from Reserve Bank of
India (RBI) has been subjected to strict limits through a memorandum of understanding between the Government of India
and the RBI. Ideally, the extent of monetised deficit should be subjected to a limit linked to GDP.
3.13 Borrowing from foreign sources, the other alternative for financing deficits, tends to appreciate the exchange rate.
However, by its very nature the flow of foreign funds depends on many factors, not all economic. The economy’s aggregate
external borrowings (public and private) have to be managed by the central bank taking into account the safe limit to the
current account deficit, the structure of existing external debt and their time profile. The government’s external borrowings
should be limited considering that its vulnerability to external shocks increases if external debt servicing requirements are
too large.
3.14 Domestic borrowings are the other main source for financing deficits in government budgets. However, it has
implications for the rate of interest and the availability of savings for the private sector. A critical issue that we need to
consider is whether government borrowing and debt are sustainable at the present level. For their sustainability over a
period of time, an essential condition is that the ratio of debt to GDP does not grow beyond a point. The debt ratio may,
however, remain stable even while there is a primary deficit (i.e., the excess of expenditure excluding interest payments
over receipts), as long as the rate of interest does not exceed the rate of GDP growth. This is known as the budget
constraint rule. However, the level of primary deficit relative to GDP should not exceed the threshold derived from the
difference between growth rate and the effective interest rates on government borrowing4. It can be seen that currently the
sustainability condition is violated in the budgets of the Centre, in the combined accounts of the Centre and States, and
individually in many States (Appendix III.1, Tables A III.1-5). Unless the present trends are reversed and the deficits are
brought down, the debt-GDP ratio will keep growing undermining the solvency of the public sector. From the angle of
sustainability, it is necessary not only to contain the deficits to levels permissible under the budget constraint rule but also
to bring down the debt ratio from its present level which is rather high. The need to reduce the debt level also arises from
difficulties in debt servicing associated with high levels of indebtedness. When debt-servicing liability is large – as it
happens when the level of debt is high and a large chunk of the revenue receipts is used up in servicing the debt – the
budgets should either cut down non-interest expenditure to the barest minimum or generate adequate revenue to finance
the essential expenditure of the government after meeting the interest liabilities or do both.
3.15 Ultimately the right size of fiscal deficit relative to (full employment) GDP depends on how the borrowed resources
are used. If borrowing is for consumption or current expenditure, borrowed resources will not create any assets that can
yield a return to service the additional liability in the future. Hence, the dictum that there should be no deficit on the
revenue account; rather the revenue budget should generate surpluses for government investment. An exception can be
considered for revenue expenditure that fosters human capital formation. The sustainability of fiscal deficit would depend
on the expected rate of return on government investment, including expenditure on human capital, and the efficacy of the
revenue system to finance the resulting debt servicing needs. Other things remaining the same, if the rate of return on
government investment financed by deficit is lower than the interest rate at which the incremental debt to finance the
deficit is incurred, then debt and fiscal deficit will tend to spiral. In comparing the rate of return on government investments
against the interest rates, it is necessary to look at not only the financial returns on government capital but the social
returns as well. Fiscal deficit may be sustainable to the extent it helps to support government expenditure so that GDP
growth warranted by full employment of available resources becomes possible, provided the revenue sources are also
buoyant enough to take care of the requirements of debt servicing. However, there are clear limits to increasing full
employment output growth rate by continuously running a high fiscal deficit because of the solvency question. Further, if
the debt level is high, interest payments will pre-empt an unduly large share of current receipts leaving too little for
expenditure on other essential heads of the budget. There are also limits to the extent to which the rise in the tax level that
may be required to meet mounting expenditure commitments, would be acceptable to the community.
3.16 The immediate issue for us is (i) whether at the present juncture the fiscal deficits of governments at the Centre
and in the States should increase or decrease and (ii) at what level relative to GDP should they settle down or stabilise.
The answer to these questions cannot but be different for the Central and the State governments taken severally. Considering
the State governments first, answers will be different for different States, depending on their existing debt to GSDP ratios,
their growth rates, and the return on government capital that they may obtain, as also the rate of interest at which they can
borrow. The constraints for the Centre are not the same as for the States. One important reason is that the rate of interest
is more endogenous to the Central government because of its ability to influence the growth of money supply via the share
of monetised deficit in total fiscal deficit, its capacity to administer the interest rates (despite deregulation of the financial
market) and the lower risk premium on its borrowing. These need to be borne in mind while considering appropriate rules
to set limits for borrowing and debt of the governments at the two levels.
 21
Fiscal Rules for Maintaining Macroeconomic Stability
3.17 The formulation of fiscal rules in the context of macroeconomic stability involves, basically, setting a rule regarding
the size of the deficits that the government can incur in financing its expenditure. In setting this rule, account should also
be taken of the existing level of the debt. According to available information, the ratio of government debt (including
external debt) to GDP is currently about 65 per cent. This does not take into account the debt of the public sector as a
whole inasmuch as the borrowings of public sector enterprises are not included in this computation5. At the current level
of indebtedness, over 40 per cent of the gross revenues of the Centre goes into interest payments alone. In the case of
the States, interest payments constitute on an average about 22 per cent of their revenue receipts (for some States, over
30 per cent). Growth of interest liabilities has been a major factor in driving up revenue deficits of both Centre and the
States in the nineties. If the public finances are to be restructured, the level of government debt should be brought down
to a level that would help to contain interest payments to a reasonable proportion of revenue receipts so that adequate
revenues are available with the governments for providing essential public services. Simultaneously there should be a
limit on the fiscal deficit in order that the debt-GDP ratio does not grow to undesirably high levels.
3.18 While benchmarks for sustainable debt and deficit would differ depending on the extant situation of a country, in
the context of the European Monetary Union, the Maastricht Treaty has laid down certain norms for the member countries
to follow. The rule regarding deficits is that the fiscal deficit should not be more than 3 per cent of the GDP and the debt-
GDP ratio should not be more than 60 per cent. These levels of deficit and debt, however, have to be seen in the context
of the rate of GDP growth in the countries of Europe averaging around 3 per cent per annum. For a developing country like
ours, aiming at a higher growth rate (such as 7 to 8 per cent) for eradicating poverty and realising the full growth potential,
a higher level of deficit may be permissible. However, from the angles of solvency and the likely impact of a high debt-GDP
ratio on the economy, and the government budgets via interest burden, it is desirable to bring down the level of debt-GDP
ratio and stabilise it at a level of no more than 55 per cent. A reduction in debt-GDP ratio is required particularly in view of
the fact that our interest rates are much higher than in advanced countries. By this rule, if the economy grows at a nominal
rate of 13 per cent, a fiscal deficit of 6.5 per cent may be sustainable. 6 This is the level which we have put forward as target
for the combined fiscal deficits of the Centre and the States by the year 2004-05, given the relativities between interest
rate and the GDP growth rates.
3.19 Another rule to guide the fiscal behaviour can be derived by relating interest liabilities to revenue receipts. As
emphasised earlier, a major problem with large deficits and consequent growth of debt is the growth of interest liabilities.
Unabated growth of deficits leading to continuous growth of interest payments pre-empts a large chunk of government
receipts and the balance left may be inadequate for meeting the required expenditure liabilities of the government,
necessitating borrowing and thus creating a vicious circle. To break this circle, a rule may be laid down whereby the
interest payments as a proportion of revenue receipts is confined to a level which permits the available receipts to meet
the requirements of expenditure7. This rule is particularly relevant for the States, as in their case, access to instruments
that influence the interest rate is limited. In other words, a composite rule laying down the limit of the fiscal deficit for the
economy as a whole and an operative rule restraining the growth of interest payments as a proportion of revenue receipts
appears to us to be necessary to ensure that long run macro economic stability is not jeopardised by imbalances on the
fiscal side.
3.20 For deriving the ratio of interest to revenue receipts at the optimal level consistent with the objective of maximising
growth at full employment while maintaining macroeconomic stability, it is necessary to take account of the elasticity of
government revenues and expenditure to GDP growth and of the interest rates to deficit, in a macro-model incorporating
the relevant structural relations. Given our limitations of data and time, it was not be possible for us to set up such a model.
However, a study commissioned by us at the Institute of Economic Growth, New Delhi, shows that the interest rate does
bear a significant and positive relationship with fiscal deficits. Keeping in view this situation and the past behaviour of the
tax revenues, expenditure and interest rates, we feel that the following norms of debt and proportion of interest rates to
revenue receipts may be followed to underpin the restructuring plan:
i) For the system as a whole, i.e., the Centre and the States combined, the debt-GDP ratio currently stands at
above 65 per cent (Annexure III.1). For reasons mentioned earlier, we feel that this needs to be brought down
to around 55 per cent. For this level to be attained and sustained, the proportion of interest payment to
revenue receipts should not go beyond 25 per cent as against the current level of about 35 per cent. This will
further require raising the level of revenue receipts (tax and non-tax taken together) as a proportion of GDP
to 20 per cent.
ii) For the Centre, we propose to set a norm of 35 per cent as the desirable proportion of interest payments to
revenue receipts (net to Centre) as against the existing proportion of 51 per cent. Given the target of 10.28
per cent as the ratio of Centre’s net revenue receipt to GDP in the terminal year, it may not be possible to bring
down the interest to revenue receipt ratio to 35 per cent in five years. However, this should serve to bring
down the Centre’s debt-GDP ratio from the present level of 53 per cent to 48 per cent within a five-year span.
iii) For the States, the proportion of interest payments to revenue receipts including devolution and grants should
be about 18 per cent as against the present average proportion of 22 per cent. However, some inter-State-
variations may have to be allowed so as to avoid causing shocks. We strongly commend that the States
endeavour to move towards this ratio keeping it as their medium term objective.
 22
The Macro Scenario and Restructuring Targets
3.21 The desirable levels of government debt and fiscal deficit and the associated fiscal restructuring would need to be
anchored in a macroeconomic scenario of growth of output and prices over the period 2000-01 to 2004-05. Some of the
key macro indicators that define the perspective for restructuring programme prepared by us are set out in Table 3.1. The
growth rate of GDP during the mid-nineties (1994-95 to 1996-97) was in the range of 7.0 - 7.5 per cent, but declined
towards the close of the nineties largely due to recession. In the mid-nineties, industrial growth rate had touched a peak
of 12.8 per cent. It fell in 1998-99 to 3.7 per cent. Alongside there was a price stability not seen before. But the fiscal side
already contained seeds of instability. The overall scenario (Annexure III.2) may be summarised as follows:
(i) Growth rate of the economy had declined from a peak of 7.5 per cent in 1996-97 to 5.9 per cent in 1999-
2000.
(ii) The economy was in the grip of a recession during the last 3 years;
(iii) Inflation rate was down to about 3.5 per cent in 1999-2000;
(iv) Interest rates also came down by a margin ranging from 50 to 100 basis points since January 1, 1999.
(v) The current account deficit was about 1.5 per cent of GDP;
(vi) Revenue and fiscal deficits on the combined account are estimated to be 6.76 and 9.83 per cent of GDP in
1999-2000, respectively.
3.22 The underlying growth and inflation scenario that we have in mind for 2000-01 to 2004-05 is growth in the range
of 7.0 to 7.5 per cent and inflation in the range of 5.5 to 5.0 per cent. A growth of 7 per cent or above was achieved for 3
years in the mid-nineties, but more recently we slipped from this trajectory in the wake of recession. Now that the
recession is easing, we expect that a growth of 7 per cent plus can again be attained. With a noticeable decline in the rate
of growth of money, (Annexure III.2) we have assumed an underlying rate of inflation in the range of 5.5 to 5 per cent per
annum.
3.23 In order to sustain output growth at the targeted level, there has to be stability in the macro-economy and that
calls for several supportive actions in the fiscal sector. In particular, tax and expenditure reforms need to be carried
forward. Subsidy reforms must be completed so that prices of key inputs like those of power, irrigation, water and
petroleum reflect their true opportunity costs. In any case, all subsidies should be explicit so that their justification, or
otherwise, can be debated in the legislature. Further, government capital expenditure must increase to sustain the targeted
growth rate by providing the necessary infrastructure.
3.24 When the structural reforms and other changes which we recommend are put into practice, the macroeconomic
scenario in 2004-05 as compared to 1999-2000 would appear to be as in Table 3.1.
Table 3.1: Macro Scenario Before and After Restructuring Over the period 2000-05
1999-2000 2004-05
5.9 Growth Rate (% per annum) 7.0 – 7.5
3.5 Inflation Rate (% per annum) 5.5 – 5.0
-1.5 Current Account Balance (% of GDP) -1.5
6.76 Revenue Deficit (% of GDP) 1.0
9.83 Fiscal deficit (% of GDP) 6.5
14.0 Tax Revenue (% of GDP) 16.7
2.48 Non-Tax Revenue(% of GDP)* 3.2
4.17 Capital Expenditure(% of GDP) 6.6
* excludes interest payment from States to Centre.
Source (Basic Data): As in Annexure III.2.

Contours of Fiscal Adjustment

3.25 Having considered the underlying macroeconomic scenario, we now proceed to spell out the broad contours of
fiscal adjustment that we consider necessary and feasible. It is evident that revenue balance can be restored only if
revenue receipts grow faster than revenue expenditure.
3.26 On the expenditure side, interest, pensions and salaries provide only limited scope for reduction in the short run.
Some expenditure - like those on education, health and infrastructure need to be increased if growth in the economy is to
be sustained at the desired level. The revenue side is also marked by rigidities. Non-tax revenues, for example, have
stagnated at around 3.5 per cent of GDP for many years. Fiscal restructuring has to be undertaken to overcome these
constraints and the cost of adjustment has to be borne by the Centre and the States in their respective fiscal domains.
However, the consequences of what would happen if nothing was done and various components of revenues and expenditure
were allowed to grow according to their historical drives, as per the estimated trend growth rates may be highlighted.
3.27 The fiscal scenarios that would emerge for the Centre and the States – if the current trends prevailed – called the
‘base scenarios,’ are depicted in Appendix III.1 (Tables AIII.1 and AIII.3). For the Centre, fiscal deficit rises from 5.64 per
cent of GDP in 1999-2000 to above 6 per cent by 2004-05. Revenue deficit touches the level of 4.57 per cent of GDP and
 23
capital expenditure to GDP ratio falls to 2.11 per cent. On the States’ side also capital expenditure falls, and revenue and
fiscal deficits increase as a proportion of GDP. These trends must be arrested. We need to look for a feasible adjustment
path to bring about the required restructuring.
3.28 It hardly needs pointing out that if we set our sights too low, going in for soft options, it will take a longer time before
revenue balance is restored, and fiscal deficit reined in. On the other hand, if we adopt a programme that is too ambitious,
revenue balance may be achieved in shorter time but the cost of adjustment as well as chances of slippage will be high.
3.29 Given the constraints and compulsions, what is required is to select a path that strikes the right balance between
desirability and practicability. For indicating the period that would be required under alternative options to achieve revenue
balance, we have identified a feasible path and compared it with the consequences of the base scenario and the soft
option. In the soft option, the tax-GDP ratio increases only by one percentage point in the five years up to 2004-05, the
non-tax revenues continue to stagnate and only a mild expenditure compression takes place. As a result, a revenue
budget balance appears in the distant future, almost beyond the foreseeable time horizon.
3.30 Dissatisfied with the results, sights are lifted and efforts are redoubled. A tougher degree of restructuring is
attempted. Bolder expenditure controls, aggressive downsizing and further revenue enhancing measures are planned
and imposed. Incentive systems are worked out. In consequence, it appears that a revenue budget balance would be well
within sight and the economy is left only with a small and manageable revenue deficit in 2004-05. In the feasible option, we
have proposed an increase of about 2.6 percentage points in the tax-GDP ratio, and compression of a little less than one
percentage point in revenue expenditure. We have targeted a growth in capital expenditure to GDP ratio such that it comes
to about 6.6 per cent of GDP by 2004-05. Unless this is done, the economy will continue to be lacking in the necessary
infrastructure and a growth rate of 7.5 per cent may not be sustainable.
3.31 A more aggressive restructuring would call for an increase of 4 percentage points in the tax-GDP ratio within five
years. It would require other more vehement fiscal and non-fiscal changes which will neither be economically nor politically
acceptable under democratic system.
3.32. Chart 3.1 traces the path of revenue expenditure and revenue receipts with reference to the combined accounts
of the Central and State governments. Charts 3.2 and 3.3 depict the corresponding paths of revenue and fiscal deficits,
respectively, for the base scenario and the restructured scenario under the feasible and the soft options.
 28.00
Chart 3.1: Achieving Revenue Balance: Selecting a Feasible Path
D1
26.00

D0
24.00

22.00

% to GDP
D2
D*
20.00

D'2
18.00

D'1
16.00 D'0

0
14.00
1994-95 1995-96 1996-97 1997-98 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08

Rev. Rec.(feasible) Rev. Exp.(feasible) Rev. Rec.(mild)

Rev. Exp.(mild) Rev. Rec.(base) Rev. Exp.(base)

9.00 Chart 3.2: Revenue Deficit under Alternative

Scenarios
8.00

7.00

6.00

5.00
% to GDP

4.00

3.00

2.00

1.00

0.00

- 1 . 0 0 -00 -01 -02 -03 -04 -05 -06 -07 -08

99 00 01 02 03 04 05 06 07
19 20 20 20 20 20 20 20 20
feasible mild base

12.00
Chart 3.3: Fiscal Deficit under Alternative Scenarios

10.00

8.00
% to GDP

6.00

4.00

2.00

0.00

-00 -01 -02 -03 -04 -05 -06 -07 -08

99 00 01 02 03 04 05 06 07
19 20 20 20 20 20 20 20 20
feasible mild base

Note: In Chart 3.1, D0 - D'0 is revenue deficit to GDP ratio in 1999-00. It increases to D1 - D'1 by 2007-08 in the
unreformed (base) scenario. In the reform (feasible) scenario, revenue deficit is reduced to a level indicated by D*
in 2004-05 and a small surplus emerges in 2007-08. In the mild restructuring scenario revenue deficit to GDP ratio
is D2 -D'2.

24
 25
3.33 The adjustment path that we have selected, asks for an increase of 2.63 in the tax-GDP ratio, 1.48 coming from
the Central taxes, and 1.15 coming from the State (Table 3.2). The increase envisaged in non-tax revenues will be more
from States (0.50 percentage points) and a little less from the Centre (0.25 percentage points). This is because many
public services which are not in the nature of pure public goods and the beneficiaries can be identified individually, are
delivered more at the State-level. According to available estimates, subsidies embedded in the State budgets amount to
nearly 10 per cent of GDP (as of 1994-95). Most of these are implicit in nature as few subsidies are given from the State
budgets in an explicit and transparent manner. A tax-GDP ratio of 16.7 should be achievable as this level of taxation was
realised in the eighties. Revenue expenditure falls by about 2.30 percentage points of GDP. In 2004-05 we would be still
left with a revenue deficit of 1.00 per cent of GDP at the Centre but in the States it would be entirely eliminated. Fiscal
deficit comes to 6.50 per cent of GDP as targeted and capital expenditure rises to about 6.6 per cent of GDP. The main
features of the fiscal profile that emerges in 2004-05 under the restructuring programme envisaged by us are summarised
below:
i) The growth rate of the economy is restored to 7.5 per cent per annum as achieved in the mid-nineties.
ii) Inflation rate is kept around 5 per cent.
iii) The current account deficit is kept below 1.5 per cent of GDP.
iv) Revenue account balance is restored in the case of the States.
v) A revenue deficit of 1 per cent of GDP is left in the Central budget.
vi) The combined fiscal deficit is brought down to 6.5 per cent of GDP.
vii) Aggregate tax revenues of the Centre and the States measure 16.7 per cent of GDP.
viii) Non-tax revenues reach a level of 3.2 per cent of GDP.
ix) Capital expenditure of the Centre and the States taken together will rise to 6.6 per cent of GDP.

Table 3.2: Fiscal Adjustment: Centre and States

1999-00 2004-05 2004-05 Annual Adjustment
(% of GDP) (% of GDP) over 1999-00 (% points)
(% points)
Combined Finances
Tax Revenues 14.09 16.73 2.64 0.53
Non-Tax Revenues* 2.48 3.23 0.75 0.15
Revenue Receipts 16.57 19.96 3.39 0.68
Revenue Expenditure 23.33 20.96 -2.37 -0.47
Capital Expenditure 4.17 6.61 2.44 0.49
Revenue Deficit 6.77 1.00 -5.77 -1.15
Fiscal Deficit 9.84 6.50 -3.34 -0.67
Centre
Tax Revenues 8.80 10.28 1.48 0.30
Non-Tax Revenues 2.75 3.00 0.25 0.05
Revenue Receipts 11.54 13.28 1.74 0.35
Revenue Expenditure 13.10 11.47 -1.63 -0.33
Capital Expenditure 2.62 4.00 1.38 0.28
Revenue Deficit 3.81 1.00 -2.81 -0.56
Fiscal Deficit 5.64 4.50 -1.14 -0.23
States
Tax Revenues (own) 5.29 6.44 1.15 0.23
Non-Tax Revenues (own) 1.03 1.53 0.50 0.10
Revenue Receipts 10.38 12.96 2.58 0.52
Revenue Expenditure 13.33 12.96 -0.38 -0.08
Capital Expenditure 2.06 2.85 0.80 0.16
Revenue Deficit 2.96 0.00 -2.96 -0.59
Fiscal Deficit 4.71 2.50 -2.21 -0.44
* does not include interest payments from the States to the Centre.
Note: Ratios of receipts and expenditure of States are based on assessment after making adjustments for contra-entries, identified subsidies
and net of lottery receipts.
Source (basic data): Budget documents.

3.34 Having selected a fiscal reform path couched in a macroeconomic scenario, we shall now spell out the content of
restructuring and the ways and means to achieve it. Before spelling out our suggestions, we first go over the views of the
Central and State governments on the subject.
 26
Restructuring of Public Finances: Views of the Central Government
3.35 In the context of restructuring, the Central government, in its Memorandum, made the following main suggestions:
(i) Tax devolution and article 275 grants should be regulated by taking into account the overall resource transfers
from the Centre to States. This is important for restructuring, as one of the main reasons for the high level
of fiscal deficit of the Centre is the high level of resource transfers to the States.
(ii) In order to curtail the revenue deficit component of the Centre’s fiscal deficit, devolution of taxes should be
regulated by taking into consideration the combined revenue deficit of the Centre and the States. A reduction
in revenue deficit is urgently needed for better use of borrowed resources and also to achieve intergenerational
equity. Except for human resource development through current revenues, consumption expenditure should
be financed from tax and non-tax revenue.
(iii) As global integration of trade and capital markets is taking place, an emerging economy like India’s needs
to maintain a sound fiscal environment for the inflow of foreign capital. An increase in the fiscal deficit of the
Central government may affect the economy adversely more than that of State governments as the
perceptions of foreign investors depend more on the Centre’s fiscal situation.
(iv) A reduction in the fiscal deficit of the Centre is more important, as increase in the Centre’s fiscal deficit
means an increase in the rate of interest via market borrowing and thus an upward pressure on the overall
interest rate structure, which, in turn, may crowd out interest sensitive components of private spending.
(v) The role of the State and the Central governments should be redefined and there should be a gradual
reduction in the role of the Central government as a financial intermediary for the States and the Central
Public Sector Enterprises (CPSEs); consideration should be given to rationalisation and better targeting of
subsidies; and closure of unrevivable PSEs with government guaranteed market debt to fund the closure
costs.
(vi) Year-wise fiscal deficit targets for both the Centre and the States may be recommended. The Commission
has been urged to prescribe the type and limit of expenditure of the States that should be financed by their
own tax revenues and through devolution and grants. Any additional expenditure should be financed by
Central Plan assistance and by raising loans within the fiscal deficit target.
(vii) Any measure of debt relief to the States should be linked to quantifiable improvement in fiscal performance.
Restructuring of Public Finances: Views of States
3.36 The views of State governments were focussed more on the concerns of their own finances. The salient points of
their suggestions are summarised below:
a. Macro Aspects: Some States (e.g., Karnataka and Manipur) suggested the need for taking an overall view
of finances covering not only revenue but also capital accounts of the States. A few States (e.g., Bihar)
called for a general lowering of interest rate in order to step up required capital expenditure and reduce
debt-servicing burden. Bihar also wanted a reduction in the rate of interest specifically on Central loans.
West Bengal emphasised that more resources could become available by bringing black money into the tax
net.
b. Expenditure: Many States emphasised the need for increasing developmental expenditure in social and
infrastructure sectors. Andhra Pradesh expressed the need for a substantial stepping-up of expenditure in
primary health care, primary education, and expenditure on operation and maintenance. Gujarat has
emphasised the need for reducing the size of government and privatising State parastatals. Jammu and
Kashmir highlighted the importance of avoiding wasteful and avoidable expenditure on items such as vehicles
and telephones, and travelling by government officers. Punjab advocated reduction in non-merit subsidies,
rationalisation of non-salary expenditure, and better management of public debt. Uttar Pradesh emphasised
economy measures including non-filling of vacancies arising on retirement and an across-the-board cut of
10 per cent in non-salary non-plan expenditure. Several States stressed the need for increasing capital
expenditure as a proportion of total expenditure. Assam suggested that this ratio be taken to 70 per cent.
c. Revenues: Many States acknowledged that their sales tax structure needs to be rationalised so as to
generate additional revenue as well as to provide a better tax environment for private sector growth.
d. State Level Public Enterprises: Several States (e.g. Orissa, Punjab, Rajasthan, Uttar Pradesh) emphasised
the need for restructuring public sector undertakings, favoured increases in user charges and disinvestment,
voluntary retirement schemes and an appropriate exit policy. As a component of State level reforms, Haryana
emphasised the need for restructuring the power sector. Haryana also wanted enhanced participation of the
private sector and reduced capital expenditure by the Centre so that more funds may become available for
the States. Jammu and Kashmir advocated reduction in the budgetary support to public sector enterprises.
e. The Role of the Centre: The role of the Central government in providing congenial economic environment
by maintaining monetary and fiscal discipline under restructuring was emphasised by Karnataka. Tamil
Nadu was of the view that the Centre’s fiscal restructuring might take precedence over that of the States.
f. Borrowing: Maharashtra suggested that borrowing by the States should be assessed with reference to
their ability to service debt, rather than consideration of economic backwardness alone.
g. Fiscal transfers: Maharashtra wanted a mechanism for redistribution of resources favouring the States
and a curtailment of Centrally Sponsored Schemes (CSS). Several States (e.g. Maharashtra, Karnataka,
 27
Meghalaya and Punjab) recommended introduction of incentives for prudent fiscal management. Tamil
Nadu wanted a normative basis of assessment. It also emphasised the need to assess the CPSEs with
some objective criteria. It further said that the States should be consulted before the constitution of a
Central Pay Commission. Rajasthan recommended rationalisation and greater use of taxes under article
269.
3.37 While the suggestions taken individually do not present a full programme of restructuring, the views of the States,
and those of the Centre, provide valuable inputs for the restructuring programme contemplated by us. Most of our
restructuring plan is consistent with their suggestions except that we do not agree with the contention that a reduction in
the Centre’s fiscal deficit is more important than that of the States. We are also encouraged by the fact that most State
governments seem to recognise the need for fiscal restructuring. Their commitment to undertake the requisite steps
towards fiscal reforms also came out quite clearly during our interaction with the States in the course of our visits, when
we had detailed discussion with them on various aspects of restructuring and the issues involved.
Contents of Restructuring
3.38 To attain the targets set for the various budget variables in our restructuring plan, reforms will be needed over a
wide area, embracing the revenue sources, composition of expenditure, public enterprises and intergovernmental fiscal
relations. We consider below the broad directions of reform that will be needed in the relevant areas.
Restructuring of Revenue Sources
a. Tax Revenue
3.39 The extent of increase in tax-GDP ratio called for in the restructuring programme has already been indicated: 1.48
for Central taxes and 1.15 for State taxes. The content of adjustment by major taxes is indicated in Table 3.3. These targets
cannot be regarded as over-ambitious in view of the fact that this was the level that prevailed in the latter half of the
eighties, peaking at 17.1 per cent (old GDP series) in 1987-88. The ratio had dropped thereafter and the drop was
particularly sharp – by as much as 2 percentage points – between 1993-94 and 1994-95. This was the time when the
Central taxes underwent extensive reforms. It is relevant to note that during the eighties many countries succeeded in
raising their tax ratio dramatically along with reform. The setback to revenue that occurred in the post-reform years in
India, therefore, needs a thorough analysis and investigation. It was not possible for this Commission, nor was it within its
purview, to undertake such an inquiry. Nevertheless, a few observations might be in order.
Table 3.3: Restructuring of Tax Revenues
(per cent of GDP)
Taxes 1999-00 2004-05 2004-05
over 1999-00
(% points)
Income Tax 1.38 1.77 0.39
Corporation Tax 1.55 2.18 0.63
Union Excise Duties 3.26 3.69 0.42
Custom Duties 2.47 2.57 0.09
Central Taxes(Gross) 8.80 10.28 1.48
States’ Own Tax Revenues 5.29 6.44 1.15
Source: Budget documents and estimates.

3.40 Major head-wise break up of the Union taxes shows that the main reason for the drop in the tax ratio in the
nineties was the slump in the revenue from customs and Union excises that account for over two-thirds of the Central tax
revenues. As noted in Chapter II, the buoyancies of these two taxes with respect to GDP declined to 0.74 and 0.71 in the
nineties as against 1.45 and 1.04, respectively, during the eighties. Some decline in customs revenue was to be expected
following the drastic downward revision of custom tariffs in the wake of liberalisation under the new economic policies.
Reasons for the decline in the buoyancy of Union excises however are not very obvious and need to be identified. Introduction
of Modified Value Added Tax (MODVAT) is sometimes cited as a possible cause. Here again, it is salutary to note that the
Value Added Tax (VAT) has been the anchor of successful tax reforms in many countries across the world over the last two
decades.
3.41 One possible reason for the sluggishness of excise revenues in the latter half of the nineties could be the recession
that adversely affected the growth of industrial production. There could be more fundamental causes as well. Narrowness
of the excise tax base with services excluded can also be a major cause. With services emerging as a fast growing sector
of the economy and constituting over 50 per cent of the GDP, it is imperative to increasingly bring in services under the tax
net for improving the buoyancy of indirect taxes.
 28
3.42 Services are now being taxed by the Centre selectively in exercise of the residual powers given in the Constitution
but the tax on services is being levied separately from the tax on goods. This can be a source of distortion which the tax
reforms initiated during the 1990s sought to mitigate. Hence, ideally, services should be taxed like goods both when a
service is integral to goods or independent of it. This will form a comprehensive base for the VAT, going down to the retail
stage. However, if they are taxed outside the VAT umbrella, as far as possible, services which are, prima facie, meant for
final consumption should be taxed and in case the net is sought to be cast wider, some way should be found to provide
relief for the tax paid on services used in business as under MODVAT. Power to tax services which are delivered in retail
and those which are incidental or appurtenant to the sale of goods (such as works contracts) should be given to the States
who, in turn, may delegate the power to local bodies. Wherever feasible, this will open up a rich source of untapped
revenue and augment the resources of both the Centre and the States substantially. Several initiatives have been taken
by the present Union government to transform the excise system into a Central VAT designating it as “CENVAT” and by
moving towards a single rate. However, the task will remain incomplete unless a way is found to bring in services under
taxation along with goods under a comprehensive VAT.
3.43 The tax reforms undertaken by the Union government in tandem with economic reforms in the 1990s have helped
to rationalise and simplify the direct tax system considerably. The rates have been moderated and many exemptions and
concessions have been weeded out. In the interests of stability, the rate structure should not be disturbed especially since
the revenues from the direct taxes have been quite buoyant. Care should be taken not to re-introduce the concessions and
exemptions as they tend to erode the revenue productivity of the taxes and create inequities and inefficiencies which the
reforms sought to alleviate.
3.44 On the States’ side, buoyancy of sales tax, the principal tax source of the States, also suffered a decline in the
1990s as in the case of Union excise duties. This again, may be due partly to recession. But another factor that may have
weakened the revenue productivity of sales taxes has been tax competition among the States. Low levels of sales taxes
in the Union Territories adds to this unhealthy competition. With liberalisation of the economy, States have been vying with
each other more vigorously than before to attract industry and trade to their respective trade regimes through offer of
generous concessions in sales tax and rate cuts. It is encouraging to note that the States have now joined together to
organise their tax system by introducing floor rates of taxes and easing out the existing concessions and tax holidays. If
pursued earnestly, these measures should help to strengthen the buoyancy of sales tax appreciably in the coming years.
3.45 There are a few other taxes which the States can levy but remain unexploited or under exploited. Taxation of
agricultural incomes is one of them and profession tax is another. The land revenue which has traditionally been the
principal mode of taxing agriculture in the country has almost fallen into disuse. Taxes on land/farm incomes in some form
may be levied to augment the resources of the Panchayats. The Panchayats may be given the powers to fix the rates,
collect the tax and retain the proceeds. Stamp duty and registration fees and motor vehicle tax can also yield more
revenue through better administration in which computerisation of information relating to taxable transactions can be of
immense help. The local governments may be empowered to levy a surcharge on some of these taxes. Urban properties
also constitute a potent source of tax revenue which also is not fully exploited. A major difficulty has been the entangling
of municipal property tax laws with rent control legislation. This has been the most important single factor that has
impoverished the municipal bodies. Laws governing the levy of property / house tax should be suitably modified to improve
the productivity of these taxes.
3.46 The profession tax is presently imposed only in 13 States. The Constitution lays down a ceiling on the amount of
the tax that can be levied by the States. The present ceiling of Rs.2500 was prescribed in 1988. Consideration may be
given to an upward revision of the ceiling levied by the States, by amending the Constitution. It should be made possible
to change this ceiling through a parliamentary legislation instead of a Constitutional amendment.
3.47 The existing potential for raising the tax-GDP ratio, at bearable tax rates, remains unrealised because of
administrative weaknesses. In the administration of direct as well as commodity taxes, computerisation opens up new
possibilities of checking evasion through exchange of information between the Central and the State governments and
among the State governments.
3.48 Massive arrears of assessed but uncollected revenues remain on the account books of both Central and State
governments. Effective steps for collecting these arrears in the next few years can help to ease the resource position of
the governments at both levels.
b. Non-Tax Revenues
3.49 Non-tax revenue accrues to governments from (i) investments in the form of dividends on equity and interest on
loans, (ii) user charges and fees for goods and services provided by the governments, (iii) royalty on minerals, (iv) forest
revenue and (v) miscellaneous general receipts.
 29
3.50 In the case of non-tax revenues not only structural change, but a paradigm shift is called for. Where governments
consider it essential to publicly provide private goods, such provision should be at efficient costs, and the costs should be
recovered from all users who can pay for them eliminating the subsidy implicit in under-pricing. Governments, at both the
Central and the State levels, provide an array of social and economic services. In many cases, it can recover the costs
from the users, because the services are individualised, and users can be identified and charged according to the extent
of their consumption. However, while the costs of providing services have been increasing, the fees and user charges
have remained virtually frozen in nominal terms for years. As a result, implicit subsidisation has increased, draining the
governments’ budgetary resources, and getting ultimately financed by borrowing. User charges should be index-linked (to
input costs) and the process of periodic revision should become automatic. However, users can be persuaded to pay if the
quality of services is commensurate with the price charged and the production of the services is cost-efficient so that the
users are not made to pay for the inefficiency of the public sector. Autonomous tariff commissions should be appointed to
advise on the revision of railway tariffs, bus fares and administered prices so that the link to costs is maintained while
protecting the interests of the consumers.
3.51 The main reason for the declining trend in the receipts of the State governments from interest is the low rate of
return on loans and advances. The rates of return have generally been hovering between 2.5 to 3.5 per cent in the last
twelve years. In several States the average rate of interest realised on loans and advances is less than half per cent, while
their cost of borrowing has been consistently more than ten per cent. This implies heavy subsidisation of borrowers. An
increase in the recovery of interest by even one percentage point on the outstanding loans and advances will considerably
strengthen the States’ finances.
3.52 A major structural drag on the public finances in India has been the poor return on investments of the government
in public sector enterprises and statutory corporations. Directions of reform of public sector enterprises are considered
in a subsequent section. The other two major sources of the non-tax revenue of the States – royalty on minerals and
revenue from forests – depend to a very great extent on the policy and approach of the Central Government. The royalty
on minerals other than coal and lignite was last fixed in 1997. For 19 out of a total 54 minerals included in the relevant
notification, the rates are ad valorem. In the case of coal, the last revision was done in October 1994 and specific rates
were fixed for different grades of coal. The prices of coal have been revised several times since then and judging by
inflation, the royalty rates fixed in 1994 have gone down in real terms. The irony is that the State Electricity Boards have
to pay the continuously increasing price of coal for their power stations but State Governments have no share in the
increased price because of the fixed rates of royalty. Periodic revision of the rates of royalty would improve the financial
position of several States, and ease the burden on the Centre. However, the impact of such revision on the economy and
the incidence of higher mineral prices on the non-mineral owning States needs to be kept in view.
3.53 We recommend that royalty rates on minerals be revised regularly and the decision about the revision of the rates
of royalty be taken well before the date on which the revision falls due so that it can be notified immediately after the
completion of every three-year period as provided under the law. In case the process of revision is not completed by the
date the new revision is due, the States should be entitled to compensation.
3.54 Fixation of royalty rates is done by the concerned Ministry/ Department. For the sake of transparency and fairness,
the task of making recommendations on royalty rates should be entrusted to an independent body.
3.55 Forests also constitute a significant source of revenue for States having large forest areas. However, forests
should not be seen merely as a source of revenue especially since the forest cover of the country has come down below
the desirable level. The forests need to be nurtured in the context of the national forest policy, in order that the rate of
afforestation is greater than that of denudation. In recent years, the revenue from forest has declined markedly for many
States. Revenue from forests can be augmented even while keeping in view the objectives of national forest policy,
provided the States having forest potential prepare scientific work plans for management of forests. Such Plans should be
drawn up expeditiously. The procedure for approval of plans may be simplified and streamlined in order to reduce delays.
Restructuring of Government Expenditure
3.56 Alongside revenue augmentation, restructuring of public finances will require structural changes on the expenditure
side as well. While the thrust should be on compression, the composition of expenditure would need to be restructured in
favour of priority sectors like elementary education, primary healthcare, water supply, sanitation, roads and bridges and
other infrastructure. Items that would require a tight rein are salary and pensions, interest payments and subsidies. There
has to be a radical change in the method of financing the plan expenditure as well. The order of adjustments in our reform
scenario for the major expenditure items is indicated in Table 3.4
 30
Table 3.4: Restructuring of Expenditure
(per cent of GDP)
Centre 1999-00 2004-05 2004-05
over 1999-00
(% points)
Revenue Expenditure
Centre
Interest Payments 4.73 4.26 -0.47
Pensions 0.74 0.65 -0.09
Other General Services 2.50 2.14 -0.36
Social Services 0.36 0.29 -0.07
Economic Services 0.36 0.29 -0.07
States
Interest Payment 2.30 2.55 0.25
Pension 1.15 1.00 -0.14
Other General Services 1.63 1.74 0.12
Social Services of which 5.13 5.81 0.69
Elementary Education 1.32 1.75 0.43
Primary Health 0.17 0.45 0.28
Water Supply and Sanitation 0.29 0.50 0.21
Economic Services of which 2.90 2.33 -0.57
Roads and Bridges 0.22 0.60 0.38
Capital Expenditure
Centre 2.62 4.00 1.38
States 2.06 2.85 0.80
Source: Budget documents and estimates.

3.57 The lines on which action needs to be taken to bring about the desired expenditure pattern are indicated below:
a) Salaries: Wages and salaries have been growing primarily because of periodic revisions carried out on the
recommendations of the Pay Commissions of the Centre, and the States falling in line, without due regard
to the capacity of individual States to pay. The burden of pay revision is compounded by releases of DA
twice a year by the Centre which has an effect on the States too. While it is the prerogative of the States to
decide the size of their government, the total wage bill cannot be allowed to rise beyond a certain proportion
of revenue receipts which represent the capacity to pay. In this background, we recommend the following:
(i) As full neutralisation for the increase in the prices has been given to all categories of employees,
there is no need to appoint any new Pay Commission as a matter of routine and at intervals of ten
years. A new Pay Commission should be appointed only when warranted by special circumstances.
(ii) As the recommendation of the Central Pay Commission have an impact on the States, the terms of
reference of the Pay Commission should be settled in consultation with the States. Similarly, the
decisions on the recommendations of the Pay Commission should be taken in consultation with the
States.
(iii) It is noticed that the size of establishment is disproportionately large in relation to the requirements of
administration in several States. In implementing the Pay Commission recommendations the Central
Government has been in some respects more generous than what the recommendations of the Pay
Commission implied. Some States have gone even beyond those levels resulting in the rise of
emoluments of the employees beyond what is warranted by their capacity to pay.
(iv) Salaries and other allowances should bear a relationship with the revenue expenditure of the Centre
and the States and the ratio should be such so as to leave adequate funds for maintenance and
development expenditure. It is suggested that an Expert Committee may be appointed to determine
the present relationship between salaries and other allowances with the revenue expenditure of the
Centre and the States and to suggest the relationship which should be attempted. States having
high ratio should bring it down gradually. This will also include the salary component of grants given
to local bodies and other aided institutions. This relationship between salary and allowances and the
revenue expenditure should be periodically determined.
(v) The capacity of the Centre/States to pay salaries from their own resources should be one of the main
criteria for determining the pay and allowances of the employees. This position obtained till mid-
eighties, when the States determined their own pay scales. States cannot afford to offer pay
scales unrelated to their revenue capacity and then expect the Central Government to extend support
or resort to borrowing. The same criterion should apply to the revision of salary and allowances at
the local level.
 31
(vi) In order to avoid the shocks to the Central and State budgets that emanate from periodic pay revisions,
it is desirable to evolve a national policy for the salaries and emoluments of government employees
across the country. Such a policy can be made acceptable and effective only if it is evolved through
a consensus among the States and the Centre in the forum like the Inter-State Council. Only a forum
like this can lay down the differentials in the pay scales of the Centre, States and local government
employees keeping in view their capacity to pay from their own resources. The question of regulating
DA releases may also be examined by the Council.
a) Pensions: As noted in Chapter II, pensions have been the fastest growing item of the States’ budgets in
recent years. At the rate at which pensions are growing, liability for pension payments is going to cast a very
heavy burden on the budgets in the coming years. Several factors have contributed to the growth of pensions.
One has been the generous rise in the pensions recommended by the Fifth Pay Commission and, two, the
recent judicial pronouncement directing that no distinction should be made between people retiring at different
points of time and all pensioners should be treated alike in the matter of their pension rights. Another factor
has been the addition of the liability on account of pensions payable to retired employees of aided institutions
and local bodies to the government’s pension bill. The increasing longevity of people, though welcome, has
also meant growing pension liability of governments. What causes concern is the fact that pensions are
paid by governments on pay as you go basis, i.e., there is no corpus or fund which could take care of the
pension liabilities. Consideration needs to be given to evolving a system under which pensions do not
become an unsustainable burden on the State exchequer. A large amount of pension burden is on account
of retired defence employees. A suitable scheme to absorb the retirees from the armed forces in other
government departments can help to contain the growth of defence pensions.
b) Interest Payments: Interest as a proportion of the revenue receipts of the States has increased sharply over
the years, particularly during the last 10 years. The scheme of deficit reduction outlined in our restructuring
plan, should help to check the debt growth of the States and thereby the growth of interest payments. From
the supplementary memorandum on small savings received from the Ministry of Finance, it appears that
the Centre may offer the State governments an option of pre-payment or rescheduling of past loans attributable
to small savings. The guiding principle would be incentive-based maturity reduction. Thus a loan of 25
years’ duration could be rescheduled to 15 years’ loan with lower interest rates. If such a scheme is introduced,
the States will be paying less on account of interest, as the payments will be on reducing balances. We
commend that this proposal be given consideration, as without some substantial reduction of the interest
burden, it will be difficult for the States to come out of the woods.
c) Subsidies: Subsidies are provided by governments implicitly as well as explicitly. While the Centre’s budget
provides estimates of explicit subsidies in the State budgets, the outgo on account of subsidies is scattered
under several heads. Subsidies, no doubt, have their uses as these help to alleviate the poverty of the low
income segments of the population by providing access to essential goods and services free or at affordable
prices. However, subsidies are apt to be misused and often go to the benefit of the non-poor. All subsidies
should be reviewed continuously to eliminate or reduce them, especially in the case of non-merit goods.
3.58 Reform in the Method of Financing Plan Expenditure
a. Central Assistance for State Plans: Emergence of revenue deficits in the government’s budgets has resulted,
to a considerable extent, from the manner of plan budgeting and financing. At the time when planning was
initiated, the expectation was that the finances for the plan would come out of surpluses to be generated by
the public sector, although some draft on the private sector savings was not ruled out. This expectation did
not materialise as the public sector savings turned out to be inadequate and the bulk of the requirements for
the plans were made out of borrowings. On the other hand, contrary to the focus of planning geared to
investment planning, revenue expenditure has emerged as the major component of the plan outlay. But the
budget surpluses have been inadequate to meet the plan revenue expenditure and in most States now even
non-plan revenue account is in deficit. In this situation, Plan revenue expenditure are financed to a large
extent out of borrowings in all general category States. This has meant accumulation of debt to finance
revenue expenditure in larger and larger proportions. A pre-requisite for restructuring of public finances is to
bring some discipline in the financing of the plans whereby the plan revenue expenditure are financed mainly
out of available balance of revenue receipts after meeting non-plan expenditure and borrowing is resorted to
primarily for investments. Revenue deficits are inherent in the practice of giving Central assistance for States’
plans in the form of grants and loans in the proportion of 30:70 as is the case with non-special category
States, while their plan revenue expenditure constitute nearly 60 per cent of the plan outlay. To remedy this,
we suggest the following structural change in the revenue budget:
i) The requirements of the States for plan revenue expenditure should be assessed with reference to
their deficiencies in basic minimum needs. A fresh look needs to be taken at the Gadgil formula with a
view to evolving a suitable alternative. With the liberalisation of the economy and withdrawal of physical
controls over location of industry through licensing, the States are now free to attract private investments
from domestic as well as foreign sources. In fact, the States with good infrastructure are attracting
private investments in much larger measure than those where the infrastructure is weak. The Central
investments hereafter should be redirected taking this fact in view.
 32
ii) The requirements of the States to meet revenue expenditure as a whole including plan revenue
expenditure should be looked after by the Finance Commission. Even if the Finance Commission is
not in a position to assess the plan revenue expenditure of individual States, the grants to meet the
revenue components of the plan can be dispensed by the Planning Commission within the overall
ceiling indicated by the macro parameters for restoring budget balance.
b. Financing of the Centrally Sponsored Schemes: During the course of the last three decades, the Central
Sector Plan Schemes/CSS have become an important vehicle for transfer of resources to the States outside
the State Plans, and over and above the transfers flowing through the mechanism of the Finance Commission.
These were started primarily to provide funding for projects in areas/subjects considered to be of national
importance and priority by the Central government. The details of the schemes are drawn up by the Centre
and their implementation and funds for their implementation are allocated to the State governments or directly
through District Rural Development Agencies or similarly created organisations. There is little freedom left to
the State governments to modify the schemes to suit local requirements or to divert funds to areas which are
considered of local priority. On the other hand, the State budgets are burdened with additional revenue
expenditure when the schemes are completed and their maintenance expenditure is pushed under the “non-
plan” category. During the course of our visit to the States, several State governments expressed the view
that these schemes along with the funds be transferred to the States. Plans for transfer of CSS are drawn up
from time to time. Recommendation for transfer of CSSs were made by earlier Finance Commissions also.
But no decision has so far been taken in this regard.
In our view, CSSs need to be transferred to the States along with funds. All other schemes should be
implemented by the panchayati raj institutions and urban local bodies on the basis of plans prepared by the
District/Metropolitan Planning Committees. The transfer of these schemes would mean that the staff working
in the related Ministries/Departments would become surplus and would need to be redeployed. This would
lead to a reduction in the revenue expenditure of the Centre.
Rethinking the Role of Government
3.59 Expenditure restructuring would call for a rethinking on the role of governments itself. In general, governments
may have to withdraw from a number of areas and strengthen their role in selected sectors in the overall context of
economic reforms. Goods and services may be defined over a wide range from pure public goods at one extreme to pure
private goods at the other. In the intermediate space, there may be goods that are basically private in nature but with
different degrees of externality. Whereas public goods have to be provided by governments, in the remaining sectors the
government sector should have a limited role. Even in the context of public goods, a distinction may be made between
private production of public goods financed by public authorities, as compared to public production of public goods. In
other words, supply and production need to be distinguished. Where the public authority is responsible for supply, it need
not necessarily get into the act of production. Government needs to enter only in those areas where due to large externalities,
private sector participation, by itself, would lead to sub-optimal supply.
3.60 In a growing economy like ours, the capital stock as well as the volume of employment is bound to expand.
However, this does not rule out the need to eliminate the waste and inefficiencies in government. There is obvious
overstaffing in several governmental departments and public sector undertakings leading to low productivity barring very
few exceptions. During our visits to the States, we found that several governments are now examining the scope for
downsizing the government apparatus. We recommend that rationalisation and redeployment of government employees
be taken up in right earnest. Downsizing should be viewed in the context that a developing economy with large gaps in
vital social sectors may require public sector involvement in greater measure in some areas while government’s presence
in other areas may be unnecessary and wasteful. The focus of downsizing, therefore, should be on retraining and
redeployment of staff, early retirement of persons in advanced pre-retirement age, supported with a large National Renewal
Fund. Work contracts should be modified and fresh contracts should now be considered for all newly employed persons
hereafter with suitable conditions of appointment and employment, with a view to evolving a new work discipline.
Enhancing the Efficiency of Government Expenditure
3.61 The task of expenditure restructuring cannot be fully accomplished, until attention is paid to the efficiency of
government expenditure. A pre-requisite to this is the reform of budgeting processes and improved management and
control of government expenditure. Budgets in India, both at the Centre and in the States, are known for their poor quality
forecasts. Frequent supplementary demands and appropriation bills bear evidence to this malady. Budget estimates
often turn out to be far out of line with “actuals”. Budgets are also non-transparent and items where government is involved
are sometimes kept “off budget”. Various “funds” have been created which add to opacity of the budgeting process. The
phenomenon of “March spending” pushes a considerable amount of expenditure to the last few months of the financial
year where the quality of decision making suffers. Excessive categorisation of expenditure into plan and non-plan, and
developmental and non-developmental categories, also adds to non-transparency of government expenditure. Although
provisions exist for examination of accounts in the Constitution (articles 149, 150 and 151), scant follow up of the observations
made in the reports of the Comptroller and Auditor General (C&AG) is responsible for not providing the necessary feedback
which could improve the quality of budgeting, and management and control of government expenditure.
 33
3.62 It is now well recognised that if the budgets are to remain under control, there should be a multi-year perspective.
In U.K., for instance, now the budgets lay down limits on expenditure which the departments can control, for a three-year
period, allowing flexibility and incentives for managing the budgets. A comprehensive review on expenditure is undertaken
involving a thorough examination of departmental accounts and objectives and a zero-based analysis for each programme
to find the best way of delivering the government’s objectives. The comprehensive spending review led to significant
changes in the framework for planning and controlling public spending. In India too, a similar review of all government
programmes and longer-term expenditure targets for government departments/agencies should be laid down and variation
or departure should be allowed only very sparingly. In addition, it is necessary to pay attention to the weaknesses in the
system of budget formulation and control.
3.63 A major weakness of the budgeting process of governments in the States and also at the Centre is the practice of
spreading resources over too many projects. Often only a token amount is provided in the year in which the project is
announced but this commits the future budgets also for which no detailed estimates are provided in the current year’s
budget and the projects remain incomplete for years for lack of adequate funds. For government expenditure to be brought
under the discipline of resource availability and efficiency in resource use, proper budgeting and strict discipline in matters
of launching new projects is required. Also there should be a commitment to completion of projects within the stipulated
period and to provide necessary funds.
3.64 Another necessary reform in budgeting is to do away with the dichotomy between ‘plan’ and ‘non-plan’ in expenditure.
With the introduction of planning, budget heads have come to be divided under ‘plan’ and ‘non-plan’ and the distinction runs
through all items of expenditure on revenue as well as capital accounts. Apart from creating problems in keeping the revenue
deficits and thereby fiscal deficits in control, as pointed out earlier, the distinction has had a deleterious effect on the quality
of public services. Essential maintenance has been neglected as they do not come under the plan and existing assets
including schools and hospitals are starved of much needed support for their running. In recognition of these ill-effects of the
plan/non-plan distinction in budgeting, the Union Finance Minister had observed in the budget speech for 1998-99:
The distinction between plan and non-plan expenditure in our budgetary system has created several problems. It
has led to an excessive focus on so called plan expenditure with a corresponding neglect of items such as maintenance
which is classified as non-plan. Various bodies, including the Finance Commission have advocated the elimination
of the plan and non-plan distinction in the budget. I propose to constitute a Task Force, including representatives of
Planning Commission, Finance Ministry, Comptroller and Auditor General of India and State Governments to examine
these issues in a comprehensive manner and to make recommendations for a functionally viable and more focussed
presentation of government expenditure in the budget.
We fully endorse this suggestion and would like it to be followed up.
3.65 In this context, we would like to suggest that: (i) government may examine the feasibility of introducing a multi-
year budgeting process, (ii) introduce objective methods of preparing budget estimates so as to improve the quality of
budget estimation, (iii) stipulate a maximum time within which reports of C&AG are scrutinised by Public Accounts
Committee and examined by Parliament or Legislature, as the case may be, (iv) review all expenditure classifications
other than revenue and capital, and (v) fully computerise cash flow management at all levels of government.
3.66 In order to improve the efficiency of public expenditure we need to have better targeted, beneficiary oriented
programmes and an effective monitoring mechanism. It may be mentioned that the evaluation of public programmes has
so far been primarily expenditure oriented. However, expenditure is not an end by itself. Evaluation of performance in
terms of achievements related to the objective is seldom done. This needs to be remedied.
Restructuring of Public Sector Enterprises
3.67 Disinvestment has often been considered merely as a means of dealing with large budget deficits. However, it
needs to be considered primarily in the context of restructuring of the public sector enterprises. Disinvestment is some
times conceived in terms of selling of the worst and chronically loss-making enterprises, sometimes as disinvestment of
the shares of the highly profit-making and surplus generating enterprises and, at other times, in terms of selling packages
or bundles of shares of good, bad and indifferent enterprises together. Some of the best enterprises are being sought to
be sold off primarily because their shares are eminently saleable while the shares of the loss making units do not sell.
3.68 Major structural reforms initiated in the nineties have nearly totally bypassed the public enterprises of this country.
The structural reforms of the 1990s concentrated on giving greater role to the private sector leaving the public enterprises
largely untouched and unreformed. In the second phase of structural reforms, restructuring should be undertaken extensively
in the public enterprises, giving them the same benefits of autonomy and freedom as the private sector has lately witnessed.
Public Sector Enterprises have to be freed from the shackles of the Ministries from which they originally emerged. The
management of PSEs has to be autonomous, professional, accountable, transparent and durable for a good length of
time. Such reforms, in terms of autonomy, deregulation, accountability and professionalism in public enterprises, should
be immediately launched. After an era of, say, five years of structurally reformed existence, if a public enterprise fails to
demonstrate its sustainability and cannot get out of the zone of chronic losses, such an enterprise should be sold off - at
whatever price it can sell. When all such chronically loss making and inefficient public enterprises, which bring a bad
name to the whole of the public sector, are actually closed down, it will be seen that the profitability of the sustainable
 34
public enterprises will be quite high and much more than is the case today. These successful enterprises will then be a
major source of resource generation and budgetary support and will play a substantial role in cutting down the overall
deficits, in particular, the revenue deficits, of the Central and the State governments. Many PSEs, even though loss
making often possess vast expanses of land and other real estates. Their sale value could be substantial and when
realised could be ploughed back into the expansion of other units.
3.69 The main elements of Central government’s policy on public enterprises announced in the Union Budget for
2000-01 consist of (a) restructuring and reviving the potentially viable PSEs; (b) closing down the PSEs which cannot be
revived; (c) bringing down government equity in all non-strategic PSEs to 26 per cent or lower, if necessary; and (d) fully
protecting the interest of the workers. To the extent these elements have been applied in the restructuring of some PSEs,
the results have been found to be good. These applications, we believe, should continue. While protecting the interest of
the workers, the rationalisation of the workforce in the PSEs has become a necessity and is an important condition for the
very survival of these enterprises. Inadequately trained and excessive work force affects the performance of the enterprise
adversely. As a means of sustainability and growth of the PSEs, measures to improve the efficiency and productivity of
workers are important. Equally important is the need to reduce the surplus work force through such measures as early
retirement with adequate compensation, golden handshakes, re-employment of young workers with training and retraining
in jobs emerging in new and expanding enterprises and the provision of national renewal funds for the aforementioned
purposes.
3.70 There are a large number of public sector enterprises in the defence sector. Their interface with the rest of the
economy is lower than desired. If they have to improve their productivity and competitiveness, there should be effective
performance audit and increase in interaction with the private sector for research and development. These undertakings
should have access to wider markets.
3.71 Most State level public enterprises are running at a loss. Therefore, they are unable to pay any dividends.
State Electricity Boards and State Road Transport Undertakings are chronic drain on State budgets. The performance of
Electricity Boards is critically affected by the following factors:
i. structure of tariffs involving rigidities and excessive cross-subsidisation;
ii. high unit of cost of supply due to old plants and bottlenecks in availability of inputs like coal; and
iii. technical inefficiencies resulting in high cost of generation, and sometimes camouflaged as theft.
The strategy of unbundling the SEBs into separate units looking after generation, transmission and distribution, is presently
being tried out in some States. Such unbundling is possible with or without privatisation and States may select a suitable
option depending on their circumstances. However, the determination of proper tariffs reflecting costs and keeping
subsidisation and cross-subsidisation implicit in the tariff structure should be rationalised and kept at minimum levels.
State level tariff commissions need to look at the issue of revision of electricity tariff structure keeping in perspective the
interests of different categories of consumers, changes in cost structure, the functional implications for the SEBs, as also
for the State governments.
3.72 State Transport Undertakings (STUs) are also running in losses in many States. Poor productivity combined with
subsidised tariffs, concessions, and higher share of low profit routes keep the STUs in the red. Key elements of reforms in
this sector are tariff revisions in line with input costs, elimination of concessions,
suitable mix of profitable with non-profitable routes, and improvement in efficiency parameters, including lowering of the
staff-bus ratio.
3.73 Most other SLPEs, subject to exceptions, are in the doldrums. They need to be sold off. Closure, disinvestment of
equity, merger of SLPEs operating in the same products and services where horizontal/vertical integration may lead to
economies and externalities, and voluntary retirement schemes may help reduce the fiscal burden.
Institutional Reform
a. Federal Fiscal Relations
3.74 Restoration of budgetary balance on an enduring basis would require institutional reform. A major source of fiscal
instability is the vertical imbalance that necessitates transfer of revenues from the Centre to the States. The first step
towards achieving fiscal stability and accountability is to reduce this vertical imbalance as much as possible so that the
governments at all levels are able to raise the resources they require, keeping the need for transfers at a minimum. This
in turn calls for a review of the scheme of assignment of tax powers and functions between the Centre and the States in
our Constitution. A widened access to the tax bases would enable the States to generate larger revenue and reduce their
dependence on the Centre. In some cases, it would lead to better exploitation and yield.
b. Management and Control of Debt
3.75 It would be useful to introduce some methods for explicit control on growth of debt as also of contingent liabilities.
Articles 292 and 293 of the Constitution provide for the fixation of limits by Parliament on borrowing and on guarantees by
the Central government. Article 293 provides for fixation of limits by State Legislatures in the case of State borrowing as
also guarantees of loans extended by the State governments. This article also provides for the consent of the Central
 35
government if there are any outstanding Central loans with the States or if there are any loans in respect of which Central
government has extended a guarantee. Clause 4 of article 293 provides for conditional consent. So far, these provisions
in the Constitution have not been effectively used. However, considering that the debt problem has become serious,
explicit controls need to be laid down, taking advantage of existing provisions in the Constitution. Some States (e.g.
Karnataka and Gujarat) have taken the initiative and passed legislation for restricting growth of contingent liabilities, i.e.,
guarantees. We suggest that other States also consider determining tangible levels on the growth of debt and contingent
liabilities. Annexure III.3 provides details on outstanding government guarantees for the period 1992 to 1998. The limits
that may be set under articles 292 and 293 should also include the borrowings by the governments from Public account
and other sources, which are not borne on the security of Consolidated Fund of the Central government and the State
governments, respectively. Any statutory or constitutional amendment, if required in this regard, may also be considered.
c. Constitutional and Legal Changes
3.76 We have said earlier that if other means do not suffice, we may have to also consider bringing about Constitutional
amendments, wherever required, as also changes in other statutes. While the matter has been dealt with at some length
later, here we mention a few areas where Constitutional amendment may help in bringing about the contemplated
restructuring. These are:
(i) bringing services under the Concurrent List (change in the Seventh Schedule);
(ii) making Inter-State Council responsible for arriving at decisions on fiscal policies having inter-State or Centre
- State ramifications (amendment in article 263);
(iii) ensuring that the Inter-State Council meets regularly and a national consensus is arrived at all important
issues; and
(iv) taking nominal limits for profession tax out of the Constitution and making it subject to only statutory change
(amendment in article 276). These and a few other suggestions are contained in the Chapter on concluding
observations.
Shri N.C. Jain, Member, has given a separate note on the restructuring giving suggestions for some Constitutional and
legal changes about Finance and Planning Commissions. The note is appended at the end of this report.
Restructuring of Finances of Special Category States
3.77 Out of 25 States currently forming the Indian Union, 10 are grouped under a “special category” for various purposes,
particularly plan financing. Unlike the general category States, States of the special category get Central plan assistance
for their plans in the form of 90 per cent grants and only 10 per cent as loan. Such special consideration is given to this
category of States presumably in view of their weak economic bases. Their own revenue sources meet on an average a
small percentage of their revenue expenditure. The bulk of their revenues come from the Centre. Because of their weak
revenue base, all the special category States have large deficits on their non-Plan revenue account before devolution.
With 90 per cent of Central assistance for the State Plans in the form of grants, the revenue budgets of the States are left
with sizeable surpluses. Even so, all the special category States have large fiscal deficits. Even with massive infusion of
Central funds, the finances of these States remain under acute stress with fiscal deficits running at over 10 per cent of
their GSDP in some cases. Evidently, the system of financing of the expenditure of these States needs a fundamental
restructuring. In our view, such restructuring should proceed on the following lines:
(i) The non-plan revenue gap of these States assessed on the basis of norms relevant in their case after taking
into account their share in Central taxes should be met out of Finance Commission grants. There should be
no need for any Plan grant to meet these gaps.
(ii) Responsibility for development of infrastructure of vital importance to the region requiring large investment
should be that of the Centre.
(iii) The system of plan assistance for special category States may be reviewed. The review of Gadgil formula as
suggested by us earlier should also cover the review of plan assistance to the special category States.
Summing up
3.78 The plan of restructuring of the finances of the Government recommended by us is designed to move the public
finances of the Indian economy away from chronic deficits and unsustainable debt and bring them on a course that will
strengthen the foundations of growth consistent with stability. The restructuring plan recommended by us aims at bringing
the combined revenue deficit of the Centre and the States to a level of not more than 1 per cent of GDP, containing the
combined fiscal deficit to a level less than 6.5 per cent of GDP, restoring the tax-GDP ratio to around 17 per cent of GDP,
enhancing non-tax revenues by 0.75 percentage points (of GDP) over 5 years, reprioritising expenditure towards basic
needs like elementary education, primary healthcare, water supply, and sanitation and essential infrastructure, and
increasing capital expenditure on the combined account to around 6.6 per cent of GDP. The strategy that we have
suggested in order to bring about the contemplated restructuring is predicated on:
(i) widening the tax base and, in particular, bringing services fully under the tax net in a properly designed
scheme which requires, among other things, listing of services in the Concurrent List;
(ii) using profession tax as also taxation of farm incomes to augment tax revenues in the States;
(iii) gearing up administration for better exploitation of the tax bases, without unduly increasing the tax rates;
(iv) relying on user charges for enhancing non-tax revenues by index linking them to changes in input costs;
(v) reviewing the policy towards fixation of royalty rates of minerals by index linking them to inflation for
augmenting the revenues of the States;
 36
(vi) salaries and other allowances should bear a relationship with the revenue expenditure of the Centre and
the States. The ratio may be worked out by an Expert Committee constituted for this purpose;
(vii) building up infrastructure in every State, particularly in the special category States, for the generation of
economic activities on a substantial scale which alone can provide them with a strong revenue base;
(viii) cutting subsidies and making them explicit and transparent;
(ix) transferring Centrally sponsored schemes to the States along with funds;
(x) revising the present system of determining and providing assistance for State plans;
(xi) resizing the governments at all levels by redeployment and downsizing;
(xii) improving budgetary procedures and procedures for evaluation and monitoring of public expenditure
programmes;
(xiii) introducing comprehensive structural reforms for public sector enterprises;
(xiv) reviewing the assignment of tax powers between the Centre and the States for better exploitation and
revenue yield;
(xv) suggesting limits on borrowing that may be fixed by reference to norms regarding the ratio of interest
payment to revenue receipts, as also the size of debt relative to output (GDP/GSDP), and suggesting that
limits to borrowing and guarantees be fixed by relevant legislation for the Centre and for each State; and
(xvi) restructuring finances of the special category States by changing the method of providing plan assistance
and direct Central participation in building up infrastructure in these States.
3.79 While the required restructuring is to be carried out by the Central and State governments, our own approach to
designing fiscal transfers is guided by the objectives of restructuring that we have outlined. In particular, our scheme of
fiscal transfers is designed to provide incentives to induce prudent fiscal behaviour. We propose to build up effective
incentive structures in our scheme of tax devolution as also in our assessment of revenue needs of the States, which is to
be on a normative basis for determining grants-in-aid. Debt relief is also to be linked with improvement in fiscal performance.
We also propose to further strengthen the incentive structures when we consider the additional term of reference mentioned
in para 3.3 in a supplementary Chapter.
 Endnotes

1 Seignorage also goes into public debt where, as in India, this takes place through borrowing from the central bank
of the country.

2 This is now called the non-accelerating inflation rate of unemployment or "NAIRU".

3 The Economics of the Government Budget Constraints, Zahid Husain Memorial Lecture by Stanley Fischer
(March, 1989).

4 The debt-GDP Ratio remains unchanged between two successive periods, if

at ( g t ? i t )
pt ?
(1 ? g t )
where,

pt - ratio of primary deficit to GDP

at - ratio of debt to GDP
it - effective interest rate
g t - GDP growth rate, and

subscript ‘t’ refers to a given period

In the case of States, the relevant ratios may be considered with respect to GSDP. For the economy as a
whole, both GDP growth rate and the interest rate endogenous to the system and, in particular, would be
affected by the levels of deficit and debt. Near-exogeneity may be a more valid assumption in the case of
States. Stability conditions are qualified by these considerations.

5 In considering the appropriate levels of fiscal deficit, we have confined our attention to the budgets of the
governments and not taken account of the borrowing of the public sector as a whole. With deregulation of the
economy and moves towards privatisation, we presume that the finances of the public sector undertakings will be
shaped increasingly by the market and not be dominated by government decisions.

6 The ratio of fiscal deficit to GDP (f t) that will sustain the debt-GDP ratio at a given level (a t), is given by ft ? at ??? g ??? ,
1? g
? ?
where g is the growth rate, as shown below
Dt Dt ? 1 ? Ft Dt ? 1 1 F Dt Dt ? 1 Ft Dt ? 1 ? ? g ?
? ? ? ? t since ? , we have ? ?1 ? ? or f t ? at ?? ??
Yt Yt? 1(1 ? g ) Yt ?1 1 ? g Yt Yt Yt ?1 Yt Yt ?? 1 ? g ?? ?1 ? g ?

7 The desirability of having such a rule for budget balancing was recommended by Dr.C. Rangarajan in his
inaugural address at the Seminar on "Issues before the Eleventh Finance Commission" held in January, 1999, at
New Delhi.

37
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Chapter IV
Assessment of Centre’s Resources

4.1 Central resources constitute the pool from which transfers to States are made in the form of tax devolution and
grants. Assessment of resources of the Centre is, therefore, basic to any exercise for the determination of the level of
transfers to States in the form of share in Central taxes and grants for various purposes including revenue deficit grants.
Our Terms of Reference also require us to take into consideration the Centre’s own needs especially relating to ‘expendi-
ture on civil administration, defence and border security, debt-servicing and other committed expenditure or liabilities.’ In
addition, this Commission, for the first time, has been required to review the finances of the Central Government and to
make suggestions for their restructuring for restoring budgetary balance. The assessment of Central resources and
expenditure has, therefore, been kept in alignment with the restructuring programme, outlined in Chapter III in the context
of para 4 of our ToR. The restructuring of the finances of the Central Government presupposes a holistic view of the total
expenditure – revenue and capital. We have, therefore, taken into account the desirability of increasing expenditure on
capital account while indicating the sustainable limits of fiscal deficit.
Centre’s Memorandum and Forecast
4.2 The Central government, in their memorandum, have stated that the Commission should not view the share of
Central taxes, and the grants given under article 275 in isolation, but to calibrate these transfers taking into account the
overall resource transfers from the Centre to the States. The memorandum says that unless such a holistic approach is
adopted, it would not be possible to bring about a restructuring of the public finances in keeping with the objectives set out
in para 4 of the ToR. We, in principle, agree with this view. Our overall approach has been outlined in Chapter II. In this
context we propose to indicate the extent of potential fiscal transfers, comprising all transfers to the States on revenue
account, in relation to the aggregate revenue receipts of the Centre.
4.3 The memorandum of the Central government further states that the continuing high level of transfer of resources
to the States is one of the main reasons for the high fiscal deficit of the Centre. It points out that a substantial portion of
discretionary transfers to the States is nothing but the Centre’s budgetary intermediation of debt for the States. The
Centre’s capacity to pursue counter-cyclical fiscal policy has been greatly constrained due to large and persistent fiscal
deficits. In the absence of fiscal rectitude, macro-economic management has been almost impossible during the last
decade. In our approach to restructuring of the Central finances these concerns have been taken care of. In particular, the
Centre’s fiscal deficit has been set to decline to a level of 4.5 per cent of GDP by 2004-05 which includes 0.5 percentage
point on account of net on-lending to States.
4.4 The Ministry of Finance had furnished to us item-wise projection of revenue receipts and non-plan expenditure in
August 1999 in which the assumptions and growth rates adopted for various items were spelt out. Apart from considering
the forecast and memorandum of the Central government, we also had occasion to discuss various aspects of Central
finances with Ministry of Finance. In making our assessment, we have taken into account the projections of the Ministry
keeping in view the fact that some of the information used in the Centre’s forecast has become dated in the light of recent
policy initiatives spelt out in the budget for the year 2000-01. We have given due consideration to these developments,
and have placed reliance on the budget estimates for 2000-01, unless there were reasons for us to depart from these and
take a different views.
4.5 As already discussed in Chapter III, restoration of budgetary balance would require additional revenue efforts by
the State governments as well as by the Central government towards raising both tax and non-tax revenue. The Centre
has to play a greater role in the process of adjustment, facilitating and guiding the States by its own example. On the
expenditure side, compression of non-priority revenue expenditure and augmentation of capital expenditure, focussed on
selected infrastructure sectors, has been made an integral part of the restructuring programme outlined by us.
Revenue Receipts
4.6 The Central Government has given a forecast of the tax receipts and non-tax receipts for the period 2000-05. In
their forecast, the growth of direct taxes – income tax and corporation tax, mainly – has been assumed to grow by 20 per
cent, customs revenue by 10 per cent and excises by 11 per cent. This has been based according to the Ministry, on the
growth rates of recent past with some degree of optimism. This assumes a marginal improvement in the tax-GDP ratio
every year to reach a ratio of 10 per cent of GDP in 2004-05. In our view, there is a need for some further improvement,
if the public finances have to move towards the stated objective of restoring budgetary balance. We have made an
assessment of the tax revenue of the Centre, keeping this objective in view, as also the fact that our first attempt should be
to progress gradually, to the tax-GDP ratio (old series) already achieved in 1987-88 and 1990-91. In our view, ensuring
better tax compliance is key to raising of tax revenue.
4.7 The first step in projecting the revenue and expenditure of the Centre for 2000-05, as in the case of States, is to
assess the base year figures. Budget estimates for the year 2000-01 have become available for the Centre, and in

38
 39
estimating the Centre’s resources, we propose to go mainly by these with one modification, viz., a moderation of revenue
from corporation tax. We, in our estimates for 2000-01, have scaled down the expected revenue receipts from corporation
tax from Rs.40,040 crore appearing in the Central budget to Rs.37,978 crore. This has been done on the consideration
that the growth assumed in the budget is unduly high, viz., 33.8 per cent as against a historical growth rate of 20.6 per
cent. Even with the step up in the rates of tax and other measures, such acceleration in the corporation tax is unlikely to
be achieved. Also, with the announcement of additional concessions for the information technology sector during the
course of the discussion on the 2000-01 Budget in Parliament, the growth of corporation tax is likely to be less than what
has been stipulated in the budget. Hence, the estimate of corporation tax has been revised downward to Rs.37,978 crore
by taking the average of the budget estimate and the projection obtained by applying the historical growth rate to make it
realistic and bring it achievable. No departure has been made from the budget estimate for other items.
4.8 The estimates of tax revenues for the subsequent four years have been derived by applying growth rates com-
puted on the basis of buoyancy norms worked out by us for individual taxes. The nominal GDP has been assumed to grow
at 13 per cent per annum reflecting real growth in the range of 7 to 7.5 per cent and inflation in the range of 5 to 5.5 per
cent of GDP. The buoyancy of each tax has been worked out on the basis of: (i) assumed nominal rate of growth of GDP
(ii) past growth rates of the concerned tax during the period 1987-88 to 1999-00(R.E.), (iii) additional resource mobilisation
measures contemplated in the budget of 2000-01, and (iv) the need for raising the tax-GDP ratio by about 1.5 percentage
points by 2004-05 as compared to the 1999-00 level of gross Central tax revenues at 8.8 per cent of GDP, consistent with
the requirement of our restructuring plan. The buoyancy-based growth rates along with corresponding historical growth
rates, given in parentheses, are: corporation tax, 19.5 [20.06], income tax, 18.85 [18.74], customs, 14.3 [10.93], and
Union excise duties, 15.6 [10.90] per cent per annum. In our judgement the prescriptions or norms of buoyancies are not
unrealistic or unfeasible. For corporation tax and income tax, the growth rates assumed are not very different from the
past growth rates. Reasonable increases have, however, been assumed in the case of customs duties and Union excises.
Significant improvement in customs revenue growth is to be expected with the new EXIM policy whereby imports of a
large number of commodities including consumer goods will now be permitted, with a minimum level of tariff. Excise
revenue should also show better growth in the coming years with the recent reforms and imposition of non-rebatable
special excise duties on a number of commodities. The 2000-01 Budget assumes a growth of 12.1 per cent in customs
duties and 16.8 per cent in the Union excise duties over that of 1999-00 (RE). Further, given the potential for widening the
tax base by bringing additional items of services under the tax net, we consider it desirable as well as feasible that
domestic taxation of goods and services will have a buoyancy significantly higher than one.
4.9 For non-tax revenues, the Centre’s forecast projects a decline in terms of ratio to GDP. Recent trends in the
annual growth of the non-tax revenue give a rather different picture; during the last five years it has grown at a rate varying
from 17 to 19 per cent. In view of this, there is no basis for assuming a decline in the non-tax revenue as a percentage of
GDP. Non-tax revenue receipts should be able to bear not only the burden of adjustment as we envisage for the States but
should make an increasing contribution to the Central exchequer. We are, therefore, targeting only a small increase of
0.25 percentage points of GDP in a period of five years, over the 1999-00 level. For the year 2000-01, non-tax revenues
have been taken as given in the budget. We expect the improvement to take place during the next four years. This should
not be difficult to achieve, given the room available for improving the performance of public sector enterprises and depart-
mental undertakings specifically, the Railways and Post, and the scope for raising user charges on various general, social
and economic services provided by the Central Government.
4.10 There has been a distinct improvement in the performance of Central Public Sector Enterprises (CPSEs) during
the decade of the nineties, resulting in a significant contribution by the profit making units to the Central exchequer.
Details of the performance of these are given at Annexure IV.1. While most of the profit making enterprises have been
able to declare dividends and thereby contribute to the Central exchequer, there has also been a significant decline in the
budgetary support to them. However, we expect a higher rate of return from these enterprises during the period 2000-01
to 2004-05, and have taken this into account while estimating the non-tax revenues of the Central Government.
4.11 Among the departmental undertakings, the biggest two are the Railways and the Post. In the case of Railways, by
convention, an amount by way of dividend is payable every year, computed at the rate of 7 per cent of capital at charge.
However, in determining the capital at charge, the investments made in certain specified lines, such as strategic lines, new
lines and those in the north eastern region, are excluded. In addition, some subsidies are also paid from general rev-
enues. Further, a part of the dividend payable is deferred on various considerations. The Railways also subsidise several
of their services of which a major one is on account of coaching services. The net result is that the contribution of the
Railways to the general exchequer is meagre relative to its potential. The contribution will dwindle further following the
revision of the emoluments of railway employees and the consequent deterioration of their finances in the last two years.
The Railways provide a valuable service to the community as these are in the nature of public utility used by all segments
of population – rich and poor. However, this should not be taken as a ground for not improving its financial performance.
The Railways, on their own, should be financially viable. The approach should be not only to balance the current revenue
and expenditure but also generate surplus for payment of dividend as stipulated by the Railway Convention Committee
and for essential expenditure on maintenance and modernisation. This will not be possible unless the railway fares and
freights are revised at regular intervals to keep pace with the costs. While freights are raised from time to time, it is noticed
that losses are incurred on coaching services for all classes, except AC classes, and these losses have increased in
 40
recent years. The railway budget for the year 2000-01 has referred to the scope for raising revenues in several ways such
as commercial exploitation of railway land and space, leasing of surplus telecommunications capacity and promotion of
railway tourism. It is necessary that Railways exploit these sources arduously. In keeping with the thrust of fiscal policy of
the government all round, namely, to reduce subsidies wherever not merited, a look should be taken at the subsidies
provided to Railways as well. The Railways being the premier transport undertaking of the government in the country
should also set an example by regular revision of fares through an indexation formula. We believe that if these steps are
taken, the Railways should be in a position to contribute more to the Central exchequer regularly apart from generating
more resources for much needed maintenance and improvements.
4.12 The Department of Posts has to depend on the general budget for support, as it incurs losses. These losses have
registered a sharp rise in the last three years. The deficit was of the order of Rs.1700 crore in 1999-00 and has been
anticipated to be Rs.1,982 crore in 2000-01 Budget. The principal factor in the rise of deficit since 1998-99 has been the
increase in wages, salaries, and pensions. Revenue receipts on the other hand have not increased commensurately.
Many of the postal services also come within the category of public utility and are used by rich and poor especially by
persons living below poverty line. Some element of subsidy is, therefore, inevitable. However, with technological improve-
ment in the communication system and the growth in the per capita income, the need for heavily subsidising this sector is
bound to diminish. The implicit subsidies need to be brought down by raising the rate suitably at regular intervals.
4.13 User charges provide another potent source of non-tax revenue. For a variety of social and economic services,
the cost - recovery is extremely poor. The Discussion Paper on Government Subsidies in India (May 1997) brought out by
the Ministry of Finance had, after a comprehensive analysis of explicit and implicit subsidies, came to the conclusion that
the subsidy regime in India is non-transparent, inefficiently administered, poorly targeted and regressive, leading to distor-
tions in allocation of resources. In a more recent study on the Central Budgetary Subsidies in India (NIPFP, 1999), the
recovery rate in social services in 1996-97 was estimated at 8.36 per cent, and that in the economic services, at 16.58 per
cent. The study argues that the dynamics of subsidy growth should be reversed by bridging the growing gap between input
costs and receipts of publicly provided goods. While costs keep moving up, user charges remain fixed in nominal terms.
Unless user charges are periodically revised upward to reflect the increasing costs, cost recoveries will remain poor,
implying extensive implicit subsidisation of services supported by the budget. In our view, subsidy reforms are called for,
both at the Centre and the States. The Centre should, however, lead by example. Thus our view is, implicit subsidies
should be reduced by raising the user charges in a phased manner on a year-to-year basis, so that not only the inflation
component is fully taken care of, but also there is a reduction in the element of subsidisation in real terms.
Revenue Expenditure
4.14 The major components of the revenue expenditure of the Central Government are interest payments, plan rev-
enue expenditure, defence, subsidies and pensions. Expenditure on salary is another major component which is not
separately reflected in the budget but is a part of the major items of expenditure under various heads. In the nineties the
sharpest growth in the non-plan revenue expenditure of the Central government has been in interest payments, pensions,
and salaries, while other non-Plan revenue expenditure related to maintenance and delivery of social and economic
services was compressed relative to growth in GDP. The Plan revenue expenditure also showed wide fluctuations in the
annual rate of growth. In our scheme of restructuring of non-plan revenue expenditure, we envisage a slower growth of
interests payments, pensions and salaries. The aim is to raise the growth of expenditure in other sectors, especially social
and economic, leading to improvement in the quality and quantity of these services.
4.15 Coming to the specific items of non-Plan revenue expenditure, we have followed different rules for projecting
different items rather than using growth rates for all items as used in the forecast made by the Central government. In
particular, interest payments are derived by applying the effective interest rate to the outstanding debt of the Central
government at the end of the previous financial year. The adjustment path of fiscal deficit provides year wise increments
to debt. In particular, fiscal deficit is slated to fall to 4.5 per cent of GDP in 2004-05. The effective interest rate is set at 9.83
per cent per annum which is implicit in the budget estimate of 2000-01. This already reflects a reduction of about 0.4
percentage points from the effective interest rate of 1999-00, which is estimated at 10.26 per cent per annum. A lowering
of the nominal interest rate will imply that the effective interest rate on government borrowing would also go down although
this reduction may be of a smaller percentage point. While fresh borrowing would be at the lower nominal rate, the stock
of debt will continue to be serviced at older rates except in some schemes of small savings and provident funds where the
entire stock of debt will be serviced at the new reduced rate.
4.16 The expenditure on pensions has grown at 17 – 18 per cent during the last one and a half decade – largely due
to frequent upward revision in the pension fixation formula, entitlements of dearness allowance, the revision in the ceiling
for commutation and the extension of the pensionary benefits to some uncovered employees. The non-pensionary retire-
ment benefits – gratuity, encashment of leave etc. – were also enhanced. The expenditure on these benefits is now
expected to stabilise, as the necessary revisions have already been done in the case of existing pensioners. We, there-
fore, assume that the pensions will grow at 10 per cent per annum. This is the same growth rate as has been provided for
in the case of States. This will take into account the periodic revision of dearness relief and annual addition to the number
of pensioners as also the payment of retirement benefits.
 41
4.17 Defence revenue expenditure is also projected to grow by 10 per cent per annum. It may be noted that in the wake
of the Kargil crisis, the need for reviewing defence requirements had assumed urgency. The budget estimate for 2000-01
provides for a step up of 13.35 per cent over the previous year’s revised estimate for defence revenue expenditure. We
have accepted the provision given in the budget estimate. With this stepped up base, a growth rate of 10 per cent should
take care of the revenue requirement in the period upto 2004-05. Further, as outlined in the restructuring programme in
Chapter III, we have provided for a steady increase in the capital expenditure of the Central government which is enough
to cover the necessary defence capital requirements such that aggregate defence expenditure could reach the level of 3
per cent of GDP by 2004-05. We would emphasise that while the required resources may be provided, all possible
measures for securing economy in defence expenditure should be taken.
4.18 Subsidies are an important item of revenue expenditure in the budget of the Central Government and constitute
more than one per cent of GDP. The three major segments in which these subsidies are given are fertilizers, food and
exports. In addition, subsidy to the Railways for dividend relief and other concessions, included in ‘other subsidies’ have
been steadily increasing. Some action has been taken towards reduction of subsidies given on food and fertilizers. We do
expect that the efforts made towards reduction of these subsidies would continue. We would also suggest that the
subsidies given to Railways and to some other organisations and programmes should be reviewed every year with a view
to reduce and eliminate them. However, we have provided for the subsidies at the same nominal levels as budgeted for
2000-01, for all the years up to 2004-05. This implies a reduction in real terms. While reducing the volume of subsidies,
these must be made more effective by better targeting.
4.19 For the purpose of projection, other non-Plan revenue expenditure have been divided under the three principal
functional categories viz., (i) general services; (ii) social services; and (iii) economic services. General services, excluding
interest payments, defence and pensions have been projected by a composite growth rate, based on differential growth
rates of salary and the non-salary components. In estimating the growth of expenditure on salary, 5 per cent growth has
been provided, as in the case of States. Non-salary expenditure has been projected to grow at the rate of 7 per cent per
annum for general services, 15 per cent per annum for social services, and 11 per cent per annum for economic services.
The differential rates of growth for the three categories have been contemplated as we expect the non-development
component of the revenue expenditure to be provided to the extent of the assumed rate of growth of inflation, and the
increase in the population. In the economic segment of the development expenditure, the Government is disengaging,
confining itself to the promotional role in the building of infrastructure and other essential areas conducive to development.
However, Government will have to play a higher role in the social sector especially in the domain of human resources
development. A higher rate of growth in the expenditure in this sector has, therefore, been provided. These growth rates
correspond with those used in the case of States. In working out the expenditure, the proportion of salary to non-salary
expenditure in the year 2000-01 has been taken at 50 per cent for general services, 20 per cent for social services and 30
per cent for economic services. These proportions have been worked out on the basis of information available from
budget documents. The residual category of other expenditure comprising postal deficit, grants to foreign governments
and other expenditure is projected at 5 per cent per annum to maintain levels in real terms. The expenditure of Union
Territories without legislatures is grown at 13 per cent per annum to maintain its relative share as a percentage of GDP.
4.20 The revenue and expenditure projections as per our assessment for the period up to 2004-05, are given in
Annexure IV.2 and item-wise details in Annexure IV.3. It may be mentioned that in the process of working out the non-plan
revenue expenditure, plan revenue expenditure gets determined as a residual in view of the target set for the revenue and
fiscal deficits for each year. Based on the ceiling indicated for potential fiscal transfers to States, which includes the
States’ share in Central taxes and the grants-in-aid under article 275 and other non-plan grants, the amount that can be
transferred to States through plan grants comes out as residual after these transfers. Since the Fourth Finance Commis-
sion, with the exception of the Ninth Finance Commission, the task of the Finance Commission has, for various reasons,
been confined to recommending tax devolution and grants to meet the revenue deficits in the State budgets on the non-
plan side, and to leave them with some surpluses for meeting the requirements on the plan side. However, in recent years,
the non-plan revenue account of most States has remained in deficit necessitating recourse to borrowing. Borrowing
requirements of the States on revenue account are pushed up further by deficits on the plan revenue account, since the
plan grants from the Centre fall far short of their plan revenue expenditure. All these result in accumulation of debt
emanating from revenue deficits alone which leads to considerable annual growth in the interest burden that encumbers
the non-plan revenue budget, and squeezes out essential expenditure on maintenance - roads remain without repairs,
schools without chalks and books, and hospitals without essential medicines. If this trend is to be reversed and the public
finances of the country are to be put on an even keel, the needs of the States and the Central transfers must be viewed in
an integrated framework in which the sustainable limits of borrowing - the fiscal and revenue deficits - are laid down firmly
and adhered to.
Potential Fiscal Transfer
4.21 Revenue transfers to States are not confined merely to share in taxes and grants-in-aid recommended by the
Finance Commissions. Devolution of funds through the Centrally sponsored schemes, block plan grants, and other
discretionary transfers also have become important component of the transfer mechanism. Central Government, in their
memorandum, have suggested a holistic approach – to take into account the fiscal transfers to the States made by the
Central Government in its entirety. We looked into the Centre’s revenue transfers to States as percentage of the Central
 42
Government’s gross revenue. We found that the revenue transfers to the States between the period 1979-80 to 1997-98
fluctuated between 37.02 (1997-98) to 39.69 (1990-91 & 1991-92) (Annexure IV.4). It is only in 1998-99 and in the revised
estimates of 1999-00 that these percentages have significantly come down to around 32 - 34 per cent. In the light of past
trend, we suggest that the Centre’s fiscal transfer to the States should be around 37.5 per cent of the gross revenue
receipts of the Central Government. After deducting the share of the States in Central taxes, and the grants-in-aid, the
balance amount would be available for being given as grants under various schemes and as Centre’s support to State
Plan. This would provide stability in fiscal transfers for both the Centre and the States. It is for the Planning Commission
to decide what should be the size and content of the Plan. However, the Finance Commission, in fixing the share of the
States in the Centre’s revenues has kept a macro-picture in view that lays down the broad parameters of revenue expen-
diture and the permissible deficits at the two levels of Government. This is in keeping with the Scheme of restructuring
suggested by us.
4.22 In fixing the limits on the total revenue transfers from the Central budget, we have been guided by the need to
provide adequate funds to meet the Centre’s requirements on committed expenditure such as interest payments and
defence, as also availability of adequate funds for its plan revenue expenditure and other vital areas of expenditure. The
exercise for the Tenth Five Year Plan is yet to begin. In the absence of any clear picture of the likely size of the Centre’s
Plan in our reference period, we have based our estimates for the Centre’s revenue plan on the budget estimates of 2000-
01 so that there is no disruption in the contemplated plan programmes.
Capital Account
4.23 In order to take a comprehensive view of federal fiscal transfer we have also looked at the capital side of the
budget. Capital receipts comprise recovery of loans, non-debt capital receipts (like disinvestment not allocated for retire-
ment of debt) and net increment to outstanding debt (fiscal deficit). For recovery of debt we have taken the historical
growth of 7.33 per cent per annum. Disinvestment target is set at Rs.10,000 crore in each year, for the next five years out
of which Rs.1000 crore is used for retiring debt every year. This is as per Central forecast, and the practice of setting
apart a portion of disinvestment for retiring debt has been initiated in the budget of 2000-01. In the Central forecast fiscal
deficit is slated to fall to 3.6 per cent of GDP by 2004-05. We have, however, projected a fiscal deficit of 4.5 per cent by
2004-05. This has been done for the purpose of increasing the capital expenditure from the contemplated 2.32 per cent
of GDP in 2004-05 in the Central forecast to the level of 4.00 per cent of GDP in our restructuring programme. The
increase will take place over the years gradually. This would provide the much needed investment in the vital sectors of
the economy which is essential for sustained growth in future.
Comparison with Central Government Forecast
4.24 We had noted in Chapter III that one of the disturbing features of public finances in recent years has been the
steady erosion of public investment in relation to GDP. As a part of the restructuring strategy, capital expenditure should
rise as a percentage of GDP. We have targeted a level of 4 per cent of GDP for capital expenditure (net of repayments) to
be attained by 2004-05. For the base year we have used the budget estimates of 2000-01. The adjustments are brought
about in the remaining four years i.e. 2001-02 to 2004-05. With revenue balance, capital expenditure has been implicitly
set at 2.32 per cent of GDP in the Central forecast although it is not explicitly stated. We think, that this is rather inad-
equate, if the economy has to embark on a path of higher rate of economic growth in the coming years.
4.25 Some of the important year-wise growth rates for the period 2000-01 to 2004-05 used in the Central forecast are
summarised below: nominal GDP, 14 per cent; interest payments, 16 per cent; subsidies, 16 per cent; defence expendi-
ture, 15 per cent; grants to States, 15 per cent; and other non-plan expenditure, 14 per cent. The main difference between
projections furnished by the Ministry of Finance and our own assessment lies in the fact that we are envisaging a greater
revenue effort and a marginal decline in the non-Plan revenue expenditure. In particular, the tax-GDP ratio is expected to
increase by about 0.28 per cent point more than what the Ministry has forecast, and the non-tax revenue is expected to
grow by 0.25 per cent point by the terminal year of the report period relative to GDP as compared to 1999-00 level
whereas the Ministry has projected a decline in this ratio.
4.26 The salient differences between our assessment and the Centre’s forecasts have been highlighted in Annexure
IV.5. The Centre’s forecast is based on 14 per cent nominal rate of growth with an inflation of 6.5 per cent and real growth
of 7 per cent or vice versa. We have assumed a nominal rate of growth of 13 per cent with a slightly lower rate of inflation
and a slightly higher rate of economic growth. Further, in the Central forecast, the pre-devolution revenue account of the
Centre indicates an increase of a little more than one percentage point in the tax-GDP ratio. The tax revenue rises to a
level of 10 per cent of GDP by the year 2004-05 involving an increase of about 1.16 percentage points with respect to GDP
as compared to 1999-00 level. We think that, an enhanced revenue effort both on the tax and the non-tax side is urgently
called for.
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Chapter V
Assessment of States’ Resources

5.1 In making our recommendations regarding tax devolution and grants-in-aid to the States, we are required under
our terms of reference to assess the resources of the States for the five years commencing on 1st April, 2000 and their
requirements for meeting the plan and non-plan revenue expenditure, keeping in view the need for generating surplus for
capital investment and reducing fiscal deficit.
5.2 In order to help us in this assessment, we sought information from the States and the Union government on their
receipts and expenditure from 1987-88 onwards and the forecast for the period 2000-05 on an year-wise basis. In re-
sponse, the States have furnished their pre-devolution forecast of plan and non-plan revenue receipts and expenditure.
The assumptions underlying the forecasts, however, vary widely across the States, based as they are on varying anticipa-
tions of the growth of Gross State Domestic Product (GSDP), inflation and the likely response of revenues and expendi-
ture. A summary of the pre-devolution revenue receipts and plan/non-plan revenue expenditure consolidated for the 25
States and compiled from their forecasts are given below:
Table 5.1: Pre-devolution Forecast - All States
(Revenue Account)
(Rs. in crores)
Sl. No. Item 1999-2000 2000-01 2004-05
B.E. % to % to % to
G.D.P. G.D.P. G.D.P.
1. Revenue Receipts
i) Tax Revenue 103648 5.37 108801 4.98 162224 4.56
ii) Non Tax Revenue 18379 0.95 24799 1.14 30491 0.86
iii) Non-Plan Grants 1711 0.09 1691 0.08 2265 0.06
Total (i-iii) 123738 6.41 135291 6.20 194979 5.48
2. Revenue Expenditure 240557 12.45 315251 14.44 501670 14.09
Plan 42889 2.22 48665 2.23 76012 2.14
Non-Plan 197668 10.23 266586 12.21 425657 11.96
3. Surplus/Deficit on Revenue Account -116819 -6.05 -179960 -8.24 -306691 -8.62
4. Non-Plan Revenue Surplus/Deficit -73930 -3.83 -131295 -6.01 -230678 -6.48
5. Estimated G.D.P. at
Current market Prices 1931819 2182956 3559252
For computing the ratios to GDP in the above table, nominal GDP growth has been assumed at 13 per cent per annum
consistently with what has been assumed for assessment of the Centre’s resources.
5.3 The forecasts and the resulting revenue gaps indicated by the States present an alarming picture. In the aggregate
they show a rise in the pre-devolution deficit on non-Plan revenue account from 3.83 per cent of Gross Domestic Product
(GDP) in 1999-00 to 6.48 per cent in 2004-05. In part, this results from the projection of non-Plan revenue expenditure
(NPRE) at a growth rate much lower than that of revenue. As a proportion of GDP, NPRE is projected to go up from 10.23
per cent of GDP in the base year (1999-00) to 11.96 per cent by the terminal year 2004-05, growing at the rate of 16.6 per
cent per annum against a trend growth rate (TGR) of 16 per cent over the twelve years, 1987-1999. Tax revenue, on the
other hand as a proportion of GDP is shown to decline from 5.37 per cent of GDP to 4.56 per cent by the terminal year, the
underlying growth rate being only 5.7 per cent in the forecast period, as against 14.8 per cent observed during 1987-1999.
The projection of non-tax revenues also follow a similar pattern, indicating a decline from 0.95 per cent of GDP in 1999-
2000 (B.E.) to 0.86 per cent by 2004-05.
5.4 If restructuring of public finances to restore balance in the budget is to take place, it is imperative that the trends
depicted in the States’ forecasts are reversed. Our assessment of the resources of the States is intended to indicate how
this can be achieved, keeping in view the needs and also the capabilities of the States judged by their potential and past
performance. In making the assessment, while taking note of the trends and the likely growth of GDP in the coming five
years as well as other relevant factors, we have followed as far as possible, a normative approach. The intention is to
apply some rules uniformly to all States with appropriate variation wherever needed to take account of factors that
unavoidably affect their revenue capacity and expenditure needs. In the allocation of Central revenues among the States,
both equity and efficiency demand that the revenue requirements of every State are assessed on the basis of some

43
 44
objective norms instead of relying on what they project, and after due consideration of their limitations and needs in each
case.
5.5 As indicated in Chapter II, the essence of the normative approach in assessment of revenue capacity lies in
estimating the revenues, a State can raise by exercising its powers under the Constitution with ‘reasonable’ effort. To
minimise the scope for any subjective judgement, `reasonable’ in this context may be taken to mean an average effort, the
average being the level at which the States in general have been observed to be performing in revenue raising. On the
expenditure side, the normative approach would imply in essence that the expenditure requirements of each State will be
worked out broadly on the basis of the average expenditure per capita that a State has to incur on the revenue account to
provide public services at a `reasonable’ level, after allowing for cost differentials among them arising from factors not
within their control, such as terrain, age-profile of the population, varying rates of inflation and other relevant factors.
5.6 The normative approach serves to ensure inter-State equity in that no State can obtain a larger share than what
is warranted by the deficiencies of its revenue base attributable to its backwardness or low income level or other factors
that have a bearing on its taxable capacity but are beyond its control. Nor can any State expect whatever expenditure it
may choose to incur, regardless of what might be justifiable normatively, to be underwritten without question by the
Finance Commission. For various reasons it is not possible to implement the normative principle all the way. The
heterogeneity of the States in their endowments and present levels of development pose problems in setting up standards
which can be applied uniformly even after making suitable allowance for their specific situation. Then there are acute data
problems as well. Nevertheless, as far as possible, we have introduced some elements of the normative principle in our
assessment of the revenues and expenditure of the States for the five year period for which we are required to recommend
tax sharing and grants-in-aid.
5.7 We have applied the normative approach in two stages: first, by introducing some normative elements in computing
revenue and expenditure of the base year and next, by moving the base year figures forward to derive revenue and
expenditure estimates for 2000-05 by applying appropriate growth rates stipulated on the basis of some reasonable
norms. Salient points of our assessment exercise for States’ resources are set out in the following paragraphs.
Base Year Assessment: 1999-2000
5.8 In estimating the resources of the States for the five years, 2000-05, our first concern has been to set the base
from which the projections are to be made, i.e. figures of revenue receipts and expenditure for each State for the base year
1999-00. The simplest way of going about it would be to proceed on the basis of the estimates furnished by the States in
their budgets, i.e. budget estimates (BE) figures in the 1999-00 budget and wherever available, revised estimates (RE). It
is however, well known that often there are significant variations between BE/RE figures and the actuals. That apart, it
appeared to us that it would not be appropriate to project future revenues and expenditure taking either BE or RE figures
as the base. This is because the budgets or even actuals for a year reflect receipts and expenditure as they emerge from
the structure of tax and non-tax revenues on the revenue side and composition of expenditure in actual operation and not
what a State can be expected to raise in revenue or spend on a normative basis after allowing for its handicaps. Hence,
the budget figures of the base year or even the actuals, if available, require some modification to set up the base year
figure. This modification has been made by us partly on the basis of past trends and partly by using certain objective
norms. Unless the BE/RE figures of the base year are adjusted normatively, the assessments made by the Finance
Commission lose their efficacy in inducing prudent fiscal behaviour and every time a new Finance Commission is appointed,
the actuals of the base year are presented as a fait accompli with little regard for what the previous Finance Commissions
had considered a reasonable budget scenario for individual States. The rules of adjustments or modifications followed by
us in deriving the base year figures of revenue and expenditure, item-wise, are indicated below.
Tax Revenue
5.9 For setting up the base year figures of tax revenue of a State normatively, there are two possible approaches. The
first one is to estimate the potential of revenue for each tax individually it can raise under the Constitution taking into
account the variations in the respective tax base in the given State as compared to the general or average pattern and
applying the average rate of tax to the base. This is known as the representative tax system approach. An alternative way
is to estimate the taxable capacity of a State taking the aggregate revenue from all taxes that a State can raise under its
Constitutional powers and setting up relationship between tax revenue and variables that influence the tax base and other
factors that determine the tax yield but are beyond the control of the State.
5.10 While in principle the representative tax system approach is preferable, it was not possible for us to adopt this
method because of severe data problems regarding the individual tax bases and complications arising from heterogeneous
tax practices across the States and the varying impact of exogenous factors on their taxable capacity. For instance, the
restrictions imposed by the Central Sales Tax Act, 1956 on the States’ powers of sales taxation in respect of commodities
declared to be goods of special importance to inter-State trade or commerce impact differently on different States, depending
on the composition of their output and the variations are not easy to capture in the absence of reliable data on inter-State
trade. Then again, while State excise duties yield substantial revenue in most States, there are States like Gujarat where
full prohibition is in vogue, and Tamil Nadu where partial prohibition is in force. Also, there are taxes which are levied and
collected in some States by local governments like octroi for which complete information is not available with us. We,
therefore, opted for the aggregate tax revenue approach instead of looking at the taxable capacity of the States, tax by tax.
 45
5.11 For this purpose, we had commissioned a study at Indian Statistical Institute (ISI), Calcutta. Applying the regression
approach, the study set up a model to estimate the relative contributions of variables which might be considered as
significant determinants of taxable capacity of a State such as the per capita SDP. A number of variables were identified
in this regard, and along with some selected dummy variables, regression equations were estimated obtaining statistically
reliable results. However, the reliance on a large number of variables and dummies raised questions as to which of them
could be considered to be within the control of the States and which were not. There are also acute data problems as
reliable information regarding the identified explanatory variables were not available. Figures of per capita State incomes,
for example, are simply not computed. What we have is data on State domestic product whereas it is well known that
taxable capacity is determined to a great extent by levels of per capita income. Data on several of the explanatory
variables also are dated. Further, the results were rather sensitive to the assumptions regarding the combination of
variables as was evident from the alternative formulations. Hence, we proceeded on some broad judgements to determine
the taxable capacity of the States.
5.12 Keeping in view the limitations mentioned above, for estimating the tax revenues of the States for the base year
normatively, we first worked out the trend growth rates (TGR) of the total own tax revenue of each State over the period
1987-99 and then applied the TGR so derived to the actuals of 1998-99. We have not gone by the growth rates of
individual taxes because of the varying tax practices among the States as mentioned above and the possibility of substitution
among different tax handles.
5.13 Having derived the base year tax revenue figures in this way, we worked out the tax-GSDP ratio (hereafter tax
ratio) of each State for the year 1999-00. The States were then divided into two groups, viz., special category and general
or non-special category. The tax ratio of each State was compared with the average ratio of the respective groups. Where
the average tax ratio of a given State fell below the relevant group average, we made upward adjustment in the ratio on the
reasoning that all States should try to move towards their group average over a period of time. The adjustment we have
in view is intended to reduce the gap between a State’s tax ratio and the average ratio of the group. Keeping in view their
relative revenue capacity as reflected in their per capita GSDP, where the per capita GSDP of a State fell below the
average per capita GSDP of the respective group of States by more than 15 per cent, we adjusted the tax ratio of the State
in question by 10 per cent of the difference between the tax ratio of that State and the average ratio of the group in
question. Where, however, the per capita GSDP of a State was not less than the relevant group average by more than 15
per cent, that is to say, the State’s per capita GSDP is close to the group average, the tax ratio was adjusted by 30 per cent
of the difference between the tax ratio of that State and the average ratio of the relevant group on the reasoning that States
should be able to have tax ratio approximating to their group average. For example, with the group average of tax ratio at
7 per cent, the tax ratio of a given State at 6 per cent, if the per capita GSDP of the State happens to be 85 per cent or
more of the average of the group, the tax ratio of that State for the base year is taken to be 6.3 per cent (6 plus 30 per cent
of 7 minus 6). For the special category States, the upward adjustment in the tax ratio for the base year has been restricted
to 10 per cent of the difference between the tax ratio of a State and the group average in all cases. The effect of this
normative adjustment for States which were below the respective group averages in their tax ratio is given in
Annexure V.1.
Non-Tax Revenue
5.14 The main components of non-tax revenue of the States are interest receipts, revenue from forestry and wildlife,
irrigation rates and royalty on minerals. It was noticed that these are heterogeneous in nature, and are not amenable to a
uniform treatment across the board. Hence, we have proceeded to estimate the base year figures of each major item
individually in most cases. Separate norms were applied for different items of non-tax revenues, namely, interest receipts,
dividends, revenue from forestry and wild life, irrigation rates and royalty on minerals. The basis of derivation of the base
year figures, item-wise, is indicated below:
i) Interest receipts have been estimated separately for interest from loans and advances and interest from
others. Interest from loans and advances has been estimated on the basis of TGR applied to the actuals of
1998-99. For others, the estimates are based on the average realisation in the three preceding years.
Interest accruing from the irrigation department has been excluded from non tax revenue receipts and
expenditure as these are merely contra entries.
ii) For dividends and other miscellaneous receipts under general services, the average realisation in the three
preceding years is taken as the base.
iii) Receipts from forestry and wild life, and royalty on minerals were estimated for the base year in the same
way as dividends i.e., on the basis of average of three years.
iv) In the case of receipts from irrigation, TGR based estimates or BE for the base year, whichever is higher
was adopted.
v) Lottery receipts constitute a significant source of non-tax revenues in some States. No clear trend was
discernible in the receipts from lotteries and the gross receipts vary widely from year to year. Hence net
receipts of 1998-99 was taken for the base year, whenever the lottery receipts occur.
vi) For rest of the items under general, economic and social services, receipts for the base year have been
estimated by projecting the 1998-99 actuals with the TGR.
 46
5.15 In the present exercise, non-tax revenues have been estimated on the lines indicated above with one more
change. In the case of some States, user charges as a proportion of their revenue expenditure (excluding interest and
pension) were found to be unduly low as compared to the average of the group of general category States. In order to give
a clear message that all States should make at least average effort to recover a part of the cost of providing public
services as reflected in their revenue expenditure, we have adjusted the ratio of non-tax revenue to revenue expenditure
of such States (excluding interest and pension benefits) in order to reduce their gap as compared to the group average by
50 per cent. This rule has, however, been applied only to States belonging to the general category.
Revenue Expenditure
5.16 As in the case of revenue receipts, considerations of both equity and efficiency require that the revenue expenditure
of the States also be estimated on a normative basis. Ideally, an equitable system of federal transfers should bring about
a measure of parity in the capacity of the constituent units to provide basic civic services to all citizens at a reasonable or
at least a minimum level. The determination of the relative revenue capacity of the States on a normative basis is intended
to serve this purpose. Variation among the States in the capacity to provide civic services, however, can arise also from
difference in needs such as a large proportion of the aged or children in the population, or morbidity, and also because of
variations in the unit cost of providing public services stemming from terrain (hilly tracts), and so on. Hence in designing an
equitable system of transfers, it is necessary to complement the assessment of relative revenue capacity with an assessment
of expenditure needs.
5.17 Determination of expenditure needs on a normative basis is, however, more problematic than that of taxable
capacity. The reason is that differences in the level and composition of expenditure can arise from variation in the levels
of income and consumption and also from the preferences or choices of the people regarding the services they desire
from the government sector. One way of getting over these problems would be to look at the differentials in the per capita
revenue expenditure of different States in the services which are basic to governance and are usually common among all
States. For instance, the three functional categories of services into which the expenditure of government are usually
classified, namely, general services, social services and economic services, contain major heads, such as, interest,
pensions and police under general services, and expenditure on elementary education, rural primary health, family welfare
and other social welfare activities under social services. An attempt could be made to examine the differences in the per
capita expenditure needs of different States for the services under these heads derived normatively and see how the
actuals fall short of the norm-based needs. The differences multiplied by the population of the State would then serve as
the base for determining revenue needs for purposes of equalisation transfers.
5.18 We commissioned a study at the Institute of Social and Economic Change, Bangalore, to work out the revenue
expenditure needs of the States based on the normative approach. The study provided estimates of revenue expenditure
of the individual States for the main items excluding interest payments, pensions and a few other items. The estimates
were derived by fitting regression equations with selected explanatory variables. Although, the equations satisfied the
standard statistical tests, it was not possible for us to use the results mainly for the reason that in several cases the
estimates were way out of alignment with the actual expenditure and since we are not starting from a clean slate, imposition
of norms derived statistically would be too disruptive. Besides, the expenditure needs of a State for purposes of equalisation
should be viewed in juxtaposition with, or as supplement to revenue capacity equalisation transfers and not in isolation.
There were also conceptual as well as data problems as in the case of taxable capacity estimation. For instance, for
police expenditure, information which could help to quantify the requirements of States having insurgency problems was
not available. The only option available to us, therefore was to impart elements of the normative principle in estimating the
revenue expenditure of the States in the base year in a limited way as indicated below.
5.19 Keeping the normative principle in view as far as possible, for estimating non-plan revenue expenditure of the
States for the base year i.e., 1999-00, we proceeded in three steps. The first step was to look at the figures arrived at by
applying the TGR on the actuals of 1998-99. Where the TGR turned out to be negative, the average of the three years,
1996-99, was taken for the year 1999-00. It was noticed that revenue expenditure of all States had grown at a fast pace
during the nineties. However, some restraint became visible in the provision of expenditure under certain major heads of
accounts recently. It was therefore decided as a second step that if the TGR based estimates happened to be higher than
the BE of a particular major item, the BE would be adopted. The TGR based estimates were retained for others. In other
words, in the second step, the TGR based estimates projected from 1998-99 or the budget estimates for 1999-00, whichever
was lower, was taken.
5.20 However, it was noticed that in many States expenditure under the heads of account relating to pensions and
interests were unduly high, whichever way they were estimated, whether by using the TGR or by adopting the BE.
Considering that the upward revision of pay and pensions would have been carried out by 1998-99, the growth of pensions
in the year 1999-00 was limited to 15 per cent over the actuals of 1998-99. Similarly, interest payments for 1999-00 were
estimated by projecting the 1998-99 actuals by 15 per cent on the reasoning that the States should exercise some check
on the growth of their borrowings and no one should expect that whatever commitments they may make on account of
interest liability will be accepted by the Finance Commission for purposes of assessment of their revenue needs. To go by
the actuals of interest payments in all cases would be unfair to States which have been more prudent in the matter of
borrowing. We have, therefore, made another adjustment in the interest liability in the case of States whose interest
payments as a percentage of revenue receipts were found to be higher than their respective group average. Thus, for
 47
States whose interest payments as a proportion of revenue receipts as indicated above did not exceed the group average,
the estimates arrived at by the rule TGR/BE whichever was lower, were not disturbed. However, for States for whom the
ratio was above the group average, only 80 per cent of the excess was accommodated in our assessment. Annexure V.2
provides details of the compression carried out in respect of interest payments for various States.
Projections for 2000-05
5.21 After firming up the base year figures in the manner indicated in the preceding paragraphs, we proceeded to
make projections for our reference period namely, 2000-05 by applying appropriate growth rates and by relying on certain
reasonable norms. The growth rates also have a normative thrust, oriented to the restructuring scheme. The method
followed for projecting revenues and expenditure of the States from the base year is described briefly below:
Tax Revenue
5.22 The tax ratio of the Centre and the States registered a decline during the nineties. In the case of the States the
decline has been less pronounced but all the same, the sluggish growth of States taxes contributed to their revenue gap.
This trend can be reversed only with determined effort by the governments to raise more revenue through taxation.
5.23 In our discussion on restructuring we have indicated that the improvement in the tax ratio for all the States
considered together over the five year period under consideration should be of the order of 1.15 percentage points of GDP.
With an underlying growth rate of GDP of 13 per cent, this translates into a growth rate of about 17.5 per cent in the tax
revenues. However, rather than applying a growth rate of this order uniformly across the States we considered it desirable
to allow for reasonable inter-State variation in the tax revenue growth rate depending on differences in their potential
revenue base. In particular, we took into account the differential constraints arising from variations in the rate of growth of
GSDP among the States and also their existing tax ratios relative to their past. The tax revenue growth rates for the
projection period were derived by using prescriptive tax buoyancies ranging from 1.1 to 1.35. The States were then
grouped according to GSDP growth-rate (12, 13 and 14 per cent) as also with respect to the tax buoyancies. A State was
placed in a higher or lower growth rate category depending on the constraints to growth they may face as reflected by
respective TGRs of GSDP. Further, the States were placed in a higher or lower buoyancy group depending on whether,
compared to their own past, they improved or deteriorated in terms of the tax ratio. For this purpose, a comparison was
made between the average tax ratio over 1994-95 to 1996-97 to the corresponding average ratio over 1987-88 to 1989-90.
A State, where the tax ratio is low compared to its own past, signifying deterioration in the recent years, was put in a higher
tax buoyancy group with the expectation that it should be able to improve its position back to where it was in terms of the
tax ratio. A State, which showed improvement in its position, was placed in a lower buoyancy group so that it was not
penalised for showing a better tax effort. But since the buoyancies we have prescribed are all above 1, (1.10, 1.20,1.30,
1.35), all States also will be required to make efforts to raise their tax ratios from the present levels. In the case of special
category States, all of them were placed in the lowest buoyancy group except for three, which were put in the next higher
buoyancy category. Annexure V.3 provides information on cluster of States in three groups, prescriptive buoyancies and
buoyancy based growth rates.
Non-Tax Revenue
5.24 A basic source of weakness of government finances in the States (as at the Centre) is the poor return on the
capital invested and negligible recovery of cost of services rendered by the government by way of user charges. The total
investment made by the States in Government companies and statutory corporations in the form of equity and loans
stood at Rs.1,16,368 crore as of 31.3.1997. These investments yield very little to the State’s exchequer in the form of
dividends, interests or profits. As for user charges, only 2.13 per cent of the revenue expenditure on social services is
realised by the States. In the case of economic services, the recovery rate is somewhat better, mainly because of royalty
from minerals and receipts from forestry. But these are more in the nature of taxes rather than user charges. There can
be no enduring solution to fiscal problems of the States unless government investments yield a reasonable return and the
rate of recovery of the cost of public services through user charges shows some appreciable improvement. Studies show
that recovery rates can be enhanced substantially in the case of non-merit goods and the implicit subsidies flowing
through governmental activities can be reduced.
Interest and Dividends
5.25 Coming to specific items of non-tax revenues, interest from loans and advances received by the States is, on an
average, around 3 per cent on the outstanding amounts. The loans and advances are extended out of the borrowed funds
only and the borrowings have to be serviced from return on investments made out of them. Hence it is proposed to set a
norm of 9 per cent return by way of interest on loans and advances in order to narrow the gap between the ratio of return
and cost of funds. However, to allow some time to the States to come up to this level of interest realisation, we postulate
the norm set by us to be achieved over a five year period so that the 9 per cent rate is realised by 2004-05. Accordingly,
interest receipts from 2000-01 have been estimated in such a way that the gap between the current level of realisation and
the targeted level for 2004-05 is closed each year on a proportional basis. For States which are already realising 9 per
cent or more as interest on loans and advances, the estimates furnished by them have been adopted. For dividends, we
have set a norm of at least 2 per cent on equity or the actuals/RE in 1999-00 whichever is higher for the year 2000-01.
Thereafter dividends have been projected to grow to 5 per cent by 2004-05 on the basis of proportional increase every
year.
 48
Royalties
5.26 Royalties on major minerals, crude oils and natural gas are dependent on production and the rates fixed by the
Government of India. However, to keep pace with inflation, a growth rate of 5 per cent has been adopted for projecting
revenues from royalties on major minerals.
Irrigation Receipts
5.27 The other important item of non-tax revenue is receipts from irrigation charges. Irrigation rates at present are
nominal in many cases and cover only a fraction of the operation and maintenance (O & M) expenditure. Ideally, the target
should be to fix irrigation rates in such a way that the receipts cover not only the maintenance expenditure but also leave
some surplus as return from capital invested. We recognise that this objective cannot be achieved immediately. Hence,
we propose to moderate the targets for increase in irrigation receipts in the following manner:
Table 5.2: Projected Return from Major and Medium Irrigation Projects
Sl. No. Range of Revenue Receipts from Projected
Major and Medium Irrigation increase per Remarks
Projects per hectare year (%)
1. Below Rs.150 25 Subject to a minimum of
Rs.80 per hectare in 2000-01
2. Rs.150 to 250 15 —
3. Above Rs.250 10 —
Forestry & Wildlife
5.28 Receipts from forestry and wildlife have been declining, not only as a proportion of total non-tax receipts but also
in absolute terms. Several States have urged that the scope of raising more revenue from this is dwindling because of fast
depleting forest resources and also due to court rulings relating to felling of trees and transportation of timber. We have
had occasion to peruse the relevant court orders on the subject. We found that the court directives and orders restrict only
indiscriminate felling of forest trees without a duly approved scientific plan. The forest policy of the Centre also points in
this direction. On these considerations, we do not find any justification for keeping the freeze on the receipts from forestry
at the 1999-00 level and instead we have assumed a growth of 5 per cent per year in forestry receipts over the estimates
for 1999-00.
Lotteries
5.29 Some States derive substantial amounts of non-tax revenue from lotteries. In view of the national policy to
discourage lotteries, we have taken the base year figures of receipts net of expenditure as the likely revenue from the
lotteries for all the years.
User Charges
5.30 In all cases of user charges, a 25 per cent step-up per year over the base year has been assumed in our
estimates of revenue receipts. We feel that this step-up is essential if the implicit subsidies are to be reduced.
Return from Public Sector Undertakings
5.31 Paragraph 5(vi) of our ToR requires us to consider the need for ensuring reasonable returns on investments of the
States in irrigation projects, power projects, transport undertakings, departmental undertakings and public sector enterprises.
The need to obtain reasonable returns from investments made by the States in these entities has been underlined in
Chapter II. In conformity with this objective, we have postulated a higher return in the form of dividends and interests and
these have been incorporated in our estimates for revenue receipts during the forecast period. We are aware that a 5 per
cent dividend on equity and 9 per cent interest on loans and advances are not adequate to meet the cost of borrowings of
the States. However, keeping in view the current realities, it would be unrealistic to postulate a higher return. Besides, an
element of subsidy in the interest on loans cannot be eliminated altogether, since some of the investments also yield a
social return such as investments to uplift backward areas or on roads to connect rural areas. Our norms of receipts from
non-tax revenue sources seek to strike a balance among all these considerations. Details of estimated net return on the
investments by the States in the power and transport sectors are given at Annexures V.4 and V.5 respectively.
Non-Plan Revenue Expenditure
5.32 For projecting the revenue expenditure of governments in different States over the five year period, starting from
the base year, we had two alternatives: (i) adopt uniform growth rate for all the three functional categories of government
services, and apply the rates uniformly to all States, or (ii) work out differential rates for different categories namely, the
general services, the social services and the economic services with appropriate variation as between States.
5.33 The justification for adopting differential rates for different categories of services is that the proportion of the two
main components of the revenue expenditure namely, salaries and other than salaries, vary considerably as between
services. For instance, the salary intensity of general services in most States is higher than that of the other two services.
The two components also grow at varying rates. Considering the net impact of normal attrition (3 per cent), increments
(2.7 per cent) and inflation protection (5 per cent), salary bill growth may reasonably be taken at 5 per cent per annum.
This growth allows for one per cent fresh recruitment against 3 per cent retirements. Non-salary components determine
 49
the quality of public services in the social sector as in the case of health and education etc and should be expected to grow
at least at the same rate as GDP. In order to allow for improvement in the level of these services, we have assumed an
increase of 2 per cent over the GDP growth in social services that is 15 per cent growth per annum. For general services,
the growth for non-salary components is assumed at 7 per cent and for economic services, at 11 per cent. Seven per cent
growth in the non-salary components of general services is assumed to take care of inflation (5 per cent) and population
growth (2 per cent). For economic services, we assume an 11 per cent growth in non-salary components in view of the
growing involvement of private sector in many areas of economic activity including infrastructure, and the diminishing role
of the public sector.
5.34 As will be seen, we have worked out an appropriate growth rate for each category of services taking into account
the salary intensity and the varying rates of growth of the two major components of revenue expenditure i.e. salary and
non-salary. In this process, we have tried to introduce a normative element in the salary growth by grouping the States
under broad bands of salary intensity and bringing them down nearer to the average of the respective group.
Interest
5.35 In the case of interest payments, we have assumed a growth rate of 10 per cent which is markedly lower than the
trend growth rate. A lower growth rate has been adopted to bring interest growth in line with the normative approach. In
our view the States have to exercise restraint in the matter of borrowing and rely more on revenue resources for expenditure.
It is time it was realised that there has to be a check on the borrowings and thereby on interest payments if the finances
are to be brought in order.
Pensions
5.36 As regards pensions and other post retirement benefits it is presumed that the impact of pension revision has
largely been absorbed by 1999-00 and the future requirements of expenditure would depend upon the net increase in the
number of retired persons and the need to provide inflation protection in their basic pension. Considering these two
dimensions, a 10 per cent growth per year in pension and the other retirement benefits over the base year has been
considered reasonable.
Subsidies
5.37 Subsidies are provided by the States implicitly and explicitly. Our recommendations for raising the level of cost
recovery in irrigation and other public services through higher user charges and returns on investments in public sector
enterprises would serve to reduce the implicit subsidies substantially. As for subsidies provided explicitly through the
State budgets, we do not have comprehensive information regarding the amounts involved. However, where we have
been able to identify them, these have been taken as ‘nil’ for the forecast period. For departmental undertakings, we have
not allowed for any loss, implying that, in our assessment, no subsidy will be extended to them from the State budget.
Maintenance of capital assets:
5.38 In making our recommendations, the ToR require us to take into account, among other considerations, the
maintenance and upkeep of capital assets and the norms on the basis of which the amounts necessary for maintenance
may be provided and also specify the manner of monitoring of such expenditure. It is a matter of concern that our capital
assets are languishing because of poor maintenance. There has been a tendency to take up a number of new projects
without making adequate provision for maintaining the existing assets. The poor state of our roads, irrigation projects, and
government buildings bear testimony to the sad neglect of maintenance. This has happened in spite of the fact that
successive Finance Commissions in the past have made liberal provisions for maintenance of capital assets in their
assessment of revenue expenditure. The reasons for this state of affairs are: one, maintenance expenditure is usually
classified as “non-plan” and thus these get a low priority in the budget allocations; two, the funds assessed by the Finance
Commissions get diverted to other areas of expenditure as no specific fund is created for the maintenance of capital
assets; and three, budget allocations, which as it is often fall short of the requirements, are used up largely in meeting
salary expenditure and the running cost of establishment itself. All this needs to be changed but it cannot come about
without an attitudinal change towards the priorities, budgetary allocations and monitoring of such expenditure. With this
caveat we now proceed to indicate the norms of expenditure required for maintaining capital assets specifically for irrigation
projects, roads and bridges and government buildings.
Irrigation Projects
5.39 In computing the admissible expenditure on maintenance of irrigation projects, the Tenth Finance Commission
(TFC) had adopted a norm of Rs.300 per hectare for utilised potential and Rs.100 per hectare for the unutilised part. The
Commission had also followed the past practice of enhancing the norms by 30 per cent for hill States. It had provided
suitable increases in the norms in each year of the forecast period to insulate the expenditure against inflation.
5.40 In their memorandum on the subject, the Ministry of Water Resources have suggested a provision of Rs.450 per
hectare for major and medium irrigation projects for the maintenance of the utilised potential and a provision of Rs.150 per
hectare for maintenance of the unutilised potential. For the maintenance of utilised potential of minor irrigation projects
the memorandum suggested a provision of Rs.225 per hectare and a provision of Rs.75 per hectare for unutilised potential.
Further, Rs.300 per hectare for special repairs of existing irrigation systems and a step-up by 30 per cent for maintenance
of utilised potential of projects located in hill States have been recommended by the Ministry.
 50
5.41 We understand that it has not been possible to maintain most of the major and medium irrigation projects at the
desired level primarily due to paucity in budget allocation. The Standing Committee on Agriculture in their report for 1998-
99 drew the attention of the Union Government on the imperative need for giving high priority to maintenance of these
assets. We have adopted the norm, of Rs.450 per hectare for the maintenance of the utilised potential and Rs.150 per
hectare for unutilised potential in the case of major and medium irrigation projects as suggested by the Ministry. Considering
the cost differentials for maintenance in the hill States, an additional provision of 30 per cent is being made in their case.
5.42 On the basis of the data obtained from the Planning Commission, the utilised and unutilised irrigation potential at
the end of 1999-2000 has been worked out for individual States. We have assumed that the States whose unutilised
potential in 1999-00 was less than 10 per cent of the total would be fully utilising their potential by 2004-05. States with
unutilised potential between 10 to 25 per cent could be expected to reduce the unutilised part to 5 per cent and those with
unutilised potential exceeding 25 per cent will reduce it to 10 per cent by 2004-05.
5.43 The TFC had provided Rs.150 per hectare for the maintenance of minor irrigation projects in respect of utilised
potential. There was no provision for any unutilised potential. It had also recommended an additional 30 per cent
allocation for hill states and hill areas of other States. We have adopted a norm of Rs.225 per hectare for the utilised
potential in respect of minor irrigation projects with a 30 per cent step-up for hill States and hill areas as suggested by the
Ministry.
5.44 While working out the requirements for the maintenance of irrigation projects, it was noticed that in some States
the TGR based estimates are higher than the norm-based estimates. For the sake of better maintenance, we have not
disturbed the higher estimates. An increment of 5 per cent per annum has been provided to take care of the possible
price increase. Annexures V.6 and V.7 indicate provision for maintenance of major & medium irrigation projects, and minor
irrigation projects, respectively.
Roads & Bridges
5.45 The TFC had estimated the requirements for maintenance of roads and bridges of the States on the basis of
norms suggested by the Ministry of Surface Transport (MoST) and information on road length of different categories
furnished by the States. The requirements of funds thus worked out was found to be rather high and therefore, the
Commission had limited the total provision for all the States to twice the amount provided by the Ninth Finance Commission.
The State-wise distribution was made on the basis of the average of their percentage share in (a) the all-State norm based
aggregate expenditure and (b) the estimated all-States total expenditure in 1994-95. The provisions for individual States
so worked out were suitably modified to ensure that each State got at least twice the amount provided by the Ninth
Finance Commission. It was also ensured that the provisions were at least 20 per cent higher than the expenditure in
1994-95. The Commission thereafter provided a graduated increase in the expenditure each year without affecting the
totals.
5.46 We have obtained norms for maintenance of roads from the MoST. The Ministry has suggested zone-wise norms
for total maintenance and repair costs in different rainfall areas for all categories of roads with traffic intensity based on the
Report of Sub-Committee on Norms for Maintenance, October, 1999. These norms are at the 1999-00 level of prices and
divided into two categories viz. i) maintenance and repairs (normal) and ii) maintenance and repairs (special). The norms
for hilly areas are given separately in the Report. The norms received from the States were incomplete and dated in
respect of large section of roads. It was therefore, considered reasonable to adopt norms provided by the MoST with
some modifications.
5.47 Maintenance expenditure as per the MoST norms for normal repairs have been worked out in the above manner
for the base year. For comparison, maintenance expenditure on roads for the year 1999-00 has been worked out on the
basis of trend growth rate as well. In the case of States whose expenditure as per the MoST norms in 1999-00 turns out
to be too high as compared to the projected estimates for 1999-00 on the TGR basis, the normative provision for the base
year 1999-00 was limited to 125 per cent of the actuals of 1998-99. In respect of the other States, the projected expenditure
for 1999-00 was allowed to remain undisturbed. Having firmed up the base year estimates in this way, a 5 per cent step-
up was provided in each year to take care of inflation. We have also provided 30 per cent step up for the hill areas in our
estimates. Annexure V.8 indicates the provision for maintenance of roads and bridges.
Buildings
5.48 The TFC had considered three factors for determining the requirements for maintenance expenditure of buildings
during the forecast period, 1995-00. These three factors are (i) the trends in actual expenditure on maintenance of buildings,
(ii) the steep increase that had occurred in the costs involved and (iii) the poor state of upkeep of the State government
buildings. Keeping these factors in view, the TFC had provided a step-up of 250 per cent by 1999-00 on the norms followed
by the Ninth Commission for 1994-95. Provision for each year for their forecast period was worked out taking inflation into
account within an upper and a lower ceiling.
5.49 In order to estimate the State-wise annual maintenance expenditure on buildings in 1999-00, we have made a
comparison between the figures worked out on the basis of the norms of the Central Public Works Department (CPWD)
and the State Government norms. For this purpose, we have collected information related to residential and non-residential
buildings from all States under two categories namely, civil and electrical.
 51
5.50 In deriving the estimates of maintenance expenditure on buildings for the base year (1999-00) State-wise, we
have compared the estimates based on the CPWD norms and the State norms. The lower of these two figures was
compared with the estimates derived for the year 1999-00 based on TGR. We have not disturbed the TGR based estimates,
if they happened to be above the norm-based figures. In other cases, we have adopted the norm based estimates subject
to a maximum of 25 per cent step up on the 1998-99 figure for the actual expenditure of the State to derive the base year
estimate. Starting from the base, the requirements for forecast period was worked out with a step up of 5 per cent each
year to allow for inflation. Annexure V.9 sets out the provision made for maintenance of buildings.
Committed Liability
5.51 We are required, as per the terms of reference, to consider, inter-alia, maintenance expenditure of plan schemes
completed by 31st March, 2000. The TFC was also required to consider the liability on account of maintenance of plan
schemes completed by 31 st March, 1995. It was pointed out by the TFC that the transfer of maintenance of plan expenditure
to non-plan account in the middle of the Eighth Plan was problematic. The reason was that as per the guidelines of the
Planning Commission, maintenance of plan schemes taken up during a five year plan period continues to be on plan
account till the end of that plan and a transfer of maintenance expenditure of plan schemes completed during a given plan
period into non-plan account is done only in the first year of the next plan. Yet, keeping in view the terms of reference, the
TFC had taken 30 per cent of the plan revenue outlay for the year 1994-95 in the non-plan revenue account of 1995-96 as
committed liability for the general category States and Meghalaya. In respect of the special category States other than
Meghalaya, the provision was higher at 40 per cent on the consideration that these States did not transfer maintenance
expenditure of plan schemes completed during the Seventh Plan period into non-plan account during the Eighth Plan.
The Eighth Five Year Plan continued up to 1996-97. The TFC, however, did not provide for incremental requirement of
funds for plan schemes completed during the last two years of Eighth Plan i.e. 1995-96 and 1996-97. It felt that the
Planning Commission might consider making provision for such schemes till 1999-00 under the plan as was done for the
schemes of two annual plans of 1990-91 and 1991-92.
5.52 There are conceptual as well as operational difficulties in providing funds for maintenance of plan schemes
completed by 31st March, 2000. First, expenditure on running these schemes will continue to be covered under plan till
2001-02. Any provision for maintenance of plan schemes for the year 2000-01 on the basis of completed schemes as on
31st March, 2000 will result in over-estimating the total non-plan revenue expenditure of the States for 2000-01 and 2001-
02 as the States following the guidelines of the Planning Commission will count such expenditure on the plan side.
Second, since the forecast period of this Commission goes up to 2004-05, the requirement of funds under non-plan
revenue expenditure will not be covered fully for the years 2003-05 if the plan schemes completed during the years 2000-
02 are not taken into consideration. Considering all these, it appears appropriate to us that maintenance requirements for
plan schemes may be provided only from 2002-03, on the basis of the estimated expenditure on plan schemes in 2001-
02. This will cover plan schemes completed by 31st March, 2000 also.
5.53 There are a number of operational problems in providing adequate fund for maintenance of plan schemes. No
specific information is available about plan schemes completed by 31st March, 2000 or to be completed by 31st March,
2002. Also, it is not clear how many of these schemes will be in operation after completion of the Ninth Plan. Information
was sought from the Planning Commission and also from the States in respect of requirement of funds for maintenance
of such plan schemes. Some information was received from the States in this regard, but these related mostly to the
expenditure requirements in 1995-96 and 1996-97. These requirements were implicitly covered in the projection of non-
plan revenue expenditure put forward by the States for the forecast period as they formed an integral part of non-plan
revenue expenditure in the budgets of the States from 1997-98 onwards. However, the information in respect of requirement
of funds for transfer of these schemes either in 2000-01 or in 2002-03 was not provided by the States. It is also noticed
that there was no definite trend in the non-plan revenue expenditure of the States in the past to identify an increase of
expenditure on account of transfer of plan expenditure into non-plan expenditure for the maintenance of plan schemes at
the end of each Five Year Plan. In view of this, we feel that the norms adopted by the TFC i.e. 30 per cent of plan revenue
expenditure for general category States may be continued as there is no large structural change in the composition of plan
revenue expenditure in the last five years.
5.54 As regards special category States, it is noticed that the per capita plan expenditure is much higher than the all
India average mainly due to large plan grants from the Centre. They have also been diverting a significant part of plan
assistance for meeting non-plan expenditure in consultation with the Planning Commission. Further, most of them have
been incurring maintenance expenditure under their plan with the approval of the Planning Commission. Since we are
providing adequate grants to these States to meet deficits on non-plan revenue account it should not be necessary to
divert plan grants for non-plan purposes. These States can thus meet committed liabilities on the plan side, as done in the
past, without any adverse impact on their developmental expenditure. Hence, no provision has been made in the case of
special category States for non-plan revenue expenditure for committed liability arising out of plan schemes to be completed
by 31st March, 2002.
5.55 A related issue is the estimation of revenue expenditure of the States under the plan till 2001-02. Neither the
States nor the Planning Commission were able to provide any firm or reliable estimates of revenue expenditure under the
Plans completed by the end of March 2002. In the absence of any specific information from these sources, the only
 52
alternative was to arrive at plan revenue expenditure at the end of 2001-02 on the basis of trend growth rates for the period
1987-99 over the estimated plan revenue expenditure for the base year 1999-00. This projection is only for the limited
purpose of estimating requirements of committed liability. The requirements for committed liability arising from the Ninth
Plan in 2002-03, 2003-04 and 2004-05 for the general category States have been worked out at 30 per cent of the
estimated plan revenue expenditure by the end of 2001-02. State-wise projection for maintenance of plan scheme likely
to be completed up to end of March 2002 worked out for 15 States for the years 2002-05 is placed at Annexure V.10. These
amounts do not cover additional liabilities arising out of maintenance of Centrally Sponsored Schemes (CSS). A large
number of these continue as plan schemes from one Five Year Plan to another in some form. Some of them get terminated
at the end of a given Five Year Plan. The requirement of the States for maintenance of C.S.Ss. under “non-plan”, therefore,
is considered to be not substantial. Further, the Ninth Five Year Plan has envisaged transfer of large number of C.S.S. to
the States. When this happens, we presume that such transfer will be accompanied with transfer of funds as well. In view
of these considerations, we have not provided any separate fund on account of committed liability for maintenance of
Centrally sponsored schemes.
Monitoring of Maintenance expenditure
5.56 We are required, under our terms of reference, to recommend the manner of monitoring expenditure for maintenance
and upkeep of capital assets and maintenance of plan schemes. We have provided reasonable sums for the maintenance
and upkeep of capital assets and for maintenance of plan schemes. We have noticed that maintenance of capital assets
in the past has been poor not because of lack of funds provided by the Finance Commission but because of lack of
adequate budgetary provision within the overall resources available to the States. The TFC had examined the reasons for
the poor state of maintenance of capital assets and it was noticed by them that the main reason had been the exhaustion
of a large part of the provision for maintenance expenditure by spending on establishment, leaving little for maintenance
per se. They further noticed that the information system in the States was not geared for providing data regarding the
exact amount spent on maintenance and on maintenance related establishment. It was further noticed that though the
respective work divisions entrusted with maintenance had the necessary details, these were not reflected in the accounts
or in any other reporting system in a fashion which would permit easy monitoring. The TFC had, therefore, suggested
changes in the system of maintenance of accounts in such a way that the expenditure on the works component and the
establishment expenses get reflected separately and are easily accessible. The details of the re-designed accounting
system on maintenance expenditure proposed by the TFC as explained in Appendix 3 of their report dwelt upon the need
for providing the new sub-heads and minor heads in order to make the accounts more transparent. From the replies of the
States furnished to us, it is seen that these new heads have not been introduced so far. Transparency in accounting is
imperative. Hence, we endorse the suggestion of TFC in this regard.
5.57 For monitoring, the TFC had recommended the formation of a High Powered Committee chaired by the Chief
Secretary, with Secretaries of the Departments of Finance, Planning, Irrigation and Public Works and the Chief Engineers
of Works Department as members. It was further stipulated that this Committee may review every quarter the allocation
and utilisation of the funds for maintenance and ensure that allocated funds are not diverted to other areas. From the
expenditure on maintenance shown in the accounts, it seems that nothing much has been done in this direction as
expenditure levels still continue to be far below the amounts provided in the estimates of the TFC.
5.58 We have made reasonable provisions for the requirements of maintenance of capital assets and for committed
liability arising from completed plan schemes by the end of 2001-02. The States should make budgetary provisions each
year to a level at least equal to the provisions for maintenance recommended by us. We are of the opinion that this can be
achieved only if States themselves take initiative to fix priorities and to provide sufficient budgetary support for maintenance.
In this context, we reiterate the recommendation of the TFC in regard to the monitoring by a high power committee. The
functioning of this committee at the state level should be activated. Further, the budgetary provisions and expenditure for
maintenance of capital assets and for committed liabilities on plan schemes may be assessed by the Planning Commission
at the time of assessment of their resources and estimation of the balance from current revenues. Planning Commission
may consider devising a suitable mechanism for this purpose.
5.59 The fiscal position of the States is under acute stress. We believe that a mere tinkering with tax rates here and
there, or small increases in user charges and marginal cuts in expenditure cannot be a lasting remedy to the problem.
Structural changes both in revenue raising and expenditure are called for. Details of these are discussed in Chapter II. We
have assessed own resources of the States and their non-plan revenue expenditure, keeping these aspects in the
background. In the process, we have introduced norms, though in a limited way, which are considered reasonable to
achieve. The results of our assessment of States’ own resources are indicated in Annexures V.11 to V.35.
 53

Chapter VI
Sharing Union Tax Revenues

6.1 Article 280 (3) of the Constitution requires the Finance Commission to make recommendations as to the distribu-
tion of the net proceeds of shareable taxes between Union and the States, and the allocation between the States of their
shares in such proceeds. Formulation of principles that should guide the assignment of share to the States and the
determination of individual share of each State constitutes a central task of the Commission.
6.2 The Constitution (Eightieth Amendment) Act, 2000 has altered the pattern of sharing of Central taxes between
the Centre and the States in a fundamental way. Prior to this amendment, Taxes on Income other than agriculture income
and Union duties of excise were shared with States under articles 270 and 272 respectively. The Eightieth Amendment
Act has substituted a new article for article 270 and omitted the old article 272. The new article 270 provides as under:
“270(1) All taxes and duties referred to in the Union List, except the duties and taxes referred to in
articles 268 and 269, respectively, surcharge on taxes and duties referred to in article 271 and any cess
levied for specific purposes under any law made by Parliament shall be levied and collected by the
Government of India and shall be distributed between the Union and the States in the manner provided in
clause (2).
(2) Such percentage, as may be prescribed, of the net proceeds of any such tax or duty in any
financial year shall not form part of the Consolidated Fund of India, but shall be assigned to
the States within which that tax or duty is leviable in that year, and shall be distributed among
those States in such manner and from such time as may be prescribed in the manner pro-
vided in clause (3).
( 3) In this article, “prescribed” means, -
(i) until a Finance Commission has been constituted, prescribed by the President by
order, and
(ii) after a Finance Commission has been constituted, prescribed by the President by
order after considering the recommendations of the Finance Commission”.
The Finance Commission is now required to recommend such percentage of taxes or duties referred to in the
new article 270 that may be assigned to the States and also recommend the manner in which these may be distributed
among the States.
6.3 This Amendment Act is based on a recommendation of the Tenth Finance Commission (TFC) which had recom-
mended an Alternative Scheme of Devolution (ASD) in its report submitted in November 1994. Under this scheme,
proceeds of all Central taxes, except surcharges, would constitute a common shareable pool from which a share was to
be devolved to the States. The TFC recommended 29 per cent of the proceeds to be devolved to the States under this
Scheme. This percentage share included devolution on account of additional excise duties levied in lieu of sales tax as
well as the grant-in-lieu of the tax on railway passenger fares.
6.4 In December 1996, the Government of India had brought out a Discussion Paper on the Alternative Scheme of
Devolution spelling out the pros and cons of the proposed scheme. On the basis of a consensus reached in the Third
Meeting of the Inter-State Council held on 17th July, 1997, the Government of India accepted the scheme with some
modifications. A Constitution (Eighty-Fifth Amendment) Bill, 1998 was introduced in the 12th Lok Sabha. The Bill was
referred to the Standing Committee of Parliament on Finance. The Standing Committee gave its report to the Parliament
in the last week of February 1999. However, the Bill lapsed with the dissolution of the Lok Sabha. A modified version of
the Bill was introduced in the Lok Sabha as ‘The Constitution (Eighty-Ninth Amendment) Bill, 2000’ on March 9, 2000. The
Bill was passed by Parliament and received the assent of the President of India on June 9, 2000, as ‘Constitution
(Eightieth Amendment) Act, 2000.’
6.5 The main changes brought about by this amendment are as follows:
(a) All Central taxes and duties, except those referred in articles 268 and 269 respectively and surcharges and
cesses, are to be shared between the Centre and the States.
(b) Only States in which these taxes and duties are ‘leviable in that year’ are entitled to get a share in these
taxes and duties.
(c) A percentage of “net proceeds” of these taxes and duties as may be prescribed by the President by order
after considering the recommendations of the Finance Commission is to be shared by States.
(d) The percentage of “net proceeds” of these taxes and duties which is assigned to the States in any financial
year shall not form part of the Consolidated Fund of India.
53
 54
(e) The article 270(2) which referred to taxes on income prior to the amendment contained the following
provision :
“Such percentage as may be prescribed, of the net proceeds in any financial year of any such tax, except
in so far as those proceeds represent proceeds attributable to Union Territories or to taxes payable
in respect of Union emoluments, shall not form part of the Consolidated Fund of India.”
In the new article 270 which refers to all taxes the words “net proceeds” attributable to Union Territories or
to “taxes payable in respect of Union emoluments” have been omitted.
(f) The recommendation of the Tenth Finance Commission regarding sharing of “gross proceeds” was also not
accepted in the new Amendment Act and the words “the share of net proceeds” was prescribed in order to
maintain consistency between articles 270, 279 and 280.
6.6 Article 269 has been recast by the Amendment Act. The new article includes only taxes on sale and purchase of
goods and taxes on the consignment of goods. All other taxes that were listed under article 269 prior to the amendment
have been deleted from this article.
6.7 In view of the changes brought out by the Constitution (80th Amendment) Act, 2000 the terms of reference were
modified by the Presidential Order dated 19th June, 2000 and para 7 of the original terms of reference was deleted. This
para required the Commission to suggest changes in the principles governing the distribution of additional excise duties
in lieu of sales tax on sugar, textiles and tobacco, and the grant in lieu of the tax under the repealed Railway Passenger
Fares Tax Act, 1957.
6.8 The Commission is now required to determine the share of the net proceeds of Union Taxes and Duties which may
be assigned to the States and the respective share of each State. The share to be given to each State is only in respect
of taxes and duties which are leviable in that State in the relevant year. We have therefore obtained information from the
Union Finance Ministry about the taxes and duties which are leviable in all the States of the country and whether there are
exceptions. The Union Ministry of Finance has informed us that at present all taxes except the expenditure tax and
service tax are leviable in every State of the country. Expenditure tax and Service tax are not leviable only in the State of
Jammu & Kashmir. We have kept this position in view while determining the inter-se share of the States in the distribution
of Central taxes.
Aggregate Share of States
6.9 We are required to determine, first, the aggregate share of the States in all Union taxes and duties under article
280(3)(a) of the Constitution and para 3 of our terms of reference. The determination of the aggregate share of States in
the net proceeds of all Union taxes and duties, often referred to as the vertical devolution, requires a comprehensive view
of (i) the expenditure needs of the Centre; (ii) the aggregate resources of the Centre; (iii) the aggregate requirements of
States on revenue account, and (iv) the resources of States from own sources. We have already discussed the resource
and expenditure position of the Centre in Chapter IV, and similarly the requirements of the States in relation to their own
revenues in Chapter V.
6.10 In considering the issue of vertical division of the Central tax revenues, it would be useful to briefly review the
changes in the aggregate share of States in the net proceeds of all Union taxes and duties, excluding surcharge, cesses
and the cost of collection during the last two decades. This has been worked out on the basis of share of all States in the
Union excise duties and income tax recommended by the successive Finance Commissions and converted as a share in
all Union taxes and duties, including the grant in lieu of tax on railway passenger fares, and the additional excise duty in
lieu of sales tax on textiles, sugar and tobacco (Annexure VI.1).
6.11 It may be noted that the share of the States in the net proceeds of all Union taxes and duties including grant in lieu
of railway passenger fares tax and additional excise duty on sugar, tobacco and textiles has fluctuated between 26.30 per
cent and 31.59 per cent. Even during the period of devolution covered by the same Finance Commission, the year to year
fluctuations in terms of percentage of all Union taxes and duties have been significant. This may have been largely due to
fluctuations in the rates of growth of income tax and Union excise duties, which were the only taxes shared with the States
before the Eightieth Amendment to the Constitution, apart from the grants given in lieu of passenger tax, and the collec-
tions from additional excise duty in lieu of sales tax on these commodities.
6.12 In their memoranda, States are in unison in asking for the changeover to the alternative scheme of devolution,
and for giving up the present system of tax sharing of revenues from specified taxes, viz., income tax and Union excise
duties. Many have, however, asked for a higher share in the pool of Central taxes as compared to the 29 per cent share
that was recommended by the Tenth Finance Commission. They have asked for shares that range from 33 to 50 per cent
of the gross proceeds of Central taxes. Some of the important benchmark figures in this range are 33 per cent [Bihar,
Meghalaya, Mizoram, Tripura, West Bengal], 33.33 per cent [Haryana, Punjab, Rajasthan, Sikkim, Tamil Nadu], 35 per
cent [Goa, Madhya Pradesh, Orissa] 40 per cent [Karnataka, Kerala], and 50 per cent [Andhra Pradesh, Assam,
Maharashtra]. Some States have suggested that initially it may be a lower figure, but the share should ultimately be raised
to 50 per cent. Most of them have asked for sharing the ‘gross’ rather than the ‘net’ proceeds. Most special category
States have asked for an earmarking of 30 per cent of the shareable pool of taxes for distribution among the special
category States only. A few States have indicated that the aggregate percentage recommended by the Tenth Finance
 55
Commission be retained, but have asked for exclusion of the 3 per cent share included in the figure of 29 per cent in
respect of the sharing of additional excise duties in lieu of sales tax on specified commodities. For these commodities,
they want that the tax rental arrangement should be terminated and the power to levy sales tax on these commodities be
restored to them.
6.13 In their memorandum, the Central government has urged that the Commission may provide for an assured
minimum absolute level of vertical tax devolution, which may be pegged at 29 per cent of the current level of Central taxes,
e.g., linked to the 1999-2000 level, with a reduced percentage (say 20 per cent) of vertical tax devolution for incremental
gross tax revenue of the Centre over the 1999-00 level.
6.14 States have raised objection to the frequent levy of surcharge on income tax, which assigns exclusively to the
Centre an amount of the tax which otherwise would be shareable as it is realised from the same tax base. It has been
argued that instead of the measure being used for meeting any emergent requirements of a specific nature, the surcharge
is used as a normal source of revenue. In the process, the States are made to lose considerable revenue which other-
wise, would have been available to them had the surcharge been integrated into the income tax rates. As a result of
frequent representations from the States, the surcharge on income tax was completely withdrawn from the financial year
1994-95. However, it was reintroduced in the budget for 1999-00 and retained in the budget of 2000-01 with an enhanced
rate for taxable income above Rs.1.5 lakh. Article 271 has been retained in its present form, which means that Parliament
can now levy surcharge on all Union taxes and not merely on income tax and the taxes specified in article 269 as was the
position before the Eightieth Amendment to the Constitution. Surcharge levied on any tax is not shareable, and therefore,
to the extent that power to levy surcharge is used as a revenue raising measure, it affects the States. We have ourselves
recommended the levy of surcharge for the purpose of meeting the expenditure for providing relief to the affected popula-
tion at the occurrence of a calamity of rare severity. However, these occasions are expected to be rare. We would like to
state that while there is no harm in levying surcharge on any specific tax for meeting an unexpected and unforeseen item
of expenditure, it should not be resorted to as a revenue raising measure to fill the budgetary gaps. It should be levied for
a specific purpose, for a limited period.
6.15 In the light of our assessment of Central finances, as also the State finances, we have recommended the share
of States in income tax and Union excise duties in our interim report, for making provisional arrangements for the year
2000-01 as 80 and 52 per cent, respectively. This was done with a view to ensure that the States do get about 29 per cent
of the gross revenue from Union taxes, the additional excise duties and the grant in lieu of tax on railway passenger fares.
We have completed our assessment for the entire period from 2000-01 to 2004-05 of the Central resources and State
finances. Since the submission of interim report, the necessary changes in the Constitution providing for sharing of all
Union taxes and duties have been done. On the basis of our analysis and assessment of the Centre’s and States’
budgetary requirements we are of the view that the share of the States be fixed at 28 per cent of the net proceeds of all
taxes and duties referred to in the Union List, except the taxes and duties referred to in articles 268 and 269, and the
surcharges and cesses, for each of the five years starting from 2000-01 and ending in 2004-05. Our recommendations
made for the sharing of income tax and Union excise duties in the interim report would, consequently, stand modified.
6.16 The Constitution (Eightieth) Amendment has come into force. A consequence of this change is that the net
proceeds of the additional excise duties levied under the Additional Excise Duties (Goods of Special Importance) Act,
1957, cannot be passed on to the States as article 272 of the Constitution has been deleted. These are now part of the tax
revenue receipts of the Central Government and are sharable with the States. In view of these changes, there is a need
for a review of the earlier arrangement. Pending that, we further recommend that 1.5 per cent of all shareable Union taxes
and duties be allocated to the States separately, thus totalling 29.5 per cent of the net proceeds of all Union taxes and
duties. Inter-se distribution among the States be done in the same manner as the distribution of 28 per cent of net
proceeds. We further recommend that if any State levies and collects sales tax on sugar, textile and tobacco, it will not be
entitled to any share from this 1.5 per cent.
Determining Inter se Shares of States
6.17 We now consider the issue of inter se distribution of the aggregate share of States in the Central tax revenues.
Up to the Seventh Finance Commission, the formulae used for determining the income tax shares were clearly distinct
from those for the Union excise duties. Since then, a process of convergence between the two sets of formulae is
distinctly noticeable.
6.18 Population and collection/assessment were the only two criteria used for determining the inter se shares of the
States in the case of income tax up to the Seventh Finance Commission. In respect of Union excise duties, the criteria,
as these evolved over time, had placed greater and greater emphasis on factors relating to economic backwardness and
fiscal weakness of the States. However, population continued to be the largest determining factor up to the Sixth Commis-
sion, although its weight went down from 100 to 75 per cent. This weight was further reduced to 25 per cent (a fall of 50
percentage points from the preceding Commission) by the Seventh Commission. As already noted, beginning with the
Eighth Finance Commission, two changes occurred. First, there was a move towards unifying the formulae for the inter se
distribution of both income tax and Union excise duties and, secondly, a portion of the Union excise duties was kept aside
for distribution according to ‘assessed deficits’ of States after the devolution of Central taxes. The unified formulae used by
the Eighth, Ninth and Tenth Commissions are given in Table 6.1.
 56
6.19 In the unified formula of sharing of taxes recommended by the Eighth, Ninth and Tenth Commissions, two changes
are noticeable. From the shareable amount of income tax, ten per cent was set apart for distribution on the basis of
assessment in each State by the Eighth and Ninth Finance Commissions. The Tenth Finance Commission did not adopt
any criterion of assessment for the purpose of distribution. No such criterion was adopted for the distribution of Union
excise duties. The second change related to setting apart of a portion of the Union excise duties for distribution to the
States on the basis of ‘assessed deficits’. This practice was started by the Eighth Finance Commission and was contin-
ued by the Ninth and the Tenth Finance Commissions. The share kept aside for this purpose was also gradually in-
creased. It was 5 per cent of the ‘net’ proceeds of Union excise duties in the case of Eighth and the first report of the Ninth
Commission. It was raised to 7.425 per cent in the second report of the Ninth Commission, and subsequently to 7.5 per
cent by the Tenth Commission.
Table 6.1: Inter se Sharing of Union Taxes: Eighth, Ninth and Tenth Finance Commissions
Finance Criteria Applicable
Commission to
Popula- Distance Inverse Poverty Index of Area Index of Tax
tion of Ratio Backward- Infrastruc- Effort
Income ness ture
Eighth 25 50 25 - - - - - 90% of
Shareable IT*
Ninth
(I Report) 25 50 12.5 12.5 - - - - 40% of UED
Ninth
(II Report) 25 50 12.5 - 12.5 - - - 90% of
Shareable IT*
29.94 40.12 14.97 - 14.97 - - - 37.575% of UED
Tenth 20 60 - - - 5 5 10 100% of
Shareable IT and
40% of UED
* The remaining 10 per cent was to be distributed according to contribution in the case of income tax. Similarly, the balance of the shareable
amount in the case of Union excise duties was to be distributed according to assessed deficits.
Source : Reports of successive Finance Commissions.

6.20 Two basic principles for determining the inter se shares of States are those of equity and efficiency. The principle
of horizontal equity is guided by the consideration that, as a result of revenue-sharing, the resource deficiencies across
States arising out of systemic and identifiable factors are evened out. The principle of equity makes up for resource
deficiencies. As such, it also tends to create a vested interest in continuing with the resource deficiency. To neutralize this
adverse incentive, it needs to be complemented by suitable criteria for rewarding ‘efficiency’, i.e., efforts to improve the
resource bases and deliver services at minimum (efficient) costs.
6.21 One issue in designing incentive-based criteria is whether they should be dynamically related to future achieve-
ments or related only to achievements already accomplished. Dynamic incentives are expected to modify current/future
behaviour. But in this case, since relevant data become available only with the passage of time, the Finance Commission
can only define the formula, but cannot determine the actual shares of States. Ideally, the incentive should be based on
year to year performance. But because of operational difficulties, and in the interest of certainty of the relative shares of
States in the tax devolution during the period of our recommendation, we do not consider it feasible or desirable to build
any incentives that may change from the quantum of devolution for a State from year to year. However, we are providing
some dynamic incentive for better fiscal performance in our proposal for debt relief. We also trust that the index of fiscal
discipline that we are suggesting for the devolution formula will act as an inducement for States to show better fiscal
performance.
6.22 As already noted, the practice of keeping a portion of shareable tax revenues from Union excise duties exclu-
sively for the purpose of allocating it among the States according to the amount of assessed deficits, after States’ own
revenues and tax devolution on all other counts have been taken into account, was brought in vogue by the Eighth Finance
Commission, and was continued by the Ninth and Tenth Finance Commissions. This in effect implied a conversion of a
part of the share of taxes into grants-in-aid. It also masks the extent of deficits of the recipient States. In the interest of
transparency, we have decided to discontinue this practice, and have not kept any portion of shareable taxes separately
for distribution among the States with assessed deficits.

6.23 In the context of selecting appropriate criteria for determining the inter se shares of States, we have also ascer-
tained the views of the States as indicated to us in their Memoranda and the discussions that we had with them. While
most States want continuation of the use of population as a factor, the weights that they have recommended vary from 20
to 70 per cent. A 20 per cent weight, for example, has been recommended by Andhra Pradesh, Bihar, Karnataka, Kerala,
 57
Rajasthan, and Tripura. Tamil Nadu has recommended a weight of 40 per cent for population and 20 per cent for popula-
tion control. Gujarat and Haryana have suggested a small weight for poverty ratio [share of population below poverty line].
Many States have also asked for continuation of ‘area’ as a factor with weights ranging from 5 to 20 per cent.
6.24 The use of progressive indices like distance of per capita income from the highest per capita income or the
inverse of per capita income, or a composite index of backwardness, have also been suggested by some States. Among
these, most States have recommended the use of the distance criterion with a weight ranging from 10 to 60 per cent. The
60 per cent weight has been recommended by Bihar and Tripura. Orissa has recommended a weight of 60 per cent for the
inverse of per capita income. Uttar Pradesh wants a weight of 50 per cent to be given to a composite index of backward-
ness.
6.25 Several States have asked for the continuance of the use of index of infrastructure with weights ranging from 5 to
40 per cent. States like Karnataka, Madhya Pradesh, Maharashtra, Orissa, Rajasthan and Tamil Nadu have recom-
mended the use of index of infrastructure.
6.26 Tax effort or an index of fiscal discipline has also been strongly recommended as a criterion in determining the
inter se shares of the States with weights ranging from 5 to 20 per cent. Gujarat, Haryana, Karnataka, Maharashtra, Tamil
Nadu have recommended a weight for tax effort as high as 20 per cent. Kerala, Punjab and Rajasthan have recom-
mended a weight of 10 per cent while Andhra Pradesh has recommended a weight of 15 per cent. Other factors men-
tioned by individual States range from locational disadvantage [Kerala], State specific factors [Tripura], collection or con-
tribution to Central taxes [Maharashtra, Gujarat and Haryana], expenditure on Human Resource Development [Andhra
Pradesh], administration expenditure [Kerala], social services expenditure [Kerala], maintenance of social and physical
infrastructure [Andhra Pradesh], Central investment [Tamil Nadu], employment rate [Kerala], population of SCs/STs [Madhya
Pradesh], proportion of people above 60 years of age [Kerala], and density of population [Kerala].
6.27 Two core criteria which have been used by previous Finance Commissions for providing higher per capita devo-
lution to lower per capita income States are distance and inverse-income formulae. In the case of the Eighth Finance
Commission, the combined weight given to these two criteria was 75 per cent. In the case of the Ninth Finance Commis-
sion, the combined weight was 62.5 per cent for income tax and somewhat lower for Union excise duties. The Tenth
Finance Commission had decided to use only one out of the two formulae, namely, the distance formula, discarding the
inverse income formula, and giving it a weight of 60 per cent. The reason given was that, owing to the implicit convexity in
it, the middle income States have to bear a relatively higher burden of this adjustment. This position holds true even now.
Many States have favoured this formula and therefore, we have decided to use it for inter-State distribution giving it a
weight of 62.5 per cent. This matches with the combined weight given by the Ninth Finance Commission to the two criteria
in this group, and it is still lower than the weight given to the two criteria by the Eighth Finance Commission. This also
recognises the fact that income and consequently, fiscal disparities have increased over time between the States.
6.28 In the calculation of distances, earlier Commissions had used comparable Net State Domestic Product (NSDP)
figures. However, we have obtained comparable Gross State Domestic Product (GSDP) figures from the Central Statis-
tical Organisation (CSO), and have used these in our analysis. In the present state of collection and processing of income
related data in the States, this gives a better inter-state comparability of the State Domestic Product (SDP), which, in
effect, reflects the domestic economic activity.
6.29 While computing distance-based shares of States, the Ninth and Tenth Finance Commissions followed the prac-
tice of measuring the distance of the per capita income of a State from that of the highest per capita income State. But for
this purpose, Goa, being a very small State, was not considered a representative State, and distances were measured
from the per capita income of Maharashtra. Maharashtra and Goa were exogenously given the same distance as for
Punjab. As a result, three States, viz., Punjab, Maharashtra, and Goa obtained the same distances, and consequently the
same per capita shares. This procedure has some difficulties, particularly, if the distance between the representative
highest and the next highest income State is too small. In the extreme, if the incomes of these two States become equal,
the share of the three highest income States would become zero. Instead of taking a single high income State as the
‘representative’ highest income State, we have taken a three-State average of Punjab, Maharashtra and Goa as the
benchmark from which distances are measured. This is a weighted average of the per-capita GSDPs of these States.
The distances of these States are worked out as a fraction of the distance of Haryana from the representative benchmark.
These fractions are obtained by taking the ratio of Haryana’s per capita GSDP to the per-capita GSDP of these States.
These procedures address the issues that have arisen earlier, viz.,
(i) rather than considering per capita GSDP of a single State, it takes the average of the top three States as
representative of the highest income; and
 58
(ii) the distances, and accordingly, the per capita shares of States in the highest income group are not equal but
successively decrease as per capita income increases.
6.30 As already noted, many States have asked for the continuation of area as a factor in determining the inter se
share of States. This factor was introduced for the first time by the Tenth Finance Commission. States which have a large
area and low density of population continue to incur heavy expenditure for providing basic administrative infrastructure.
The cost is very high compared to a State with an area of similar size but a high density of population. We have, therefore,
given a weight of 7.5 per cent to this factor. The area-based shares were subject to a minimum of 2 per cent and maximum
of 10 per cent as spelt out by the Tenth Finance Commission. We have continued with these floor and ceiling limits.

6.31 The index of infrastructure as one of the criteria for devolution has also been recommended by several States.
We have, therefore, retained it as a criterion for determining the inter se share of States and have increased its weight to
7.5 per cent. In our view, the availability of infrastructure plays a crucial role in attracting investment, and States which are
backward with low index of infrastructure need to be helped so that these are able to come up. The index has been
constructed in the same way as was done by Tenth Finance Commission. The inter se shares of States, using this
criterion, have been worked out in the same manner as described in para 6.32.

6.32 The basic emphasis in our approach, as highlighted in Chapter II, as also in our discussion on restructuring of
public finances, is to evolve a suitable structure of incentives in all mechanism of fiscal transfers. Our terms of reference
also make an explicit reference to ‘incentives that need to be provided for better utilisation of tax and non-tax revenues’.
The Tenth Finance Commission had made a beginning in this direction utilising an index of tax effort made by the States.
For this purpose they used the ratio of per capita own tax revenue of a State to its per capita income and weighted it by the
inverse of per capita income. This was done to ensure that if a poorer State exploited its tax base as much as a richer
State, it gets an additional positive consideration in the formulae. We consider that while this may be a relevant consider-
ation, the weight given to tax effort in this manner may need to be reduced. Several economists, whom we met during our
visits to States, had indicated, based on regression exercises, that this should be reduced to around 0.30 to 0.35. We
have considered these as a kind of benchmark and decided to reduce the weight of inverse of income in the tax-effort
formula from 1 to 0.5.

6.33 We feel that, given the present fiscal situation of the States and the need for restructuring, as also the reference
in our ToR for better fiscal management, further incentives need to be provided for fiscal discipline, and that this may be
integrated in the principles of devolution. Accordingly, we are suggesting the use of an index of fiscal discipline. For
working out this index, we have adopted the improvement in the ratio of own revenue receipts of a State to its total revenue
expenditure related to a similar ratio for all States as a criterion for measurement. The ratio so computed is used to
measure the improvement in the index of fiscal discipline in a reference period in comparison to a base period. For the
base period, we have taken the average for the three-year period from 1990-91 to 1992-93. For the reference period, we
have taken the three years from 1996-97 to 1998-99. It may be noted that such an improvement can be brought about by
higher own revenues or lower revenue expenditure or any combination of the two. The comparison of the performance of
a State with the all State performance, reflects the consideration that if the performance of States is deteriorating in
general, the State that accomplishes a relatively lower deterioration is rewarded. Similarly, if all revenue balance profiles
are improving, the State where improvement is relatively more than average is also rewarded relatively more. The tax
effort and the index of fiscal discipline, together, are given a weight of 12.5 per cent.

6.34 To summarise, the inter se shares of the States in tax devolution are determined by the following criteria and
relative weights.

Table 6.2: Criteria and Relative Weights for Determining Inter se Shares of States
Criterion Relative Weight [per cent]
1. Population 10.0
2. Income (Distance Method) 62.5
3. Area 7.5
4. Index of infrastructure 7.5
5. Tax effort 5.0
6. Fiscal Discipline 7.5

State-wise data on these criteria are given in Annexures VI.2 to VI.7.

 59
6.35 It will be thus noted that there are three main considerations in the selection of criteria namely: (i) resource
deficiency; (ii) higher cost of providing services; and (iii) fiscal discipline.

6.36 In view of the above considerations, we recommend that each State be given a share as specified in Table 6.3 in
the net proceeds of all shareable union taxes and duties except the expenditure tax and service tax, in each of the
financial years from 2000-01 to 2004-05.

Table 6.3: Inter se Share of States

States Share (per cent)

Andhra Pradesh 7.701

Arunachal Pradesh 0.244

Assam 3.285

Bihar 14.597

Goa 0.206

Gujarat 2.821

Haryana 0.944

Himachal Pradesh 0.683

Jammu & Kashmir 1.290

Karnataka 4.930

Kerala 3.057

Madhya Pradesh 8.838

Maharashtra 4.632

Manipur 0.366

Meghalaya 0.342

Mizoram 0.198

Nagaland 0.220

Orissa 5.056

Punjab 1.147

Rajasthan 5.473

Sikkim 0.184

Tamil Nadu 5.385

Tripura 0.487

Uttar Pradesh 19.798

West Bengal 8.116

All States 100.000

The total share of each State in the assessed Central tax revenues on the above basis for each year of 2000-05
is given at Annexure VI.8.

6.37 Expenditure tax and service tax are not presently leviable in the State of Jammu & Kashmir. Share in the net
proceeds of these taxes is, therefore, not assignable to this State. We recommend the share of each of the remaining 24
 60
States in the net proceeds of expenditure tax and service tax as indicated in Table 6.4. If in any year, these taxes become
leviable in the State of Jammu & Kashmir, the share of each State including that of Jammu & Kashmir would be in
accordance with the percentages given in Table 6.3.
Table 6.4: Share of States other than Jammu & Kashmir in the Expenditure Tax and Service Tax

States Share (per cent)

Andhra Pradesh 7.802
Arunachal Pradesh 0.247
Assam 3.328
Bihar 14.788
Goa 0.209
Gujarat 2.858
Haryana 0.956
Himachal Pradesh 0.692
Jammu & Kashmir 0.000
Karnataka 4.994
Kerala 3.097
Madhya Pradesh 8.954
Maharashtra 4.693
Manipur 0.371
Meghalaya 0.346
Mizoram 0.201
Nagaland 0.223
Orissa 5.122
Punjab 1.162
Rajasthan 5.544
Sikkim 0.186
Tamil Nadu 5.455
Tripura 0.493
Uttar Pradesh 20.057
West Bengal 8.222
Total All States 100.000

6.38 If in any year during 2000-05, a tax under Union is not leviable in a State, the share of that State in that tax should
be put to zero and the entire proceeds should be distributed among the remaining States by proportionately adjusting their
share.
 61

Chapter VII
Upgradation and Special Problem Grants

7.1 Paragraph 5(v) of the Presidential Order requires us to take into account ‘the requirements of States for upgradation
of standards in non-developmental and social sectors and services, particularly of States which are backward in general
administration, with a view to modernise and rationalise the administrative set up in the interest of speed, efficiency and
sound fiscal management.’
7.2 The earlier Commissions did not have any specific mandate for making earmarked provision through special
purpose grants. However, this did not prevent them from allocating specific amounts through grants-in-aid for improvement
and augmentation of services. Thus, the First Finance Commission provided special grants for expanding primary education
to States having very low school enrolment ratio. The Second Finance Commission examined certain specific needs of
each State and provided special grants-in-aid to some of the States accordingly. For instance, Andhra Pradesh and
Karnataka were provided grants for meeting the special needs owing to the reorganisation of States; Punjab, for tackling
the lingering problems arising out of partition; and West Bengal, for meeting the special needs emanating from the influx
of refugees from the former East Pakistan. Having done so, the Commission included the sums so determined by it in the
total amounts indicated for grants to those States under article 275(1). The Third Finance Commission provided special
grant for improvement of road communication to ten States, keeping in view their relative needs and resources. The
Fourth and Fifth Commissions did not provide any specific grants for the purposes of upgradation of any services, but did
make provision for higher level of expenditure in certain areas.
7.3 It is only from the Sixth Finance Commission onwards that the disparities in the provision of administrative and
social services were sought to be corrected through the mechanism of upgradation grants. The Sixth Finance Commission
was specifically required to take into account the requirements of the States that were backward in standards of general
administration for upgrading the administration with a view to bringing the same to the levels obtaining in the more advanced
States over a period of ten years. It identified nine sectors – developmental as well as non-developmental – and provided
upgradation grants to nineteen States that were below the all-State average in terms of per capita expenditure in those
sectors. It made suitable financial provisions for such States so as to bring them up to the all-State average over a period
of five years covered by its award. The Seventh Finance Commission was required to assess the needs of States that
were backward in general administration for upgradation of standards in non-developmental sectors. It followed a two-
step approach: first, it omitted from the purview of these grants such States that were assessed to be in pre-devolution
revenue surplus and, thereafter, it determined the needs of the remaining States in the identified sectors basing on the
comparative data in physical terms rather than on the per capita expenditure. It confined these grants to non-developmental
sectors and expected the States’ demands relating to developmental sectors to be provided under the Plan.
7.4 The Eighth Finance Commission had similar terms of reference in respect of upgradation as those for the Seventh,
and it followed the same criteria to determine the eligibility of a State for these grants. For the eligible States, it provided
grants for two developmental sectors, namely, education and health, besides for certain non-developmental sectors. In
addition, it provided grants to some States towards special problems too. The terms of reference of the Ninth Finance
Commission did not make any specific mention of the upgradation or special problem grants. In its first report (1989-90),
however, it made provision for upgradation as well as special problem grants. But in its second report (1990-95), it did not
make any such exclusive provision. The Tenth Finance Commission was specifically asked to consider the requirements
of the States for upgradation in non-developmental sectors. It recommended upgradation grants for those States that
were assessed by it to be in pre-devolution deficit on revenue account. The sectors covered by it for these grants were
non-developmental as well as developmental (education). It also provided special problem grants to all the States.
7.5 We requested the States to send their views on this term of reference, identify the areas requiring support, and
give their proposals. In response, States have presented to us their demands for upgradation and special problem grants
totalling to a staggering figure of Rs.1,81,011 crore. Sector-wise details of their demands may be seen in Annexure VII.1.
We have taken note of some of these demands in the assessment of the needs of the States on revenue account. We are
also aware that the plan programmes would cover some of the demands made by the States for these grants. Of the
remaining items, we have tried to provide for as many sectors as we could, keeping in view the resource constraints. We
have not confined these grants to the items/sectors sought by the States alone and have included areas that we consider
61
 62
essential for social and economic development of the States. Further, we have not linked these grants to the assessed
deficits of the States nor limited it to the deficit States alone. The surplus States have also been given these grants as we
feel that there is a scope for further improvement in these States according to the norms developed by us. The basic data
used by us to determine these norms are indicated in Annexure VII.2.
7.6 One of our members, Shri J.C. Jetli, did not agree with the above views, particularly that of assistance to all States
including surplus States. He considered this approach as inconsistent with article 275 of the Constitution under which, as
per his interpretation, such grants-in-aid have to be given only to such States as are in need of assistance. He felt that
since paragraph 5(v) of the Presidential Order required us to take into account the requirements of States for upgradation
of standards of non-developmental and social sectors and services particularly of States which were backward in general
administration, with a view to modernise and rationalise the administrative set up in the interest of speed, efficiency and
sound fiscal management, the approach adopted by the Commission and the grants recommended in this Chapter do not
always measure up to these requirements. However, the Chairman and other members of the Commission were of the
view that these grants need not be linked to the assessed deficits of the States as these are for such capital investments
that are not covered under the plan either because these are too small or are traditionally classified under non-plan capital
account for which adequate provision is not available otherwise.
7.7 The sectors identified by us for the upgradation grants are as follows:
i. District administration;
ii. Police administration;
iii. Prisons administration;
iv. Fire services;
v. Judicial administration;
vi. Fiscal administration;
vii. Health services;
viii. Elementary education;
ix. Computer training for school children;
x. Public libraries;
xi. Heritage protection; and
xii. Augmentation of traditional water sources.
In addition, we have provided grants for certain special problems too, which are unique to each State. In all, we
have provided Rs.4,972.63 crore towards upgradation and special problem grants, for which State-wise and sector-wise
details are given in Annexure VII.3 and year-wise break up, in Annexure VII.4. Our approach to each of these sectors is
explained in the following paragraphs:

District administration
7.8 The proposals of the States for upgradation of the infrastructure of district administration include construction of
residential and non-residential buildings, provision of furniture, equipment and vehicles, training infrastructure, survey of
lands, improvement of land records management, and creation of infrastructure in the newly created districts and sub-
district units. Of these, we have identified one item, namely, provision of infrastructure in the newly created districts, for
upgradation grants. Thirteen States have created new districts, 72 in all, during the period 1995-00. Seven of these States
have sought grants for creation of infrastructure in the newly created districts. The ratio of the amount sought to the
number of such districts varies from Rs. 6.74 crore (Mizoram) to Rs.105.63 crore (Karnataka). Some of these districts
have been very large and unwieldy and required bifurcation for better administration and for better interface between the
people and the administration. However, in order to ensure that this does not act as an incentive for creation of new
districts on consideration other than that of administrative efficiency, we have provided only 50 per cent of the amounts
sought by the States and limited it to Rs.10 crore per district, subject to the provision of matching grant by the respective
States.

Police administration
7.9 The proposals received from the States regarding upgradation of police administration amount to Rs.30,041
crore, which include residential buildings, non-residential buildings (police stations, outposts, etc.), equipment, forensic
 63
science laboratories, vehicles, communication, training, etc. The Ministry of Home Affairs (MHA) has also submitted a
memorandum to us seeking grants for these purposes. The Ministry has also pleaded for creation of a corpus for research
and development and special assistance to the States affected by left-wing extremism. The Bureau of Police Research &
Development (BPR&D) has submitted a detailed note on the requirements of the police in each State. After an assessment
of the needs and the availability of resources, we have made provision of Rs.509 crore for meeting some of the essential
requirements of the police, which are discussed below:

Police Station Buildings:

7.10 Most States have sought grants for construction of buildings for police stations and outposts. The BPR&D has
reported that out of 11,635 police stations in the country, only 8,839 are housed in proper buildings. They have recommended
that assistance be given to the States for the construction of buildings for the remaining police stations at a cost of Rs.12
lakh per unit. In respect of some States, the figures indicated by the BPR&D on the requirement of buildings for police
stations appear to be too large. Also, the figures reported by them are more than two years old, during which period many
new police station buildings might have come up. We have, therefore, provided for the construction of police station
buildings to the extent of fifty per cent of the numbers indicated by the BPR&D for each State but limited to a maximum of
100 units for a State.

Forensic Science Laboratories:

7.11 Some States, as also the MHA, have drawn our attention to the emergent need for strengthening the infrastructure
of forensic science laboratories (FSLs) in the States, including the mobile forensic science units (MFUs). We too feel that
well equipped FSLs are necessary for scientific and effective investigation of criminal cases. The BPR&D has informed
that at present 415 police districts in the country do not have the MFUs. We have made provision for setting up the MFUs
in all the districts where these are not presently available, at a cost of Rs.12 lakh each. We have also provided for setting
up a State FSL at Goa (Rs.192 lakh), and Regional FSLs in Orissa (one), Punjab (one) and Uttar Pradesh (two), at Rs.180
lakh per unit, for which details are given in Annexure-VII.5. In addition, based on the recommendations of the BPR&D, we
have provided equipment grant of Rs.53 lakh to each State for upgradation of the existing State Forensic Science
Laboratories, the details of which are given in Table 7.1.

Table 7.1: Equipment for State Forensic Science Laboratories

Sl. No. Item Cost

(Rs. in lakhs)
1 High performance thin layer chromatography machine 15
2 Ultra-violet visible spectro-photometer 5
3 Gas-chromatography head space 15
4 Atomic absorption spectro-photometer 10
5 Portable video-spectral comparator 8

Total 53

Equipment and weapons for the police:

7.12 States, in their memoranda to us, have made out a strong case for providing grant to the police for procuring the
required equipment and weapons. The MHA, in its presentation to us, has also highlighted this issue. We had had a
meeting with the Director, Intelligence Bureau and some of the State DGPs; they too laid emphasis on this aspect. The
BPR&D has submitted a comprehensive list of equipment and weapons required to be provided to the State police. Of the
equipment suggested by it, we have identified five and provided for the full requirement, viz. Rs.79.16 crore, the details of
which are indicated in Table 7.2. In addition, we have provided Rs.152.57 crore for purchase of new weapons.

Facilities for women police personnel:

7.13 In the last couple of decades, more and more women have been joining the police force at all levels. But adequate
facilities are not available in the police stations for them. We have decided to make provision for construction of restrooms-
cum-toilets in the police stations for women police personnel. The unit cost for the construction of a restroom-cum-toilet
is estimated to be Rs.90,000. We have provided Rs.52.36 crore for this purpose and distributed it among the States in the
ratio of the number of existing police station in the States, so as to cover fifty per cent of the police stations.
 64
7.14 State-wise summary of the provision made for upgradation of police administration is indicated in Table 7.2.

Table 7.2: Item-wise details of upgradation grants provided for the police administration
(Rs. in lakhs)

State Police Station Forenisc Science Laboratories (FSLs) Equipment for the police Weap- Facili- Total for
buildings ons ties for police
Mobile FSLs New Equip- Total Explo- Deep Night Poly- Bomb Bomb Total women admins-
Regio- ment for sive search vision graph blan- disposal for police tration
nal/ for FSLs detector mine/ devices machines kets equip- Equip- personnel
State State (unit metal (unit (unit cost (unit ment ment
FSLs* FSLs cost detectors cost Rs.2 cost (unit
Rs.10.5 (unit Rs.2.5 lakh) Rs 0.2 cost
lakh) cost Rs. lakh) lakh) Rs.9
1 lakh) lakh)

No. Amo- No. Amo- Amo- Amo- Amo- Amo- Amo- Amo- Amo- Amo- Amo- Amo- Amo- Amo- Amo-
unt unt unt unt unt unt unt unt unt unt unt unt unt unt unt

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
1. Andhra
Pradesh 100 1200 18 216 53 269 84 8 205 4 2 72 375 392 665 2900

2. Arunachal
Pradesh 13 156 13 156 53 209 21 2 80 4 0 18 125 179 31 700

3. Assam 48 576 25 300 53 353 53 5 230 4 1 45 338 1026 108 2400

4. Bihar 42 504 57 684 53 737 189 18 455 4 4 162 832 406 522 3000
5. Goa 11 132 2 24 192 53 269 0 0 10 4 0 0 14 74 11 500

6. Gujarat 80 960 25 300 53 353 74 7 205 4 1 63 354 627 206 2500

7. Haryana 53 636 15 180 53 233 42 4 120 4 1 36 207 745 79 1900

8. Himachal
Pradesh 7 84 12 144 53 197 32 3 80 4 1 27 147 334 38 800

9. Jammu &
Kashmir 12 144 4 48 53 101 63 6 145 4 1 54 273 325 57 900

10. Karnataka 100 1200 27 324 53 377 63 6 185 4 1 54 313 763 347 3000

11. Kerala 100 1200 17 204 53 257 42 4 125 4 1 36 212 445 186 2300
12. Madhya
Pradesh 100 1200 37 444 53 497 137 13 460 4 3 117 734 825 544 3800

13. Maharashtra 100 1200 21 252 53 305 74 7 235 4 1 63 384 1312 399 3600

14. Manipur 32 384 9 108 53 161 32 3 95 4 1 27 162 169 24 900

15. Meghalaya 11 132 7 84 53 137 21 2 50 4 0 18 95 224 12 600

16. Mizoram 8 96 3 36 53 89 11 1 60 4 0 9 85 116 14 400

17.Nagaland 40 480 10 120 53 173 42 4 90 4 1 36 177 349 21 1200

18. Orissa 31 372 19 228 180 53 461 74 7 205 4 1 63 354 326 187 1700

19. Punjab 22 264 20 240 180 53 473 63 6 205 4 1 54 333 1427 103 2600
20. Rajasthan 100 1200 30 360 53 413 84 8 245 4 2 72 415 1857 315 4200

21. Sikkim 2 24 4 48 53 101 11 1 30 4 0 9 55 109 12 300

22. Tamil Nadu 100 1200 1 12 53 65 116 11 210 4 2 99 442 481 513 2700
23. Tripura 11 132 4 48 53 101 21 2 50 4 0 18 95 251 20 600

24. Uttar
Pradesh 100 1200 15 180 360 53 593 242 23 585 4 5 207 1066 1891 650 5400

25. West Bengal 50 600 20 240 53 293 74 7 180 4 1 63 329 603 176 2000

Total - All
States 1273 15276 415 4980 912 1325 7217 1665 158 4540 100 31 1422 7916 15257 5236 50900

* For details, see Annexure-VII.5.

Prisons administration
7.15 All the States, except Goa, Punjab and West Bengal, have sought upgradation grant, amounting to Rs. 3,702
crore in all, to improve the facilities and infrastructure relating to the prisons administration. We have provided an amount
of Rs.116 crore for upgradation of the existing arrangements for security in the prisons and for vocational training and
medical facilities for the inmates. State-wise allocation made by us is based on the authorised accommodation in the
existing jails but giving a certain minimum amount to the smaller States. States may, if the funds permit, also undertake
expansion of the existing jails from out of these grants after the requirements of security, vocational training and medical
facilities for the existing jails are met. Arunachal Pradesh does not have a jail so far and has requested for a grant to
construct a new jail; we have provided Rs.10 crore for this purpose.
 65
Fire services
7.16 Twenty States, i.e. excluding Gujarat, Maharashtra, Punjab, Tripura and West Bengal, have, in all, sought Rs. 810 crore
for upgradation of fire services. The Standing Fire Advisory Committee of the Government of India has set a norm of
providing a fire station for every 10 sq. kms. in the urban areas and 50 sq. kms. in the rural areas. The total requirement of
fire stations works out at 68,188 on this basis, against the present availability of less than two thousand fire stations. We
obviously cannot provide for the entire amount required for setting up all the fire stations as per these norms. However, we
have taken these norms as the basis and after deducting the availability of this facility in each State, worked out the ratio
of shortfall compared to the all-States shortfall and then distributed the amount of Rs.201 crore, allocated by us, among
the States. A minimum amount has been provided to smaller States. In selecting the towns for providing this facility,
preference should be given to those district headquarters which do not have any fire station. After meeting that need, the
next preference should be given to the towns with a population of 50,000 or more, that do not have a fire station.

Judicial administration
7.17 We have observed that there is a pendency of about two crore cases in the district and subordinate courts in the
States. This has been a cause of concern and unless remedial measures are taken, the pendency is bound to increase
every year. Many States have given proposals for creation of new courts. The Ministry of Home Affairs has also supported
earmarking of funds for the creation of additional courts for the disposal of long pending cases. We are providing a grant
of Rs. 502.90 crore for creation of additional courts specifically for the purpose of disposing of the long-pending cases.
State-wise distribution has been done keeping in view the pendency of cases and the average rate of disposal of cases in
these courts. We have worked out the cost of an additional court as Rs.29 lakh, which includes the salary of a judge, a
peshkar/superintendent, a stenographer and a peon, for five years (@ Rs.4.8 lakh p.a.), building (Rs. 3.4 lakh), and
computers, library, etc. (Rs.1.6 lakh). This will enable the States to create 1,734 new additional courts. States may
consider re-employment of retired judges for a limited period, for the disposal of the pending cases. One of our members,
Shri N.C. Jain, has suggested a scheme in this regard, which is placed at Appendix VII.1. We expect that with these
additional courts and the reforms in the laws and procedure, it should be possible to substantially bring down, if not
eliminate, pendency in the district and subordinate courts over the next five years. We have also noticed that almost ten
per cent of the posts of judicial officers remain vacant, which adds to the backlog of cases. These vacancies may be filled
up soon.

Fiscal administration
7.18 For upgradation of infrastructure of the various departments involved in fiscal administration, including the revenue
earning departments and the Treasuries & Accounts departments, twenty States, i.e. excluding Goa, Gujarat, Maharashtra,
Punjab and West Bengal, have sought an amount of Rs. 2,087 crore in all. Indeed, modernisation of these departments,
especially by way of extensive computerisation of their operations, is essential, particularly in the context of the proposed
switch over to the value added tax regime. We have provided an amount of Rs.200 crore for computerisation of these
departments in all the 25 States and distributed it among the States in the ratio of their tax revenue receipts for 1997-98.
States like Maharashtra and Tamil Nadu that have relatively large tax revenue receipts, are given slightly less than the
proportionate share, keeping in view the economies of scale. This amount should be utilised for procurement of computers,
installation of hardware and software and related training activities.

Health services
7.19 The proposals submitted by the States for upgradation of health infrastructure relate largely to construction of
building for the hospitals and for health centres at various levels, residential quarters, equipment, vehicles, etc. We are of
the view that the primary health care needs of the people would be met to a considerable extent by the existing plan and
non-plan programmes. However, the secondary needs in terms of medical diagnostic facilities are lacking in most districts
in the country. The Director General of Health Services has sent to us the broad estimates for requirement of equipment
and buildings for the commonly required diagnostic equipment. We have assessed the cost estimates for each centre as
follows (Table 7.3):
Table 7.3: Equipment for Regional Diagnostic Centre
(Rs. in lakhs)
Sl.No. Equipment Cost of equipment Cost of building Total cost
1 Electro-Cardiogram (ECG) machine 0.40 1.10 1.50
2 Tread Mill 4.00 0.60 4.60
3 Electro-Encephalogram (EEG) mode machine 3.75 1.25 5.00
4 X-ray machine 35.00 5.00 40.00
5 Ultrasound machine 8.00 1.40 9.40
6 Computerised Tomography (CT) Scan machine 90.00 3.50 93.50
7 Clinical Pathology Laboratory 50.00 4.00 54.00
8 Operation Theatre (Major) 1.50 12.50 14.00
9 Operation Theatre (Minor) 0.35 2.65 3.00
10 Equipment & buildings for maternal &
child health care 60.00 15.00 75.00
Total 253 47 300
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7.20 We have provided for establishment of regional diagnostic centres in the States computed at one centre for every
four districts. The number of such centres and the amount provided for each State is indicated in Table 7.4. The State
Governments should provide the recurring expenses, including staff costs, and recover reasonable user charges for the
purpose.
Table 7.4: Provision for setting up Regional Diagnostic Centres
(Rs. in crores)
Sl. No. State Number of Regional Cost (@ Rs. 3
Diagnostic Centres proposed crore per centre)
1 2 3 4
1 Andhra Pradesh 6 18
2 Arunachal Pradesh 3 9
3 Assam 6 18
4 Bihar 14 42
5 Goa 1 3
6 Gujarat 6 18
7 Haryana 5 15
8 Himachal Pradesh 3 9
9 Jammu & Kashmir 4 12
10 Karnataka 7 21
11 Kerala 3 9
12 Madhya Pradesh 15 45
13 Maharashtra 9 27
14 Manipur 2 6
15 Meghalaya 2 6
16 Mizoram 2 6
17 Nagaland 2 6
18 Orissa 8 24
19 Punjab 4 12
20 Rajasthan 8 24
21 Sikkim 1 3
22 Tamil Nadu 7 21
23 Tripura 1 3
24 Uttar Pradesh 21 63
25 West Bengal 4 12
Total – All States 144 432

Elementary education
7.21 All States, except Sikkim and West Bengal, have sought upgradation grants for the education sector, amounting
to Rs. 23,687 crore. Funds for this sector are usually provided under the budget heads 2202 and 4202 through non-Plan
and Plan schemes. But these are not adequate for providing educational infrastructure including school buildings, drinking
water and toilet facilities. The externally aided projects cover only a few States and that too, only some districts in these
States. We are of the view that the elementary education sector, i.e. Classes 1-8, should have the utmost priority and,
therefore, needs support for construction of the school buildings and related infrastructure particularly in rural areas.
Accordingly, we have provided an amount of Rs.506 crore for this purpose. This amount has been distributed among the
States on the basis of a composite index worked out by taking into account the number of illiterates in the age group 7-14
as per the 1991 Census and the average per capita expenditure of the States under the budget head ‘2202-General
education’ for three years- 1995-96, 1996-97 and 1997-98, giving equal weight to each. These amounts are to be utilised
first for construction of school buildings/class rooms where the schools are currently being run in the open. After meeting
this basic requirement, the remaining amount can be utilised for provision of toilet and drinking water facilities in the
existing schools.
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Computer training for school children
7.22 We have taken note of the growing importance of information technology in the society. Knowledge of computerised
software for word-processing, spreadsheet, internet and multimedia applications and programming are increasingly
becoming necessary for most jobs, whether in the private or the public sector. Training in the use of computer hardware
and software needs to be imparted to children at the school level itself. However, the facilities available for school children
in this regard are extremely limited. We have, therefore, provided Rs.245.53 crore for this purpose. Member Secretary,
Shri T.N. Srivastava has suggested an outline on the manner of utilisation of these grants. This is given in Appendix VII.2.
The detailed modalities of construction, purchases, curricula, user charges, and operation of these Centres should be
worked out by the State-level empowered committee chaired by the Chief Secretary. The Committee may co-opt other
experts in the field. We expect these arrangements to become functional latest by the 31st March, 2001.

Public libraries
7.23 Libraries have played an important role in the spread of knowledge and awareness among persons of all ages.
Considering the growing literacy and general awareness among the people, particularly the youth, in the urban as well as
rural areas, it has become necessary to strengthen and upgrade the network of public libraries in the country. We have,
therefore, provided an amount of Rs.1 crore for the State level public library in each State. In addition, we have provided
amounts computed at Rs.20 lakh per district for upgradation of public libraries in the mofusil and rural areas. The Commission
feels that the States may create a corpus, invest it and use the returns from it for the purchase of books and periodicals
every year on a sustainable basis.

Heritage protection
7.24 During our tour to the States, particularly the field visits, we were struck by the decay and degradation of a large
number of historical monuments in various parts of the country. We also noticed that a large archeological material is lying
in many a place unprotected. Cases of theft and illegal export of such material have often been reported in the past. These
monuments are generally outside the folds of the Archeological Survey of India and are the responsibility of the State
Governments. There is a need to provide for protection and housing of these monuments and materials. Some States
have sought for upgradation grants for this purpose. We have provided Rs.122 crore for restoration, protection and
preservation of historical monuments and museums for all the States. Inter-State allocation, indicated in Annexure-VII.3,
has been made keeping in view the number of districts in the States.

Augmentation of traditional water sources

7.25 The recent drought in some States and the severe water scarcity in many others, has drawn our attention to the
need for protection and augmentation of the traditional water sources that have been the mainstay of water supply for the
daily household needs of the people, particularly in the rural areas, besides for the cattle. Most of such water sources are
revenue tanks/pond that have gradually got silted up. These need to be rejuvenated and augmented in a systematic way.
Many States have sought grants for this purpose. We are providing Rs. 500 crore to the States, on the basis of the extent
of their un-irrigated geographical areas.

Special Problems
7.26 The special problems of various States for which we have decided to recommend grants are as follows:

Andhra Pradesh
7.27 The State has submitted that the activities of the extremists in the State are spread all over the State - from the
remote naxalism-affected areas to several urban areas. It has sought Rs.100 crore for strengthening the infrastructure for
the police for anti-extremists operations. This includes upgradation of equipment, vehicles, training, communication and
improvements to the existing police stations. We have provided Rs.60 crore for this purpose. This is over and above the
provision made by us for upgradation of police administration for all States including Andhra Pradesh.

Arunachal Pradesh
7.28 The State has requested for special grants to construct the State Secretariat and Legislative Assembly buildings.
We are providing Rs.20 crore for this purpose. It has also sought grants for establishing a telecommunication network
between the 13 districts of the State, the State capital and its liaison offices at New Delhi, Calcutta, Shillong and Guwahati,
at an estimated cost of Rs.10 crore. We have provided Rs.5 crore for this purpose, the balance to come as matching
share from the State Government. In addition, the State has sought grants for undertaking survey and settlement operation
in the State; for this we have provided Rs. 5 crore.

Assam
7.29 The Tenth Finance Commission (TFC) had provided the State an amount of Rs.60 crore for construction of
building for the State Secretariat. The State has sought further grants from us to undertake other components of its State
Capital Project, viz. basic infrastructure such as water supply, electricity, drainage, sewage disposal, roads and parks,
besides for completion of the buildings for the State Secretariat, Legislative Assembly, etc. Keeping in view the TFC grants
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for some of these purposes, we have made a provision of Rs.20 crore for the remaining components of the State Capital
Project. The State has also requested for grants for establishment of a regional athletics centre, a regional indoor games
centre, a regional adventure academy for mountaineering and adventure sports and a regional academy for water sports.
For setting up these four regional centres/academies, we have provided, in all, a sum of Rs. 10 crore.

Bihar
7.30 The State has given request for special grant of Rs.50 crore for upgradation of water supply and sewerage/
drainage systems of Patna and Ranchi cities. These cities are witnessing considerable pressure on the civic amenities
that were constructed long ago. We have provided Rs.50 crore for upgradation of the water supply and sewerage/
drainage facilities of Patna and Ranchi cities. The State has also requested for grants for construction of buildings for 30
Government Ayurvedic Centres and 6 Schools for the Deaf and Dumb; we have provided Rs.7.50 crore and Rs.2.50 crore
for these purposes, respectively.

Goa
7.31 The State has submitted that the existing building of the State Secretariat was originally constructed as the
palace of Younus Adil Khan in the 1490s and has since been converted to house the State Secretariat. This old building
requires considerable improvement and extension for which they have sought assistance. We have provided Rs.3.50
crore for this purpose. It has also sought grants for upgradation and maintenance of buildings, roads, water supply, power
supply and irrigation. We have examined the maintenance requirements elsewhere. However, we do appreciate that
tourism is an important economic activity in the State and needs good infrastructure support. Accordingly, we have
provided by Rs.6.50 crore for upgradation of roads in the tourism circuits of the State.

Gujarat
7.32 The State has submitted that its 512 km long international border is extremely vulnerable to cross-border infiltration,
arms and drug smuggling and subversive activities. The grants provided by the Government of India under the Border
Area Development Programme have been too meagre, totalling to about Rs.8-9 crore for the five year period 1993-98. It
has sought special grants to bolster the security infrastructure along the border effectively. This includes procurement of
a helicopter for aerial patrolling, watch towers, residential quarters for the security staff, patrol vehicles etc. We have
provided Rs.50 crore for the purpose.

Haryana
7.33 The National Capital Region (NCR) areas of the State are subject to ever increasing growth of population and the
consequent pressure on the civic services. The State has requested for grants for upgradation of basic civic services in
these areas. We have provided Rs.50 crore for upgradation of civic infrastructure namely, solid waste management,
drainage/sewerage, water supply and road systems in the NCR areas.

Himachal Pradesh
7.34 The State has requested for a special grant of Rs.55 crore for upgradation of the sewerage systems for the towns
of Hamirpur, Dharamsala and Jwalamukhi. These towns are visited by tourists and pilgrims in large numbers almost
throughout the year and, as such, the basic civic infrastructure of these towns do need special attention. Accordingly, we
have provided Rs.30 crore for upgradation of the sewerage/drainage systems in these three towns. The State has also
sought a grant of Rs.20 crore for construction of an inter-State bus terminus (ISBT) at Tutikandi, Shimla, so as to regulate
the traffic in the capital town. In addition, it has sought Rs.5.90 crore for improvements to the Vidhan Sabha complex at
Shimla, which includes construction of residential and non-residential buildings, installation of public address system,
close circuit TV, and other equipment including computers. We have provided an amount of Rs.10 crore for construction
of ISBT at Tutikandi, Shimla and Rs. 5 crore for improvements to the Vidhan Sabha Complex.

Jammu & Kashmir

7.35 The State has represented that the villages within the range of shelling from across the border require construction
of bunkers/underground shelters for the people, at an estimated cost of Rs. 20,000 per unit. We have provided Rs. 30
crore for this purpose. The State has also requested for a special grant of Rs.11 crore to complete the second phase of
the Gulmarg - Gondola Cable Car Project (Kangdori to Apharwat). Keeping in view the tourism potential of this project, we
have provided the amount sought by the State for this purpose.

Karnataka
7.36 The State has sought special grants to rejuvenate the sick and defunct lift irrigation (L.I.) schemes, and to expedite
the execution of the ongoing/proposed new L.I. projects. For the latter category of projects, the funding arrangements
would have already been tied up and, therefore, we are not providing any grant. However, for revival of the sick and
defunct L.I. scheme that are useful to the farming community, we are providing Rs.55 crore.

Kerala
7.37 The economy of Kerala depends to a considerable extent on its coastal belt. The coastline of the State, however,
is facing the problem of erosion, which needs to be checked urgently as well as on a long-term basis. The State has
sought financial assistance to construct 86 kms of new sea wall and to reform 37 kms of the existing sea walls. We are
providing Rs.50 crore for this purpose.
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Madhya Pradesh
7.38 The State has sought special financial assistance for development of infrastructure in certain circuits of tourism
including eco-tourism. We have provided Rs.45 crore for development of tourism related infrastructure in and around
Bhedaghat (Rs.15 crore), Lamhetaghat near Jabalpur (Rs.2 crore), Mandla/Ramnagar (Rs.3 crore), Kanha National Park
(Rs.5 crore), Pench National Park (Rs.3 crore), Bandhavgarh National Park (Rs.5 crore), Maihar (Rs.1 crore), Chitrakoot
(Rs.5 crore), Satna (Rs.1 crore), Katni (for measures to ameliorate traffic problems) (Rs.2 crore), Bargi Dam (Rs.1 crore)
and Barman Ghat (Rs.2 crore). No amount from this grant should be used for payment of salaries, construction of tourist
bunglows or for purchase of vehicles, except for gypsy type vehicles for viewing the wildlife in Kanha National Park. The
State has also requested for assistance to establish a State Museum at Bhopal; we have provided Rs.10 crore for the
purpose. We have also provided Rs.5 crore to construct a sports complex at Jabalpur.

Maharasthtra
7.39 The State has sought assistance to improve the urban infrastructure such as roads, water supply, sewerage/
drainage and transport systems. We agree that the requirements of the small and medium towns for civic infrastructure,
particularly the sewerage/drainage system, need prompt attention. Accordingly, we have provided Rs.60 crore for
upgradation of sewerage/drainage systems in the small and medium towns of the State.

Manipur
7.40 The State has requested financial assistance for restoration and development of the historic Kangla Fort and for
construction of an additional block of the State Secretariat. We have provided Rs. 5 crore for each of these two projects.
It has also sought assistance for upgradation of civic infrastructure in and around Imphal, as a part of the State Capital
Project, viz. for water supply, sewerage/drainage and traffic/transportation systems; we have provided Rs.10 crore for this
purpose. In addition, it has sought grants for expansion/modernisation of the existing Sports Complex at Khuman Lampak;
for this, we have provided Rs. 2 crore.

Meghalaya
7.41 The State has requested for grants to develop the infrastructure for seven new Community Development Blocks
and for forest conservation/protection measures. We have provided Rs.20 crore and Rs.10 crore for these purposes,
respectively. These amounts should be used for capital expenditure alone.

Mizoram
7.42 The State has requested for grants to undertake the New Capital Project at Khatla and for reconstruction of the
Raj Bhavan complex. We have provided Rs.40 crore and Rs.5 crore, respectively. In addition, we have provided Rs.2
crore for the infrastructure required to set up tourist information centres at Guwahati, New Delhi and Calcutta.

Nagaland
7.43 Nagaland was sanctioned a State Capital Project, which included construction of State Assembly Hall/Secretariat
building, as a plan programme about 10 years ago. However, the State has submitted that the work was moving at a very
slow pace for want of funds; as against the project cost of Rs.65.55 crore, only Rs.20.00 crore have been spent so far. It
has sought special grant to complete the project soon. We have provided Rs.25 crore for the purpose and expect the
State to mobilise the remaining funds and complete the project by 2002-03. The other requests for special problem grants
made by the State include wild life protection measures in the Intanky National Park and the Rangapahar Wild Life
Sanctuary, for which we have provided Rs. 5 crore.

Orissa
7.44 The major components of the requests made by the State Government for these grants relate to construction of
cyclone shelters in the coastal blocks and to undertaking repair and restoration measures for the properties and utilities
damaged during the super-cyclone of October, 1999. We have examined these requirements elsewhere. Keeping the
other proposals of the State in view, we have provided Rs. 15 crore for establishment of a communication network to
interlink the blocks, gram panchayats and cyclone relief centres through satellite, with hub at Bhubaneshwar. We have
also provided Rs.10 crore for restoration of the Nandan Kanan and Chandaka-Dampara eco-zoological complex and Rs.5
crore for upgradation of the Plant Genetic Resource Centre, Bhubaneshwar. These were devastated by the recent cyclone
and we hope that the grant that we are providing would help restore them to normalcy. The State has also emphasised the
emergent need of grants to undertake consolidation measures for eco-restoration works in the Chilika Lake lagoon; we
have provided Rs.30 crore for the purpose.

Punjab
7.45 The State has requested for special grants to undertake measures to promote girls’ education. This would include
construction of girls hostels, school buildings and toilet and drinking water facilities at the high school and higher secondary
school levels. We have provided Rs.30 crore for the purpose.

Rajasthan
7.46 The State has urged for special grant for slum improvements, viz. drainage/sewerage, street lighting, water supply
and community centres in various towns; we have provided Rs.40 crore for the purpose. Among other requests of the
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State, we have identified the ones relating to women’s welfare, for this grant. These are: construction of 13 working
women’s hostels (Rs.4.16 crore), upgradation of infrastructure of the Mahila Sadans (Rs.0.75 crore), construction of Nari
Niketans at 5 Divisional headquarters (Rs.11.14 crore), ten Short Stay Homes for the women in distress (Rs.2.60 crore),
and Rescue Homes for juvenile delinquent girls at 5 Divisional headquarters (Rs.1.35 crore); all put together being Rs.20
crore.

Sikkim
7.47 The State does not have an airport as yet and has requested for grant to construct an airport near Pakyong (East
District). We have provided Rs. 50 crore for this purpose and hope that the new airport would become functional very
soon.

Tamil Nadu
7.48 The State has requested for grant amounting to Rs.49 crore to undertake slum improvement works in the cities of
Chennai, Madurai and Coimbatore. These fast growing cities do need special attention for relocation of slum dwellers.
Accordingly, we have provided Rs.49 crore for the purpose.

Tripura
7.49 The State has emphasised the emergent need of grant for construction of a New Assembly House Complex and
the High Court building, for which no other grants are available as yet. We have provided Rs. 12 crore and Rs. 8 crore for
these purposes, respectively. It has also sought grant for expansion/modernisation of the I.G.M. Hospital (capital expenditure),
for which we have provided Rs. 10 crore.

Uttar Pradesh
7.50 The State has requested for grants for improvement of infrastructure in a wide spectrum of sectors and services.
Most of these are covered either in our assessment of the State’s revenue needs or by way of plan programmes. Considering
the other requests of the State for special problem grants, we have provided Rs.40 crore for upgradation of infrastructure
for higher secondary schools in the rural areas, Rs. 10 crore for development of the yatra routes in the Uttaranchal region,
and Rs. 10 crore for rejuvenation of lakes, other than the Nainital Lake, in the Kumaon region.

West Bengal
7.51 The State has drawn our attention to the continuing problem of severe erosion of the Ganga-Padma river system
in the districts of Malda and Murshidabad, and has sought grants to undertake the required measures. We have provided
Rs.60 crore for this purpose.

Procedure for sanction, releases, monitoring and evaluation

7.52 We have looked into the procedure for sanction of schemes, release of funds, monitoring and evaluation of the
projects under these grants, as recommended by earlier Finance Commissions and as implemented in practice. Our
analysis and recommendations in this regard are as follows:

Sanction and releases

7.53 The existing procedure requires approval of the proposals of the States by the Inter-Ministerial Empowered
Committee (IMEC) and determination of unit costs by the State Level Empowered Committee (SLEC). The IMEC is
chaired by a senior officer of the Ministry of Finance of the Government of India and the SLEC, by the Chief Secretary or
an equivalent senior officer of the State Government. We would like to give greater responsibility to the States for sanction
of the schemes within the guidelines prescribed by us. Accordingly, we recommend that the power to sanction individual
schemes as well as to determine the unit costs should vest with the SLEC. There is no need for any case to be sent to the
Government of India for sanction of a project. However, once a project has been sanctioned by the SLEC, a copy of the
same indicating the time schedule for various stages of the project and for requirement of funds should be submitted to
the Government of India. The Government of India should release funds according to the time schedule indicated in the
project. The unutilised grants for a particular year may be carried forward to the next year. However, the grants that remain
unutilised as on 31st March, 2005 shall lapse.

Monitoring and evaluation

7.54 The existing procedure envisages monitoring of the projects undertaken through these grants to be done by both,
the SLEC as well as the IMEC. We have noted that the utilisation of the grants awarded by the Tenth Finance Commission
was generally very poor, as the details in Annexure-VII.6 would indicate. We would like the States to show greater
commitment for timely and qualitative implementation of the projects undertaken through these grants. Accordingly, we
propose that the physical and financial monitoring of the projects should be done by the SLEC. The States should send
quarterly progress reports to the Ministry of Finance (MoF) of the Government of India, to facilitate release of grants. We
have been informed by the MoF that no evaluation of the schemes undertaken through these grants was carried out
during 1996-00. We would suggest the State Governments to undertake evaluation through professional agencies so as
to bring out the strengths and weaknesses of the programme which may help in introducing necessary improvements.
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Chapter VIII
Local Bodies
8.1 Paragraphs 3(c) and 3(d) of the President’s Order require us to make recommendations on the measures needed
to augment the Consolidated Funds of the States to supplement the resources of the panchayats and the municipalities
on the basis of the recommendations of the State Finance Commissions (SFCs). Further, paragraph 6 of the President’s
Order states that where the SFCs have not been constituted as yet, or have not submitted their reports giving
recommendations, we should make our own assessment in the matter, keeping in view the provisions required to be
made for the emoluments and terminal benefits of the employees of the local bodies including teachers; the existing
powers of these bodies to raise financial resources; and the powers, authority and responsibility transferred to them under
articles 243G and 243W read with the Eleventh and Twelfth Schedules of the Constitution. This is for the first time that the
Presidential Order requires a Finance Commission to make recommendations in this regard.
8.2 The rural and urban local bodies, that is, the panchayats and the municipalities, were in existence even before the
seventy-third and the seventy-fourth Constitutional amendments. Every State had enacted suitable legislation for devolution
of functions, powers and responsibilities to these bodies, including the power to raise resources. The Constitutional
changes – 73rd and 74th amendments – however, envisage the panchayats and municipalities as institutions of self-
government. It has been made mandatory, under the Constitution, to hold regular elections to these bodies under the
supervision of the State Election Commission. Representation of SCs/STs and women has been made obligatory. The
devolution of financial resources to these bodies has been ensured through periodic constitution of the State Finance
Commissions that are required to make recommendations on the sharing and assignment of various taxes, duties, tolls,
fees etc., and on the grants-in-aid to these bodies from the Consolidated Funds of the States. These provisions are
closely related to articles 243G and 243W of the Constitution which require that the State legislature may, by law, entrust
these bodies with such powers, functions and responsibility so as to enable them to function as institutions of self-
government. In particular, the panchayats and the municipalities may be required to prepare plans for economic development
and social justice, and implement the schemes relating thereto including those which are included in the Eleventh and
Twelfth Schedules of the Constitution, respectively. The operationalisation of the changes contemplated under the
Constitution requires action by both the Centre and the States. The pace of empowerment of these bodies to function as
institutions of self-government has, however, generally been slow. We had extensive consultations with the Central and
State Governments, representatives of the urban and the rural local bodies and of various other organisations on the
present status of these bodies. Their views helped us formulate the principles that we have finally adopted in this regard.

Views of the Ministry of Rural Development

8.3 In the memorandum submitted to us, the Ministry of Rural Development has spelt out views on the approach
which may be adopted by this Commission. The Ministry has also drawn our attention to the needs of the panchayats for
performance of regulatory, operations and maintenance (O&M) and development functions envisaged under article 243G
and the Eleventh Schedule of the Constitution, and the principles which should guide the inter-State distribution of funds
meant for panchayats. The memorandum states that though the reports of the SFCs have become available for many
States for specified periods, these focus largely on the pre-devolution position of the panchayats and do not adequately
recognise their emerging role under the 73rd amendment. It also states that the recommendations made by the SFCs
have not been accepted in totality by the State Governments; the States anticipate a very heavy expenditure arising out of
the devolution of powers and functions to the panchayats, and unless sufficient funds are devolved to the States under
article 280, they will find it extremely difficult to implement the 73rd amendment. The memorandum states that this
Commission may also place reliance on the memoranda submitted by the States as these indicate the approach of the
States towards panchayati raj institutions (PRIs). It also states that the requirement of funds by the panchayats for
performing developmental functions is met under the various Centrally sponsored schemes and the State plan schemes
and it is the regulatory and maintenance needs of the panchayats that should receive special dispensation from this
Commission. The Ministry has not made any State-wise assessment of such needs and stated that this Commission will
have to make its own assessment of the gaps between the needs of the panchayats and the devolution of the resources
from the States, and then make recommendations on the relevant terms of reference.
8.4 The Ministry has indicated the requirement of funds for operations and maintenance of the capital assets
created under the Centrally sponsored schemes and State plan schemes at Rs.4,500 crore per annum, computed at 7
per cent of the capital costs, in respect of drinking water supply in the rural areas, schools, toilets in the upper primary
schools for girls, maintenance of assets created under the watershed development programmes etc. The Ministry has
not identified any schemes which have been implemented by the panchayats or any assets created by them under any
programme which require financial support for maintenance. It has further stressed the need for a proper system of
maintenance of accounts and their audit, under the supervision and control of the Comptroller and Auditor General of
India (C&AG). For audit, the cost is estimated as half-a-per cent of the expenditure incurred by the panchayats in a
year. It has sought financial support to set up a computerised database system relating to the PRIs, supported by V-
SAT facility, to ensure collection and compilation of the data on a uniform pattern and its ready accessibility at the
district, State and national levels.
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8.5 The Ministry has suggested that the inter-State allocation of Central resources meant for panchayats should be
based on certain parameters such as the degree of commitment exhibited by the States towards the PRIs and the degree
of resource mobilisation by the PRIs. States should be encouraged to give freedom to the panchayats to raise resources
through property, profession, entertainment and advertisement taxes; and by way of levy and collection of market fees,
tolls, tariffs and user charges for the amenities provided by these bodies. Staff costs and requirements of certain core
services may also be taken into consideration in the devolution formula. Besides, some untied funds may be provided to
the panchayats. Every panchayat should get a minimum amount from the devolution recommended by this Commission
and additional amounts may be devolved on the basis of additional devolution of functions.

Views of the Ministry of Urban Development and Poverty Alleviation

8.6 The Ministry of Urban Development and Poverty Alleviation has, in its memorandum to us, stated that the urban
population that was 26 per cent of the country’s total population in 1991, was expected to reach the level of 30 per cent by
2001 and 41 per cent by 2021. The urban centres currently provide over 60 per cent of the GDP, yet they suffer from
serious deficiencies in civic services and infrastructure in terms of safe drinking water, sewerage and drainage, solid and
liquid waste management, roads, street lighting etc. At the same time, the urban poverty levels too have become significant-
about 32 per cent of the urban population is below the poverty line and the urban slum population has grown from the level
of 2 crore in 1981 to above 5 crore in 1991 and is estimated to cross 10 crore by the year 2001. In this scenario, the
financial position of the urban local bodies (ULBs) is far too inadequate vis-a-vis the requirements. The Ministry has cited
different sources that have assessed the requirement of resources for the urban local bodies for civic services and
infrastructure and has presented its own assessment of the resource gap of the ULBs for their O&M requirements. These
are summarised below:

Sl. No. Source Services/Infrastructure covered Period of Resource

by the report recommendation requirement
(Rs. in crores)
1 Ninth Plan Document Urban water supply and sanitation. 1997-2002 50,000
2 India Infrastructure Report, Various urban infrastructures–
1996 (Rakesh Mohan Committee) capital costs as well as O&M needs. 2000-2005 1,25,000
3 Zakaria Committee Norms (1963) Water supply, sewerage/ sewage disposal,
updated to 1997-98 storm water drainage, construction of roads
and paths, street lighting and electricity
distribution - O&M. 2000-2005 72,099
4 Ministry of Urban Revenue gap for O&M requirements
Development,GOI relating to civic services. 2000-2005 18,500
The Ministry has outlined a charter for municipal reforms and suggested that a part of our award amount relating to the
ULBs should be earmarked for allotment by that Ministry for encouraging implementation of such reforms. It has also
emphasized that specific attention need be given to the small and medium towns. It has, however, not indicated the
break-up of the requirement for discharge of various functions by the ULBs, nor made any suggestion on measures that
could be taken for augmenting the Consolidated Funds of the States for supplementing the resources of the municipalities.

Views of the States

8.7 States have given various suggestions on the approach that may be adopted by us on the ToR relating to the
panchayats and the municipalities. But no State has given any suggestion relating to the ‘measures’ needed for augmenting
the Consolidated Funds of the States. Some States have, however, suggested that powers may be given to the local
bodies to levy tax on Central Government properties, about which we have given our recommendation in a later part of
this chapter. States have generally taken the view that the words ‘measures needed to augment the Consolidated Fund
of the State’ be interpreted to mean that the Finance Commission have a duty cast on them to recommend devolution of
funds to the States for meeting the developmental and other requirements of the panchayats and the municipalities. The
financial requirements of the local bodies have been posed on this basis and are not necessarily based on the
recommendations made by the SFCs. Most States have sought funds for construction of buildings – residential and non-
residential, provision of civic amenities including works of public utilities, maintenance of capital assets, and expenditure
on staff and establishment. Some States have identified two other specific areas for our support in relation to the local
bodies, namely, development of database and strengthening of the arrangements for maintenance of accounts and audit.
Bihar, Karnataka, and Tamil Nadu have further stated that 50 per cent of the funds being given by the State Government
to the local bodies should be compensated through the Finance Commission transfers. Gujarat and Haryana have
suggested that the condition of providing matching contribution by the local bodies, envisaged by the Tenth Finance
Commission, be waived and that the grants recommended for local bodies by the Finance Commission should be untied
giving freedom to these bodies to use it for any purpose. Further, deficits of the local bodies, as worked out by the State
Government, be provided by the Finance Commission as grants. Madhya Pradesh has suggested that 7 per cent of the
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Central taxes be earmarked for devolution to local bodies and from this amount, 80 per cent be distributed to States on the
basis of index of infrastructure (weight: 40 per cent), distance from per capita income (40 per cent), unadjusted area (10
per cent) and population of SCs/STs (10 per cent); and the remaining 20 per cent be allocated to those States that have
completed the process of elections and transfer of powers to elected representatives of local bodies within the first year of
the Constitutional amendments and have also completed the second round of elections by the end of 1999. The total
requirement of funds indicated in the memoranda of 18 States comes to Rs.33,115 crore for the panchayats and Rs.39,900
crore for the municipalities. Seven States have not quantified their demand for funds in their memoranda. These are
Andhra Pradesh, Karnataka (PRIs), Kerala, Manipur, Nagaland, Sikkim and West Bengal.
8.8 As regards the demand of funds for panchayats and municipalities made by the States, two points need to be
highlighted. Firstly, there are a number of schemes that have been taken up by the States as part of the State plans or
Centrally sponsored schemes for provision and improvement of civic services in rural and urban areas- such as the
drinking water supply, sanitation, rural roads etc. Such schemes should have been transferred to the local bodies for
grass root level planning and implementation. Transfer of such schemes to these bodies should be accompanied by
transfer of funds and staff too, as is the spirit of the Constitutional amendments, and if need be, suitable legislative
amendments may ensure this. Such transfer of schemes to the local bodies should, therefore, not lead to any additional
expenditure liability on the States. The construction of panchayat buildings, for instance, should be a part of assistance to
the panchayats and to the extent States provide grants for this purpose, these would be covered in the assessment of
revenue expenditure of the States. Further requirements have to be built in the State plan. Secondly, if we were to take
into account the additional financial burden that falls on a State on account of the acceptance and implementation of the
recommendations of the State Finance Commission, such expenditure has to be built into the expenditure stream of the
State. Any devolution made by a State for the panchayats and municipalities over and above the recommendations of the
State Finance Commission is outside the purview of our consideration, as would be evident from the Constitutional
provisions. We, therefore, do not find adequate justification in the demand that a certain percentage of the funds transferred
by the States to the panchayats and municipalities be provided by the Finance Commission. However, with a view to
highlight that the local bodies are more or less the Third tier of Government, we are sympathetically considering their
case.

Tenth Finance Commission award for the local bodies

8.9 The Tenth Finance Commission did not have any mandate, in its terms of reference, to make recommendations
for the local bodies. However, the 73rd and 74th Constitutional amendments had become effective before the Commission
had finalised its report and, therefore, it took the view that in terms of the sub-clauses (bb) and (c) of article 280(3), it was
obliged to make recommendations regarding measures needed to augment the Consolidated Funds of the States for
supplementation of the resources of the panchayats and the municipalities. The Commission analysed the scope of such
duty cast on it and made the following observations:
a. The need for augmentation of the Consolidated Funds of the States should first be ascertained and only
thereafter the measures for such augmentation be recommended.
b. Such measures need not necessarily involve transfer of resources from the Centre.
c. Once the SFCs complete their task, the Finance Commission becomes duty bound to assess and build into the
expenditure stream of the States the funding requirements for supplementing the resources of the panchayats
and the municipalities. Measures needed for augmentation of the Consolidated Funds of the States may be
determined accordingly.
d. The responsibility for sharing and assigning taxes and providing grants to the local bodies rests with the States
and does not stand transferred to the Centre.
e. The transfer of duties and functions listed in the Eleventh and Twelfth Schedules of the Constitution would also
involve concomitant transfer of staff and resources. Transfers of duties and functions to the local bodies should,
therefore, not entail any extra financial burden.
8.10 The Tenth Finance Commission had recommended a grant of Rs.100 per capita of rural population, as given in
the 1971 census, for the panchayats for its award period. This grant was to be in addition to the amounts transferred to the
panchayats as shares of assigned taxes, duties, tolls, fees, grants-in-aid and activity-related budgetary transfers. In the
case of municipalities, the Commission recommended an amount of Rs.1,000 crore for its award period, to be distributed
among the States on the basis of the inter-State ratio of slum population derived from the urban population figures of the
1971 census. States and areas excluded from the operation of the 73rd and the 74th amendments were also provided
grants to supplement the resources of similar local bodies, even if these were not panchayats/municipalities. The local
bodies were required to prepare suitable schemes and provide matching contributions. No amount was to be used for
expenditure on salaries and wages.

State Finance Commissions

8.11 The determination by us of the measures needed for augmentation of the Consolidated Funds of the States for
supplementing the resources of panchayats and municipalities has to be done on the basis of the reports of the SFCs. In
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fact, the SFCs’ recommendations should have been the basis of our report, but it could not be so in full measure for
several reasons. We have indicated such reasons, and the remedial measures, below:
a. Under the Constitutional provisions, there is no synchronisation of the periods covered by the reports of the
SFCs with that of the Finance Commission. The Tenth Finance Commission also had felt the absence of SFC
reports as a handicap. However, though the reports of the first generation SFCs of most States were available
to us, they were for different periods of time and, except for two (Goa and Orissa), related to only the first or at
best the second year of the period to be covered by our report. Article 243I, which provides for constitution of
the State Finance Commission ‘at the expiration of every fifth year’, in effect prohibits the constitution of a new
SFC before the completion of the period of five years, leading to this anomaly. The solution lies in amending
article 243I to enable a State to set up the SFC ‘at the expiration of every fifth year or earlier,’ akin to the
provision that already exists under article 280 for constituting the Finance Commission. The synchronisation of
availability of reports may also be ensured through either a Central legislation or an appropriate provision in the
Constitution.
b. Many SFC reports have not addressed the specific terms listed in articles 243I and 243Y, nor have they provided
a clear idea of the powers, authority and responsibilities actually entrusted to the local bodies. Many of these
reports also do not clearly indicate the principles formulated for sharing or assignment of State taxes, duties,
tolls, fees and the grants-in-aid. It is not our intention to limit the freedom of any State Finance Commission in
the manner of preparation of its report but, in order that the report of the SFC could be of use to the Finance
Commission at the Centre, it is necessary to get an idea of the specific recommendation on each ToR as
indicated in article 243I. We, therefore, suggest that it would be immensely helpful if the SFC reports contain
specific chapters narrating the approach adopted by it; an analysis of the resources of the State Government;
an analysis of the resources of each tier of the rural local bodies and each level of the urban local bodies; the
principles for distribution between the State and the panchayats/municipalities of the net proceeds of the taxes,
duties, tolls, and fees leviable by the State; the principles on which these may be distributed among different
tiers/levels of rural/urban local bodies; and the grants-in-aid to be given by the State to the panchayats and the
municipalities. A separate chapter may also be devoted to specific measures that need to be taken for improving
the financial position of these bodies to make them institutions of self-government.
c. No time limit is prescribed either in the Constitution or in the States’ legislation for submission of the explanatory
memorandum on the action taken by the State Government (i.e. the action taken report, or the ATR), on the
recommendations of the SFC. As the information given in Annexure-VIII.1 would indicate, in some States, the
ATRs on SFC recommendations are yet to be submitted to the State legislature, despite the fact that the reports
have been available for about two to three years. Even where some recommendations have been accepted, the
implementation has been tardy. Several important recommendations of the SFC, relating to sharing/transfer of
resources, are often reported to be under consideration for months and even years. It is necessary to ensure
that State Governments take their decisions on the recommendations of the SFC, especially in regard to matters
relating to resource transfer, and place the ATRs on the floor of the State Legislature within six months from the
date of submission of the report by the SFC. Amendments in the laws, if necessary, be made at the earliest.
d. While articles 280(3)(bb & c) require us to make recommendations in relation to the panchayats and municipalities
of a State on the basis of the recommendations made by the SFC, it does not provide for any alternative
approach in respect of such States wherein the SFCs have either not been constituted or have not submitted
their reports. Apparently, the Presidential Order took note of this situation and accordingly, provided for the
alternative in paragraph 6 of our ToR. Indeed, we had to take the help of various sources of information to arrive
at our recommendation in relation to the local bodies in respect of States for which the reports of the SFCs were
not available. Even in respect of the States wherein such reports were available, we could not form our opinion,
in view of their heterogeneity in approach, contents and period covered. The future Finance Commissions too
may have to face a similar situation. It may, therefore, be advisable to make suitable amendments to the
Constitution so that the Finance Commissions do not get into such a predicament. Accordingly, we recommend
that the words ‘on the basis of the recommendations made by the Finance Commission of the State’ appearing
in sub-clauses (bb) and (c) of article 280(3) of the Constitution be deleted.
8.12 We have also looked into the provisions and practices adopted by the States regarding composition of the SFCs.
In case of the Finance Commission, article 280 provides that Parliament may, by law, determine the qualification for the
members. Accordingly, Parliament enacted the Finance Commission (Miscellaneous Provisions) Act 1951, which prescribed
the qualification for a person to be appointed as the Chairman or a member. In case of SFCs, article 243I(2) makes similar
requirement for the State Legislature. A few States have enacted exclusive legislation for this purpose, while some have
made such provisions in the State Panchayat/Municipal Acts but many have left it to the State Government to prescribe
these details by rules. This has led to a wide diversity in this matter, often missing some essential features. For instance,
in some States, serving government officers are appointed as chairperson and members of the SFCs and that too in ex
officio capacities. This puts limitation on the ability of the SFC to act as an autonomous body to make recommendations
in a free and independent manner, as has been envisioned in the Constitution. Although the rule of delegation is a
permissive provision, but in such cases where SFC has to make recommendation in matters which affect the State
 75
Government, the State Legislature should itself make relevant provisions. Accordingly, we recommend that States should,
by legislation, ensure that the chairperson and members of the SFCs may be drawn from amongst experts in specific
disciplines such as economics, law, public administration and public finance.
8.13 Para 6 of the Presidential order requires us to make our own assessment about the manner and extent of
augmentation of the Consolidated Funds of the States, keeping in view the provisions required to be made for the emoluments
and terminal benefits of the local bodies including teachers, the existing powers of the local bodies to raise financial
resources, and the powers, authority and responsibility transferred to local bodies. The States’ memoranda do not generally
indicate the requirement of funds for the emoluments and terminal benefits for the employees including those of teachers.
We had sought information on these points specifically through the subsidiary points, but most States have not given this
information. States’ memoranda to us do not give the position in regard to transfer of powers, authority and responsibility
or the financial powers devolved on the local bodies to raise resources. The powers of taxation mentioned in the legislation
have been made subject not only to the rules, notification, and orders to be issued by the State government, but also to the
procedures and limits to be prescribed; in quite a few States action is yet to be taken.

Study reports on panchayats and municipalities

8.14 We entrusted two studies – one for rural local bodies and the other for urban local bodies – to National Institute of
Rural Development (NIRD) and National Institute of Public Finance and Policy (NIPFP) to study the position of devolution
of functions to the local bodies, the powers to raise resources and for working out the requirements for the maintenance
of core services. The core services were identified as primary education, primary health, rural or municipal roads,
drinking water supply, sanitation, and street- lighting. The Study done by the NIRD reveals that the 73rd amendment has
not significantly altered the functional domain of the panchayats at various tiers. Few States have been serious in vesting
the panchayats with the necessary powers, funds and staff to enable them to perform the functions assigned to them
under the statutes. The Centre as well as the States have sponsored schemes for rural people without associating
panchayats in planning and implementation. These have further marginalised them. The States’ legislation provide for
levy and collection of certain taxes, fees and tolls but the rules relating to fixation of rate structure are not periodically done
and reviewed. The assessment of the requirement of funds has been stated at Rs. 1,42,128 crore for a period of five years
for rural local bodies for operation and maintenance of core services alone. The capital expenditure is assessed at
Rs.83,603 crore for the same period. For urban areas, the study done by NIPFP does not indicate the requirement of
funds separately for the maintenance of each core service. It has given five options based on level of transfers in 1997-
98, revenue gap at 1997-98 level, enhancement of spending by municipalities deficient in revenue expenditure, enhancement
of the level of spending of municipalities deficient in operation and maintenance expenditure on core services and
enhancement of the level of core services in accordance with Zakaria Committee report. It indicates the requirement of
funds ranging from Rs.6,907 crore to Rs.32,598 crore over a period of five years depending on the option chosen. None
of these studies has indicated the possible measures that need to be taken at the local and State level to bridge this gap.

Measures to augment the Consolidated Funds of the States

8.15 Our primary task is to identify and recommend measures needed for the augmentation of the Consolidated Funds
of the States for supplementing the resources of the local bodies. An assessment of the tax and non-tax revenue of the
States has already been done earlier in the chapter on the assessment of States’ resources. Additional efforts are
needed- both at the local and State level — for raising the resources to meet the growing requirements of the local bodies.
In our view, the States may take the measures indicated below for augmenting their Consolidated Funds to supplement
the resources of panchayats and municipalities:
a. Land taxes: In many States, land revenue has either been abolished or land holdings up to a certain size have
been exempted. However, taxes on land/farm income in some form may be levied to strengthen the resource
base of the local bodies. The rate structure should be fixed suitably keeping in view the present economic
conditions. The revision should not be linked to or depend on survey and settlement operations. In the urban
areas, similar measures should be taken for revision of the lease rents. The amounts so collected may be
passed on to the local bodies for improving and strengthening the civic services. Local bodies may also be
involved in collection of these taxes.
b. Surcharge/Cess on State taxes: Cess on land based taxes and other State taxes/duties may be levied to
mobilise resources for augmenting specific civic services and for improving their quality. For example, a cess or
surcharge of 10 per cent on sales tax, State excise, entertainment tax, stamp duties, agricultural income tax,
motor vehicles tax, electricity duties etc. may give significant additional revenue which could be devolved to the
local bodies for improving the basic civic services and for taking up schemes of social and economic development.
c. Profession tax: Article 276 of the Constitution provides for levy of a tax on professions, trades, callings or
employment for the benefit of the State or local bodies at a rate not exceeding Rs.2,500 per tax-payer per year.
Many States either do not levy this tax or levy it at very low rates. States should levy this tax with a view to
supplement the resources of local bodies or they should empower the local bodies to levy it. The rates should
be suitably revised to bring them nearer to the ceiling prescribed under the Constitution. Further, the ceiling
that was fixed in 1988 by an amendment to the Constitution, needs to be suitably enhanced. Parliament should
be empowered to fix this ceiling without going in for a Constitutional amendment every time.
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Reforms in local taxes and rates
8.16 In addition to the measures mentioned above, we would like to highlight the need for improving the revenue
mobilisation by the local bodies themselves. Many SFCs have, in their reports, given suggestions in this regard, of which
some are State specific but some can be considered useful for all the States. We mention two local taxes, besides user
charges, for consideration of all the States.
a. Property/House tax: Property tax/house tax is the single most important local tax today, in a majority of the
States. Yet it has remained beset with a variety of problems that have prevented the local bodies to exploit its full
potential. Such problems are not merely confined to the proximity factor, namely, the local bodies being too
close to the people to be effective tax collectors. In most States, the tax rates have not been revised periodically
and there is no standard mechanism for determination of property tax rates and their revision. Indeed, West
Bengal has experimented with the institution of Central Valuation Authority and some other States have initiated
reforms in the system of property taxation with provisions for self-assessment, mandatory periodic revision,
dispensing with the demand notice for the tax and putting the onus on property owners for timely tax payment,
etc. Such measures have yielded good results and need to be pursued by all States in a rationalised manner.
Most States have accorded a variety of tax concessions/exemptions leading to revenue loss to the local bodies.
Arrears of taxes are allowed to accumulate either due to sheer inefficiency or due to delay in assessments and
in appeals. Yet another major impediment to the growth of revenue from the property/house tax has been the
rent control laws. The property/ house tax legislation should be suitably modified to overcome this impediment.
Where the property has been let out, the property tax should be made recoverable from the occupier.
b. Octroi/Entry tax: Besides the property/house tax, octroi has been the major source of revenue for the
municipalities and, in some States, even for the panchayats. Many States have, however, abolished octroi with
a view to remove impediments to the physical movement of goods, though several other new barriers have
been created. Some States have introduced a levy in lieu of octroi, usually the entry tax, the net proceeds of
which are transferred to the local bodies in the form of grant. During our interaction with the representatives of
the local bodies, we were told that though the grant in lieu of octroi given to the local bodies was raised by a
certain percentage from year to year, it does not have as much buoyancy as the octroi had. There have also
been numerous complaints of delay in release of the compensatory grants. While we do not advocate re-
introduction of octroi, we do feel that there is a need for replacing it with a suitable tax that is buoyant and can
be collected by the local bodies.
c. User charges: In many States, the operations and maintenance costs of drinking water supply and many other
civic services are met by the local bodies. However, the user charges are not revised periodically and a
significant percentage of the demand remains in arrears. The rate structure should be revised regularly to keep
pace with inflation and to recover at least, as far as possible, the full operations and maintenance cost of
providing these services. Local bodies should have the power to fix the rate of taxes and user charges for
themselves. That will make for accountability at the margin. People would be willing to pay, if they get better
services.
8.17 While assessing the revenue and expenditure of the States, we have already taken into account the additional
burden falling on their financial resources due to implementation of the SFCs reports and, therefore, no additional provision
needs to be made on this account. The measures recommended by us, if implemented, will generate additional resources
and will meet to a good extent the additional requirements of funds for the local bodies, posed by the States. However, we
do feel that there are certain critical areas which normally get overlooked in the normal flow of funds from the States.
There is, therefore, a need to make suitable provision for them.

Maintenance of civic services

8.18 In our perception, the first such area is the maintenance of civic services in the rural and urban areas, which
includes provision of primary education, primary health care, safe drinking water, street lighting, sanitation including
drainage and scavenging facilities, maintenance of cremation and burial grounds, public conveniences, and other common
property resources. Transfer of these responsibilities to the local bodies should be speeded up, accompanied with
transfer of funds and staff. The capital cost of the civic services identified by us would be met under the concerned
budgetary heads of the States. The cost of operations and maintenance of these services should be met by raising tax
revenues and user charges, and by devolution of funds from the State. However, the maintenance of these services in
rural and urban areas has not received adequate attention so far. It is more for the purpose of re-emphasising the
attention to this aspect, with concern for the people in focus, that we are recommending grants to the States for immediately
passing it on to the panchayats and the urban local bodies that have a primary responsibility in this sphere. No amount
from this grant should be given to the intermediate or district level panchayats where these do not have any direct
responsibility for maintenance of these services. The distribution of these grants to the panchayats and the urban local
bodies should be done on the basis of the principles recommended by the SFCs. These grants would be untied except
that they should not be used for payment of salaries and wages. We envisage that the measures recommended by us
would encourage enhanced economic activities in the rural and urban areas leading to new sets of employment opportunities
rather than direct government employment.
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Accounts and audit
8.19 Our second area of concern is the maintenance of accounts and their audit. States have been transferring funds
to the local bodies under various heads of account, besides major head 3604. We tried to collect information in this regard
from the Finance Accounts, in order to know the extent of decentralization. However, we found that the same minor heads
were used, in several cases, for transfers to the panchayats as well as to the municipalities. Further, the break-up of such
transfers among different categories of the local bodies was not available. We also looked into the status of maintenance
of accounts by these bodies. Articles 243J and 243Z of the Constitution expect the States to make provisions by way of
legislation for maintenance of accounts by the panchayats and the municipalities and for the audit of such accounts.
Following this, most States’ legislation do make general provisions for these purposes, but detailed guidelines or rules
have not been laid down, in several cases. In many States, the formats and procedures for maintenance of accounts by
these bodies prescribed decades ago, are continued without making any improvements to take into account the manifold
increase in their powers, resources and responsibilities. Most village level panchayats do not have any staff except for a
full or a part-time Secretary, because of financial constraints. It would, therefore, be rather too much to expect a village
panchayat to have a trained person dedicated exclusively to upkeep of accounts. With the passage of time, the flow of
funds to the panchayats and the municipalities will increase considerably. Therefore, there is a need to evolve a system of
maintenance of accounts by the local bodies that could be adopted by all the States. As regards audit, in many States, the
legislation leaves it to the State Government to prescribe the authority. In some States, the Director, Local Fund Audit or
a similar authority has been given the responsibility for the audit of accounts of panchayats and municipalities. The C&AG
has a role only in a few States and that too for the audit of district level panchayats and for very large urban bodies. In our
view, this area – of accounts and audit – needs to be set right under the close supervision of the C&AG and supported by
specific earmarking of funds from the grants recommended by us in respect of local bodies. We would like to make the
following suggestions in this regard:
a. States should review the existing accounting heads under which funds are being transferred to the local bodies.
For each such major head/sub-major head, six minor heads should be created - three for the PRIs and another
three for the ULBs - so that a clear picture of transfers to each category of local bodies is readily available. In
addition, specific demand heads should be created in the State Budgets for the rural and the urban local
bodies, respectively, wherein transfers to these bodies under various detailed heads of account are enlisted.
This may be done in consultation with the C&AG and the Controller General of Accounts, to ensure uniformity
among the States.
b. The C&AG should be entrusted with the responsibility of exercising control and supervision over the proper
maintenance of accounts and their audit for all the tiers/levels of panchayats and urban local bodies.
c. The Director, Local Fund Audit or any other agency made responsible for the audit of accounts of the local
bodies, should work under the technical and administrative supervision of the C&AG in the same manner as the
Chief Electoral Officers of the States operate under the control and supervision of the Central Election
Commission. In no case should the Director for Panchayats or for Urban Local Bodies be entrusted with this
work. The prescribed authority entrusted with the audit and accounts should not have any functional responsibility
in regard to the local bodies, so as to ensure his independence and accountability.
d. The C&AG should prescribe the format for the preparation of budgets and for keeping of accounts for the local
bodies. Such formats should be amenable to computerisation in a networked environment.
e. Local bodies particularly the village level panchayats and in some cases the intermediate level panchayats, that
do not have trained accounts staff, may contract out the upkeep of accounts to outside agencies/persons. For
this purpose:
i. The C&AG may lay down the qualifications and experience for the agency/person who could be contracted
out the work of maintenance of accounts. The Director, Local Fund Audit or his equivalent authority may
do the registration of such agency/person.
ii. A group of local bodies may be entrusted to an agency/person for upkeep of accounts on payment of
remuneration as may be fixed by the C&AG in consultation with the State Government.
iii. The Director, Local Fund Audit or his equivalent authority, under the direction of the C&AG, may do the
supervision over the quality of work of such agency/person.
iv. Non-compliance or poor performance should lead to deregistration of the agency/person entrusted with
such task.
f. Audit of accounts of the local bodies be entrusted to the C&AG who may get it done through his own staff or by
engaging outside agencies on payment of remuneration fixed by him. An amount of half-a-per cent of the total
expenditure incurred by the local bodies should be placed with the C&AG for this purpose.
g. The report of the C&AG relating to audit of accounts of the panchayats and the municipalities should be placed
before a Committee of the State Legislature constituted on the same lines as the Public Accounts Committee.
8.20 Panchayats at the village level, and sometimes at the intermediate levels too, do not have exclusive staff for
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upkeep of accounts. In fact, it may not usually be necessary for them to have regular accounts staff on their pay rolls.
They may get the job done on contract basis, as we have indicated before. In our view, an amount of Rs.4,000 per
panchayat per annum, on an average, should be adequate to meet the expenditure on maintenance of accounts on
contract basis, if the staff/facilities are not available within the panchayat. This amount may be paid from the grants that
we are recommending for the rural local bodies. The amount of Rs. 4,000 indicated by us is only suggestive, and may
be different for different States and for different panchayats within a State, depending on local conditions. Any additional
funds required for this purpose should be met from the grants given to the States for the panchayats. Where a panchayat
has got staff available for upkeep of accounts, these funds need not be so earmarked. As for the urban local bodies,
they generally do have accounts staff on their pay rolls. However, if any municipality does not have a regular staff for
this purpose, the grants provided to it may also be so earmarked. The State-wise expenditure on this account has been
worked out and indicated in the Table 8.1.

Table-8.1: Provision for maintenance of accounts of village level

panchayats and intermediate level panchayats
(Rs. in lakhs)
Sl. Name of the State Number of Amount Number of Amount Total
No. village level intermediate
panchayats level panchayats
(1) (2) (3) (4) (5) (6) (7)
1 Andhra Pradesh 21784 871.36 1093 43.72 915.08
2 Arunachal Pradesh 2012 80.48 78 3.12 83.60
3 Assam 2489 99.56 202 8.08 107.64
4 Bihar 12181 487.24 726 29.04 516.28
5 Goa 188 7.52 0 0.00 7.52
6 Gujarat 13547 541.88 184 7.36 549.24
7 Haryana 5958 238.32 111 4.44 242.76
8 Himachal Pradesh 2922 116.88 72 2.88 119.76
9 Jammu & Kashmir 2683 107.32 0 0.00 107.32
10 Karnataka 5673 226.92 175 7.00 233.92
11 Kerala 990 39.60 152 6.08 45.68
12 Madhya Pradesh 31126 1245.04 459 18.36 1263.40
13 Maharashtra 27611 1104.44 319 12.76 1117.20
14 Manipur 2194 87.76 0 0.00 87.76
15 Meghalaya 5629 225.16 0 0.00 225.16
16 Mizoram 723 28.92 0 0.00 28.92
17 Nagaland 1200 48.00 0 0.00 48.00
18 Orissa 5255 210.20 314 12.56 222.76
19 Punjab 11591 463.64 138 5.52 469.16
20 Rajasthan 9184 367.36 237 9.48 376.84
21 Sikkim 159 6.36 0 0.00 6.36
22 Tamil Nadu 12593 503.72 385 15.40 519.12
23 Tripura 962 38.48 41 1.64 40.12
24 Uttar Pradesh 58620 2344.80 904 36.16 2380.96
25 West Bengal 3314 132.56 340 13.60 146.16
Total 240588 9623.52 5930 237.20 9860.72

Database on the finances of the local bodies

8.21 The third area of our concern relates to non-availability of data on the finances of the local bodies. There is no
mechanism for collection of data on the revenue and expenditure of the various tiers/levels of the rural/urban local bodies
 79
at a centralised place where it could be compiled, processed and made available for use. In the absence of any reliable
financial/budgetary data, no realistic assessment of the needs of the panchayats and municipalities for basic civic and
developmental functions can be made nor can any information be generated on the flow of funds to the local bodies for the
implementation of various schemes for economic development and social justice. We are, therefore, of the view that a
database on the finances of the panchayats and municipalities needs to be developed at the District, State and Central
Government levels and be easily accessible by computerising it and linking it through V-SAT. The Director, Local Fund
Audit or the authority prescribed for conducting the audit of accounts of the local bodies may be made responsible for this
task, as he would be the main agency dealing with the finances, including budgetary position, accounts and audit of the
local bodies. The Chief Secretary of the State may do the State-level coordination and monitoring. In order to ensure that
this scheme is brought into effect within a defined time schedule and there remains a proper coordination among various
agencies at the national and State levels, it would be in the fitness of things that the C&AG is involved at all stages. He
may even be requested to undertake this responsibility. The data could be collected and compiled in standard formats, to
be prescribed by the C&AG. This will facilitate comparison of performance and state of development of local bodies
among the States. We have assessed the cost for this project for all the States to be Rs.200 crore. State-wise details are
indicated in Table 8.2.

Table-8.2: Provision for creation of database relating to the finances of local bodies
(Rs. in lakhs)
State No. of No. of Total No. of Allocation Allocation Total
PRIs ULBs LBs for PRIs for ULBs allocation
(1) (2) (3) (4) (5) (6) (7) (8)
1 Andhra Pradesh 22899 116 23015 1826.70 9.25 1835.95
2 Arunachal Pradesh 2103 0 2103 167.76 0.00 167.76
3 Assam 2714 79 2793 216.50 6.30 222.80
4 Bihar 12962 170 13132 1034.00 13.56 1047.56
5 Goa 190 14 204 15.16 1.12 16.27
6 Gujarat 13750 149 13899 1096.86 11.89 1108.75
7 Haryana 6085 82 6167 485.41 6.54 491.95
8 Himachal Pradesh 3006 48 3054 239.79 3.83 243.62
9 Jammu & Kashmir 2683 69 2752 214.03 5.50 219.53
10 Karnataka 5875 215 6090 468.66 17.15 485.81
11 Kerala 1156 58 1214 92.22 4.63 96.84
12 Madhya Pradesh 31630 404 32034 2523.18 32.23 2555.41
13 Maharashtra 27959 244 28203 2230.34 19.46 2249.81
14 Manipur 2204 28 2232 175.82 2.23 178.05
15 Meghalaya 5632 6 5638 449.28 0.48 449.75
16 Mizoram 732 6 738 58.39 0.48 58.87
17 Nagaland 1200 9 1209 95.73 0.72 96.44
18 Orissa 5599 102 5701 446.64 8.14 454.78
19 Punjab 11746 137 11883 937.00 10.93 947.93
20 Rajasthan 9453 183 9636 754.08 14.60 768.68
21 Sikkim 163 0 163 13.00 0.00 13.00
22 Tamil Nadu 13006 744 13750 1037.51 59.35 1096.86
23 Tripura 1007 13 1020 80.33 1.04 81.37
24 Uttar Pradesh 59607 684 60291 4754.96 54.56 4809.52
25 West Bengal 3672 122 3794 292.92 9.73 302.65
Total 247033 3682 250715 19706.28 293.72 20000.00

Grants for the local bodies

8.22. Keeping in view the availability of resources and the overall limits set for the flow of resources from the Centre to
the States, we recommend a total grant of Rs.1,600 crore for the panchayats and Rs.400 crore for the municipalities for
 80
each of the five years starting from the financial year 2000-01. In per capita terms, the amounts recommended by us for
the rural local bodies are higher than those for the urban local bodies. We have done so because the urban local bodies
can generate higher per capita revenue from the same taxes owing to the rural-urban income differentials. This amount
will be in addition to what would be generated if the measures recommended by us were fully implemented by the States.
These amounts should be over and above the normal flow of funds to the local bodies from the States and the amounts
that would flow from the implementation of SFC recommendations. The amounts indicated for maintenance of accounts
and audit and for development of database, would be the first charge on the grant recommended by us and would be
released by the concerned Ministries of the Government of India, after the arrangements suggested by us have become
operational. The remaining amount should be utilised for maintenance of core civic services by the local bodies, on the
principles indicated in paragraph 8.18 above.

Principles for inter se distribution

8.23 The determination of the inter se share of States in the amounts indicated by us for the rural and urban local
bodies should be based on the principles which promote the development of local bodies as institutions of self-government
and take into account the inter-State differentials in the levels of social and economic development. Population was the
sole criterion adopted by the Tenth Finance Commission for allocation of ad hoc grants to the States– rural population for
the panchayats and slum population for the municipalities. In our view, population should not be the sole basis for State–
wise allocation as it has the effect of perpetuating the status quo. Further, it does not take into account the efforts made
by the States to let these bodies raise their own resources, the extent of transfer of resources, power, authority and
responsibility to the local bodies or the initiative taken by the States in implementing the 73rd and 74th amendments and the
income differentials between the States in the rural/urban areas. Nor does it take into account the variation in the cost of
providing services in low population-density areas. In our view, such factors need to be recognised and given due weight
while devising the principles for inter-State allocation. At the same time, population should continue to be an important
factor in determining the needs of the States, as it is ultimately the people who are affected by the quantity and quality of
the services. It also ensures devolution to those States that are slow in empowering the local bodies to develop as
institutions of self-government. We have allocated 40 per cent of the amount to the States to be given to the panchayats
and municipalities on the basis of rural/urban population of the State.
8.24 In view of the 73rd and 74th amendments to the Constitution, States now owe a greater responsibility to develop
the local bodies as institutions of local self-government. The burden on the Consolidated Fund of a State on account of
transfer of funds to the local bodies has already been taken into account in our assessment of the non-plan revenue
expenditure of the States. The additional amount recommended for being given as grant for these bodies is more for the
purpose of inducing the States to speed up the process of decentralisation so that these develop as institutions of self-
government as envisaged under articles 243(d) and 243P(e) of the Constitution. States that have taken initiative and
shown commitment are given some recognition in the principles of devolution adopted by us. We are aware that an
objective assessment of the extent of decentralisation often proves difficult because what is indicated on paper does not
always match with the ground realities. Decentralisation of power, authority and responsibility is a gradual process and
takes time to establish even where intentions are clear and are communicated through appropriate instruments of policy.
Keeping all these aspects in view, we have prepared an index of decentralisation based on the steps taken by the States
for implementation of the 73rd and the 74th amendments and the speed at which these have been done. We selected ten
parameters for the purpose: enactment/amendment of State panchayat/municipal legislation; intervention/restriction in
the functioning of the local bodies; assignment of functions to the local bodies by State legislation; actual transfer of
functions to these bodies by way of rules, notifications and orders; assignment of powers of taxation to the local bodies
and the extent of exercise of such powers; constitution of the SFCs and the extent of action taken on their reports;
elections to the local bodies; and constitution of District Planning Committees as per the letter and spirit of article 243ZD.
We excluded the constitution of Metropolitan Planning Committees as one of the parameters as no State has yet constituted
them. Points were assigned on a graduated scale to the States in respect of each parameter. Following this exercise, an
index of decentralisation was prepared. The detailed methodology on the construction of this index is given in Appendix-
VIII.1 for the panchayats and Appendix-VIII.2 for the municipalities. We distributed 20 per cent of the grant to the States
on the basis of this index of decentralisation. We are aware of the limitation of this analysis and hope that with the
availability of more and more information, it should be possible to make refinements.
8.25 Local bodies should be able to raise revenue to meet their current level of revenue expenditure as far as possible.
However, the extent to which they can do so, depends on the powers delegated to them under the State legislation and the
rules, notifications and orders issued by the respective State Government, besides their own will to do so. We feel that the
efforts made in this direction by the States and the local bodies would get reflected in higher revenue mobilisation by these
bodies from their own sources and should be accorded some weight in the principles of devolution. We have collected
information on the revenue receipts and expenditure of the panchayats and municipalities from the States, which is placed
at Annexures-VIII.2A to D and VIII.3A to D, respectively. In view of the wide disparities in the States’ Domestic Product
(SDP), a uniform criterion will place the low income States at a disadvantage. We have, therefore, linked the efforts made
by the local bodies to raise own revenues, with the States’ own revenue on the one hand and with the SDP from primary
sector (excluding mining and quarrying) for the panchayats and the SDP (net of primary sector) for the municipalities,
respectively, on the other hand. The average of the ratio of own revenue collection of the panchayats for the years
 81
1995-96, 1996-97 and 1997-98 with the own revenue of the State for the corresponding years, has been worked out and
assigned a weight of 5 per cent. Similarly, the ratio of own revenue of the panchayats for three recent years, viz. 1994-95,
1995-96 and 1996-97, with the SDP for the corresponding years, after making adjustments as indicated above, is given a
weight of 5 per cent. For the municipalities too, a similar exercise has been done.
8.26 We are aware that the States with low per capita SDP will continue to have problems in raising revenue at the
State level as well as at the level of the local bodies and would, therefore, require additional support. In our scheme of
distribution of the grants relating to the rural local bodies, we have provided 20 per cent on the basis of distance from the
highest per capita agricultural income. This has been worked out on the basis of average of the ratio of SDP from the
primary sector excluding mining and quarrying and the projections for rural population made by the Registrar General of
India for the years 1994-95, 1995-96 and 1996-97. Distance of each State has been measured with reference to the State
having the highest average per capita SDP, plus half of the standard deviation. The distances have been weighted by the
rural population of the respective States for working out the share. In the case of urban local bodies, the same exercise
has been done by taking the urban population and the SDP (excluding the primary sector) for the same years. For these
calculations, we have adopted the population figures as per 1991 census, in view of the specific indication to that effect in
articles 243(f) and 243P(g). Lastly, we recognise the fact that the cost of providing basic services in the sparsely populated
areas is relatively high, and would necessitate giving weight to the expanse of the States. Ten per cent of the grant has
been distributed on the basis of the geographical area of each State– rural for panchayats and urban for municipalities.
8.27 Accordingly, we recommend that the amounts of Rs.1,600 crore and Rs.400 crore provided by us for the panchayats
and municipalities, respectively, for each of the five years (2000-05) be distributed among the States on the following
criteria and weights:
i. Population 40 per cent
ii. Index of decentralisation 20 per cent
iii. Distance from highest per capita income 20 per cent
iv. Revenue effort 10 per cent
v. Geographical area 10 per cent

Inter se distribution among the States of the provisions made by us towards panchayats and municipalities are summarised
in Tables 8.3 and 8.4 below, in terms of percentage shares. Basic data relating to these two tables are given in the
Annexures VIII.4 and VIII.5, respectively. Out of these shares, a component is indicated for the excluded areas in the
concerned States, in proportion to the population, for which details are placed at Annexure VIII.6. Such components
should be made available to the respective States only after the relevant legislative measures are completed for extension
of the provisions of 73rd and 74th amendments to such areas.

Table 8.3 Share of States in allocation for panchayats

Share (in percentage)**
Sl.No. State Total for Of which, share for- Type of the excluded areas*
the State Normal areas Excluded areas*
1 Andhra Pradesh 9.503 8.985 0.518 Fifth Schedule Areas
2 Arunachal Pradesh 0.348 0.348 0.000
3 Assam 2.918 2.814 0.104 Sixth Schedule Areas
4 Bihar 9.813 8.721 1.092 Fifth Schedule Areas
5 Goa 0.116 0.116 0.000
6 Gujarat 4.351 3.555 0.796 Fifth Schedule Areas
7 Haryana 1.839 1.839 0.000
8 Himachal Pradesh 0.821 0.795 0.026 Fifth Schedule Areas
9 Jammu & Kashmir 0.930 0.930 0.000
10 Karnataka 4.926 4.926 0.000
11 Kerala 4.120 4.120 0.000
12 Madhya Pradesh 8.943 6.232 2.711 Fifth Schedule Areas
13 Maharashtra 8.209 7.427 0.782 Fifth Schedule Areas
14 Manipur 0.235 0.128 0.107 Hills Districts Areas
15 Meghalaya # 0.320 0.000 0.320 Sixth Schedule Areas
 82
16 Mizoram # 0.098 0.075 0.023 Sixth Schedule Areas
17 Nagaland # 0.161 0.161 0.000
18 Orissa 4.320 3.056 1.264 Fifth Schedule Areas
19 Punjab 1.933 1.933 0.000
20 Rajasthan 6.137 5.558 0.578 Fifth Schedule Areas
21 Sikkim 0.066 0.066 0.000
22 Tamil Nadu 5.826 5.826 0.000
23 Tripura 0.356 0.221 0.135 Sixth Schedule Areas
24 Uttar Pradesh 16.489 16.489 0.000
25 West Bengal ## 7.222 7.222 0.000
Total 100.000 87.989 12.011

* Details of population and geographical area of the excluded areas are given in Annexure-VIII.6.
** Annexure-VIII.4 may be seen for further details.
# The entire States of Meghalaya, Mizoram and Nagaland are excluded from the provisions of Part-IX, as per
article 243M(2).
## Provisions of Part-IX relating to the panchayats at district level do not apply to the hill areas of the State of West
Bengal for which Darjeeling Gorkha Hill Council exists.

Table 8.4 Share of States in allocation for Municipalities

Share (in percentage)**
Sl.No. State Total for Of which, share for- Type of the excluded areas*
the State Normal areas Excluded areas*
1 Andhra Pradesh 8.233 8.233 0.000
2 Arunachal Pradesh 0.034 0.034 0.000
3 Assam 1.077 1.032 0.045 Sixth Schedule Areas
4 Bihar 4.695 3.802 0.892 Fifth Schedule Areas
5 Goa 0.232 0.232 0.000
6 Gujarat 6.626 6.566 0.060 Fifth Schedule Areas
7 Haryana 1.832 1.832 0.000
8 Himachal Pradesh 0.195 0.195 0.000
9 Jammu & Kashmir 0.783 0.783 0.000
10 Karnataka 6.241 6.241 0.000
11 Kerala 3.762 3.762 0.000
12 Madhya Pradesh 7.801 7.247 0.553 Fifth Schedule Areas
13 Maharashtra 15.813 15.677 0.136 Fifth Schedule Areas
14 Manipur 0.220 0.201 0.019 Hills Districts Areas
15 Meghalaya 0.135 0.009 0.126 Sixth Schedule Areas
16 Mizoram 0.192 0.184 0.008 Sixth Schedule Areas
17 Nagaland 0.089 0.089 0.000
18 Orissa 1.998 1.599 0.399 Fifth Schedule Areas
19 Punjab 2.736 2.736 0.000
20 Rajasthan 4.971 4.859 0.112 Fifth Schedule Areas
21 Sikkim 0.010 0.010 0.000
22 Tamil Nadu 9.668 9.668 0.000
 83
23 Tripura 0.201 0.201 0.000
24 Uttar Pradesh 12.582 12.582 0.000
25 West Bengal 9.874 9.874 0.000
Total 100.000 91.083 8.917

* Details of population and geographical area of the excluded areas are given in Annexure-VIII.6.
** Annexure-VIII.5 may be seen for further details.

Constitutional, legislative and administrative changes

8.28 While analysing the process of implementation of the 73rd and 74th amendments, we have noticed certain critical
problems that would require legislative and administrative changes and, in some cases, further amendments to the
Constitution. The areas so identified by us are as follows:
a. While all the States, barring Arunachal Pradesh, have either enacted a new Panchayat/Municipal Act or have
brought the existing legislation in conformity with the 73rd and 74th amendments, it has been noticed that the
schemes relating to the subjects included in the Eleventh and Twelfth Schedules have not yet been transferred
to these bodies in most of the States. States’ legislation merely enumerate the subjects indicated in the two
Schedules but do not specify the schemes that have to be implemented by these bodies as contemplated in
articles 243G and 243W. Consequently, the funds and the functionaries relating to these schemes continue to
remain under the control of the departments of the State Governments. In some cases, the implementation of
some programmes has been entrusted to these bodies but only as agency function and they have no role in the
planning and formulation of the schemes. Transfer of functions and schemes to the local bodies should be
specifically provided by legislation as, in our view, it is mandatory for the States to do so. In some States, even
though the legislation empowered the local bodies to levy certain taxes, the necessary rules have yet to be
framed, or the notifications laying down the rates have not been issued. We recommend that this may be
explored.
b. A hierarchical structure of the panchayats has been contemplated in the States’ legislation with the intermediate
level panchayats supervising the village level panchayats and the district level panchayats supervising, advising
and coordinating the activities of village level and intermediate level panchayats. However, the role of the three
tiers of the panchayats has not been clearly delineated in the State legislation and the matter has usually been
left to be decided by way of executive instructions. This has led to a high degree of uncertainty in the matter.
There is a need for making legislative arrangements to clearly indicate the role that these bodies have to play in
the system of governance in the rural areas of a district.
c. The Central Government, over the years, have formulated a number of schemes known as Central sector or
Centrally sponsored schemes; some of these are implemented for the development of the rural and the urban
areas. These schemes are mostly implemented through special agencies created at the district level or through
informal and formal organisations established over the years and financed by the Central Ministries directly
under these schemes. In some cases, the local bodies have been associated but they are merely performing
agency functions with no decisive role clearly assigned to them in the preparation and implementation of the
schemes. In particular, mention may be made of the District Rural Development Agencies and District Urban
Development Agencies, which are operating as instruments of the Central Government for the planning and
implementation of many programmes and schemes related to the subjects included in the two Schedules.
These agencies have not been integrated with the new set up. The two Union Ministries- the Ministry of Rural
Development and Ministry of Urban Development– are also the nodal Ministries for the implementation of the
73rd and 74th amendments, and, therefore, it is their responsibility to ensure that the local bodies function as
institutions of self-government and all impediments to the realisation of this ideal are removed. They have to
provide the lead in the movement towards achievement of this goal. Unless these Ministries take the initiative,
it may be futile to expect other Ministries in the Central Government to take action for the transfer of more
schemes relating to the subjects included in the two Schedules to these bodies.
d. The Constitution envisages that every State having a population of more than twenty lakhs will have a three-tier
panchayati raj system, namely, the village level, the intermediate level and the district level. We feel, on the
basis of our own assessment of the working of the local bodies in the States, that it is too rigid an arrangement
and there is a need to provide flexibility to the States to decide whether a two-tier system would operate with
greater efficiency and economy in a particular situation or a three-tier structure would be essential. Necessary
changes need to be made in this regard.
e. The Fifth and the Sixth Schedule Areas have been specifically excluded from the operation of the 73rd and 74th
amendments. Parliament has, however, been given the powers to extend the provisions of these amendments
to such areas by legislation. For extension of the provisions of the 73rd amendment to the Fifth Schedule areas,
such a legislation was passed by Parliament in 1996 and all the States except Bihar have already made the
 84
consequential changes in their State legislation. However, for extending the provisions of the 74th amendment
to the Fifth Schedule areas, Parliament is yet to enact the enabling legislation. This needs to be speeded up. In
the case of the Sixth Schedule Areas, no action has yet been taken by the Parliament to make these amendments
applicable to these areas. We understand that the power to extend the provisions of these amendments is
already available to the Governor in respect of Assam, and to the President of India in respect of Meghalaya,
Mizoram and Tripura. There is a need for clarity of approach on this issue so that the development of the rural
and urban local bodies in these areas keeps pace with the developments taking place in the rest of the country.
f. The States of Meghalaya, Mizoram and Nagaland have been specifically excluded from the operation of the
73rd amendment. However, the legislatures of these States have been given the power to extend this amendment
to their States, except in respect of the Sixth Schedule areas, by law. We do hope that suitable action will be
taken for extending this amendment in these States so that they can get the benefit of the measures that we are
going to recommend for the augmentation of Consolidated Funds of these States. In this connection, we would
also like to mention that these States have a system of a village council operating at the local level and performing
regulatory and developmental functions on most of the subjects included in the Eleventh Schedule. We suggest
that either these village level institutions be recognised as panchayats for the purpose of the 73rd amendment
by suitable legislative changes or the State may take action as indicated above.
g. The hill areas in the State of Manipur, for which district councils have been constituted under a Central Act, are
excluded from the operation of the 73rd amendment. Similarly, the provisions relating to district level panchayats
have not been made applicable to the hill areas of the district of Darjeeling in West Bengal. There are no
enabling provisions in the Constitution for making the 73rd amendment applicable to these areas either now or
at a later date. It is necessary to introduce suitable enabling provisions in the Constitution so that these areas
too could get the benefit of the 73rd amendment.
h. Panchayats and municipalities should have adequate administrative infrastructure and should be able to raise
financial resources on their own which, together with the devolution from the State Government, should enable
them to perform their basic civic, regulatory and developmental functions with efficiency and economy. There
are wide variations in the area and population served by different tiers of panchayats in the States, as the
details in Annexures-VIII.7 and VIII.8 would indicate. In some States, the population served by a village level
panchayat is only in hundreds whereas in some others it is in thousands. It appears that in many cases,
panchayats at some tiers have not been conceived as viable units. Administrative reorganisation is necessary
to ensure their development as viable institutions of self-government.
i. The District Planning Committees (DPCs) have not become operational in most States; Metropolitan Planning
Committees have not been constituted in any State. On the other hand, in some States, DPCs have been
entrusted with executive functions, by which they tend to overshadow the local bodies. Immediate measures
are required to ensure that these bodies are constituted soon and they function as per the intention of the
Constitution.

Taxation of Central Government properties

8.29 The Ministry of Urban Development (MoUD) has, on the advice of the Ministry of Finance, made a submission to
us that the issue relating to levy of service charges/taxation of Central Government properties be taken into consideration
while making our recommendations on devolution of resources to the States/Municipalities. The MoUD had drafted a
proposal for enacting a Central legislation under article 285(1) of the Constitution for regulating the payment of service
charges in respect of Central Government properties. This was based on the report of the working group constituted in
November 1994 by that Ministry, to make a study in respect of the various issues relating to the taxation of Government
properties. A copy of the reference made by the Ministry is placed at Annexures-VIII.9A & B. Many States have, in their
memoranda submitted to us, raised the issue of taxation of Central Government properties by the local bodies. In our
interaction with the representatives of the local bodies and the State Governments, this subject had come up again and
again for discussion. Their view has been that the local bodies should be permitted to tax the properties of the Central
Government, like any other property, for supplementing their resources and that necessary amendments to the Constitution
be made for the purpose.
8.30 Article 285(1) of the Constitution prescribes that the property of the Union shall, save in so far as Parliament may
by law otherwise provide, be exempt from all taxes imposed by a State or by any authority within a State. Parliament, in its
wisdom, has not made any law for imposing any taxation on the properties of the Central Government. However, as per
the apex Court’s decision, properties vested in the statutory corporations or the companies incorporated under the
Companies Act do not enjoy this exemption. Ministry of Finance has, in its memorandum to us, expressed the view
against local taxation of Central Government properties following the doctrine that the sovereign cannot be taxed except
with his consent. They have, however, expressed no objection to taxation of the properties of Central Public Sector
Undertakings (CPSUs) by the local bodies, but have cautioned against the possibilities of these bodies levying unduly
high taxes on the CPSU properties. The Ministry has expressed no objection to the proposition of levy of service charges
on the properties of the Central Government Departments. They have, however, said that such service charges should be
reasonable, i.e. commensurate with the services provided.
 85
8.31 We have given our careful consideration to the arguments advanced both by the Centre and the States. We also
note that a similar provision for exempting States’ property and income from Union taxation, with some exceptions, has
been made in article 289. The principle on which both these exemptions were envisaged by the Constitution was that in a
federal set up, the property of one level of government should enjoy immunity from taxation by another. We agree with this
principle and suggest no changes in article 285 of the Constitution of India.
8.32 As for levy of user charges, the legal basis, as per the instructions issued by the Central Government from time to
time (Annexures VIII.10A to D) is open to question and we learn, as stated by the MoUD, that there have been several
disputes on this issue. From the information gathered by us, as also available in the report of the working group constituted
by the MoUD in 1994 on the subject, we find that while some local authorities are able to levy and collect user charges on
the properties of the Central Government departments/undertakings, many others are unable to do so. It may also be
recognised that to the extent the cost of providing services is recovered by user charges, the burden on the Consolidated
Funds of the States to supplement the resources of Panchayats and Municipalities would get reduced. While taxation of
properties belonging to the Central or State governments would apparently infringe on the sovereign powers of the Union
and the States, there is no doubt that all the properties located in rural or urban areas enjoy the benefit of civic services
that have a cost. This principle has been recognised in the various instructions issued by the Government of India and,
therefore, there is ample justification to formalise and regulate it by law. We are of the view that all Government properties,
whether they belong to the Central or the State governments, should be subject to the levy of user charges. We are also
of the view that it should be regulated by a suitable legislation.
 86

Chapter IX
Calamity Relief

9.1 Para 10 of our Terms of Reference requires us to review the scheme of Calamity Relief Fund (CRF) and to make
appropriate recommendations thereon. The CRF has been established separately for each State on the basis of the
recommendations of the Ninth Finance Commission. The earlier arrangement in this regard was provided at the behest
of the previous Finance Commissions and was commonly called the ‘margin money scheme’. The term was first used in
the report of the Second Finance Commission, which had provided in its assessment of the revenue needs of each State
a specified sum ranging from Rs.10 lakh to Rs.100 lakh, as a margin for meeting the expenditure on natural calamities.
These sums were to be kept in a separate fund, the annual balance of which was to be invested in readily encashable
securities. This arrangement was broadly continued by the Finance Commissions up to the Eighth Commission. The
Sixth Finance Commission was specifically asked by the President, for the first time, to review the policy and arrange-
ments in regard to financing of relief expenditure by the States. It recommended for continuation of the margin money
arrangements and, at the same time, for systematic development of the drought and the flood prone areas through plan
programmes. The terms of reference of all the subsequent Finance Commissions included this item. The Seventh and
Eighth Finance Commissions too generally continued with the arrangements recommended by the earlier Commissions.
The size of the margin money provided for the States increased gradually from Rs.6.15 crore per annum (Second Finance
Commission) to Rs.240.75 crore per annum (Eighth Finance Commission).

9.2 The contribution of the Central Government in the calamity relief expenditure of the States, as evolved during the
course of the Second to the Eighth Finance Commissions had included a share in the margin money, advance Plan
assistance in the form of grants and loans, special central assistance as grants and loans, etc. The procedural arrange-
ments for obtaining Central Government‘s assistance required submission of memorandum by the State to the Centre
and visit of a Central Team to the State. The Ninth Finance Commission (NFC) mooted a near fundamental change in this
approach, by recommending creation of a Calamity Relief Fund (CRF) for each State to which the Centre and the State
were to contribute in a ratio of 75:25, and by doing away with different forms of Central assistance, requirement of the
visits of the Central Team to States etc. To determine the size of the CRF for a State, the NFC considered the average of
actual ceiling of expenditure approved for a State over the ten year period ending 1988-89. The total amount for the CRF
for all States was worked out at Rs.804 crore per year. The Tenth Finance Commission re-determined the size of the fund
for each State taking into account the average of the aggregate of ceilings of expenditure for the years 1983-84 to 89-90
and the amount of Calamity Relief Fund for the years 1990-91 to 1991-93. The amounts so worked out for all the States
were adjusted for inflation up to 1994-95 and thereafter, at graduated rates with the same elasticity as for other non-plan
revenue expenditure up to 1999-00. The amount thus worked out for all the States for the period 1995-00 was Rs.6304.27
crore.

9.3 The Tenth Finance Commission had also recommended the setting up of a separate Central fund - the National
Fund for Calamity Relief (NFCR) - under the Ministry of Agriculture, to provide assistance to the States affected by natural
calamity of rare severity. It held the view that if a calamity of rare severity occurs, it should be dealt with as a national
calamity, requiring additional assistance and support from the Centre, beyond what is envisaged under the CRF scheme.
Moreover, the national dimensions of such a calamity would entail assistance from other States too, both in terms of
financial support and material help. The Commission, however, did not provide a definition of ‘calamity of rare severity’.
It fixed the size of the NFCR at Rs.700 crore, to be built over the period of 1995-00, to which Centre and the States would
contribute in the ratio of 75:25.

9.4 We have received a variety of suggestions and views of Central Ministries on the continuance, or otherwise, of
the Scheme of CRF with or without modifications in its size, ratio of contribution and related operational issues. Ministry of
Finance have suggested that the quantum of CRF for each State may be determined on the basis of average actual
expenditure on natural calamities and not on the average amount of the CRF in previous years. Ministry of Agriculture
had in the earlier memoranda suggested the freezing of CRF at the existing level and augmentation of NFCR. In a
subsequent note it was stated that the system of CRF and NFCR be dispensed with and instead the State Government
should be allocated adequate funds to take care of the immediate requirements for providing relief. This, in effect, means
that the Central Government should continue to extend support for relief operations, albeit of immediate nature, and the
funds may be made available to the States on the basis of the recommendation of the Finance Commission without any
rigors of control over the investment and expenditure. We are unable to agree to this suggestion of the Ministry of
Agriculture in so far as it relates to CRF. We are of the view that funds allocated by the Central Government should be
used only for relief operations, and should, therefore, be kept in a separate fund where there is a possibility of augmenting
it through suitable investments. There is, thus, ample justification for continuing with the CRF.

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9.5 There is also a general consensus among the States on the continuance of CRF with augmentation of the fund
and some modifications. Andhra Pradesh has suggested that the size of CRF for each State should be determined after
taking into account the actual expenditure incurred by the State on relief, the State’s proneness to cyclone, drought, flood
etc., tax remissions extended and the magnitude of losses suffered by the State due to the calamity. Arunachal Pradesh
has suggested that the corpus of CRF should be enhanced five times. Assam and Bihar have suggested that in determin-
ing the size of the fund, considerations such as average actual expenditure on relief measures in the past should be
dispensed with, as very often resource constraints prevent a backward State from meeting the full requirements of admin-
istering relief. Assam has suggested that the size of the State’s CRF be raised to Rs.200 crore. Bihar and Gujarat have
suggested that there should be a suitable increase every year to account for inflation. Gujarat has further suggested that
the occurrence of natural calamities in quick succession should also be taken into account while determining the size of
CRF. Himachal Pradesh wants its annual entitlement to be at least 25 per cent of the average annual damages assessed
since 1995-96. Jammu & Kashmir, Mizoram and Tamil Nadu have stated that the major head 2245 - Relief on account of
natural calamities (or the erstwhile ‘64 - Famine Relief’) was not the only head whereunder the relief expenditure was
booked and, therefore, the size of the CRF should be determined after considering all such expenditure booked under
various heads. Karnataka has suggested that in determining the size of CRF, the proportion of a State’s unirrigated area
should be considered and also that the fund should be enhanced substantially. Kerala has recommended an increase in
the CRF by 90 per cent. Madhya Pradesh, on the other hand, has suggested that contribution to the CRF should be made
at the rate of 1 per cent of the gross tax receipts of the Centre and horizontal distribution should be based on intensity,
regularity and the duration of relief required. Rajasthan is of the view that CRF should be determined on the basis of past
expenditure with adequate adjustment for inflation. Uttar Pradesh has emphasised the need for taking into consideration
the actual relief expenditure and the inflation factor. Goa, Haryana, Maharashtra, Nagaland, Orissa, Punjab, Sikkim and
Tripura have sought substantial step up in the corpus of CRF without indicating any specific criteria for assessment.

9.6 A careful consideration of different suggestions put forward by the States shows that their main emphasis is to
raise the corpus substantially and for this purpose to take into account the expenditure incurred on calamity relief under
different heads of account. However, it is seen from the expenditure data of the States that it is very difficult to distinguish
between the expenditure incurred for calamity relief and other normal expenditure under various heads of account. States
are expected to ensure the booking of expenditure on gratuitous relief, supply of fodder, drinking water, veterinary care,
housing, etc. on account of natural calamities in various sub-heads under the major head 2245. We, therefore, do not find
it feasible to consider the expenditure booked under various major heads of accounts for fixing the corpus. We are also
unable to accept some of the other criteria suggested by the States, namely, State’s proneness to natural calamities,
magnitude of losses suffered by a State during a calamity, occurrence of natural calamities in quick succession, etc., as it
is difficult to assess them on a uniform basis across the States. All these factors are, however, reasonably captured in the
expenditure incurred by a State on relief in any year. We are, therefore, of the view that the most appropriate and objective
manner of assessing the relief expenditure is to take into account the expenditure booked under the major head 2245 only.
We do, however, share States’ concern with regard to the factor of inflation. We have, therefore, taken into account the
average annual expenditure booked under the major head 2245 during the period 1987-88 to 1998-99 at 1998-99 prices
after fully adjusting for inflation on the basis of consumer price index for industrial workers. Expenditure on natural
calamities widely vary from year to year and expenditure over a short period may not reflect the requirements in future.
We consider that a period of 12 years would adequately capture the recent trends in the occurrence of natural calamities
in various States. The amount so worked out has been projected up to 1999-00 on the basis of estimated inflation and
provision for each year up to 2004-05 has been made assuming the current rate of inflation. However, where the average
expenditure works out to be less, the allocation for the year 2000-01 has been maintained at the level of 1999-00, to
ensure that no State gets less than what it was getting earlier.

9.7 The existing scheme of CRF provides for contribution of 25 per cent by the States and 75 per cent by the Centre.
Ministry of Agriculture has favoured continuance of this ratio. Many States have, however, represented that the share of
States in the contribution to the CRF be reduced. Andhra Pradesh, Arunachal Pradesh, Bihar, Gujarat, Haryana, Karnataka,
Kerala, Orissa and Tamil Nadu have suggested that the contribution of the States should be reduced to 10 per cent, while
Tripura has suggested that it should be kept at 15 per cent. Assam, Himachal Pradesh, Madhya Pradesh, Mizoram and
Nagaland are of the view that the entire fund should be provided by the Centre as grant. We have considered these
suggestions. It is the primary responsibility of the States to incur necessary expenditure on the immediate relief whenever
a natural calamity occurs. The role of the Centre is to provide supplementary assistance to the States as it may not be
possible for a State to immediately come forward with sufficient funds to meet natural calamities which occur suddenly
and with intensity. Raising Centre’s share to 85 or 90 per cent may also lead to inflated demands on the CRF. Lastly, the
financial constraints of the Centre would require that this burden should be shared by the States too, to a significant extent.
Considering all these factors, we recommend that share of the States in the CRF should be retained at 25 per cent.

9.8 Assam and Bihar have stated that the past expenditure alone should not determine future allocations since many
weak States could not spend adequately for relief due to paucity of funds. We have identified six States, namely, Assam,
Bihar, Orissa, Madhya Pradesh, Uttar Pradesh and West Bengal in this category. These States belong to the low income
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group and face the wrath of recurring natural calamities year after year. In order to provide additional assistance to such
States, we propose to strengthen the size of CRF of these States by an additional provision of ten per cent of the
aggregate size of the CRF. This additional amount is allocated among these six States in the same ratio in which these
States have their own CRF. The amount thus worked out for all States for the period of our report is Rs.11007.59 crore.
This includes the Centre’s share of Rs.8255.69 crore, and the States’ share of Rs.2751.90 crore, worked out in the ratio of
75:25. The State-wise distribution of CRF giving the Centre and States’ share is indicated at Annexures IX 1 to IX 3.

9.9 Another important issue relates to the nature and types of calamities which should be eligible for relief expendi-
ture from the major head 2245. The Second Finance Commission had suggested that expenditure under this head should
be available for all other natural calamities too, besides drought, famine and flood. There was no further deliberation on
this aspect in the reports of the Third, Fourth and the Fifth Finance Commissions. The Sixth Commission too did not
define ‘calamity’ but, by way of examples, talked of cyclone, drought, earthquake and flood. The Seventh Finance Com-
mission made a distinction between drought on the one hand and cyclone, flood and earthquake on the other hand, on the
basis of suddenness and intensity of impact. For the expenditure related to drought, it recommended that the Centre
should provide assistance to the affected State as advance Plan assistance and if such expenditure exceeded 5 per cent
of the State’s Plan outlay, the excess amount be provided to the State as grant-cum-loan (50:50). As regards the relief and
restoration works relating to cyclone, flood and other calamities of a sudden nature, it recommended that 75 per cent of
the expenditure incurred by the State in excess of the margin, should be provided by the Centre as non-Plan grant and the
balance 25 per cent be met by the State, in order to discourage wasteful expenditure. The Eighth Finance Commission
further added hailstorm and fire to the list but continued with this distinction. The Ninth Finance Commission recom-
mended that all calamities covered by the existing schemes relating to relief assistance should continue to be covered but
the distinction between drought on the one hand and cyclone, flood, fire, etc., on the other hand, be done away with. The
Tenth Finance Commission did not make any specific recommendation regarding the nature or type of calamities to be
covered by the CRF scheme. It, however, recommended that the Ministry of Agriculture should set up a committee
comprising experts and representatives of States to list out the items that could be charged to the CRF. The latest scheme
notified by the Ministry of Finance in July, 1995, provides that CRF would cover all natural calamities such as cyclone,
drought, fire, flood, etc. The Ministry of Agriculture have emphasised in their memorandum to us that calamities arising out
of heavy rains, land-slides, avalanche, hailstorms and pest attacks should also be included in the list of natural calamities
eligible for relief expenditure; but fire, heat/cold wave and epidemics should be excluded. Assam has suggested that
coverage of the CRF scheme may be enlarged so as to include various types of calamities caused by industrial disaster
and epidemics. Karnataka has suggested that severe fluctuations in output and prices of several agricultural products
should be considered and, if required, a separate fund should be created for the purpose. Kerala has argued for inclusion
of coastal erosion in the list. Madhya Pradesh has suggested that the cost of supply of safe drinking water in times of
stress should be included in the list. Punjab is of the view that calamities caused by locust/pest and water logging should
also be identified as natural calamities.

9.10 We have examined the suggestions made by the Ministry of Agriculture and the States. It is indeed very difficult
to draw a distinction between one natural calamity and another, with a view to limit the use of the CRF for only a few natural
calamities and exclude others. In a country where three-fourths of the population is either directly or indirectly dependent
on agriculture for its sustenance, any calamity that affects the agricultural productivity or production is bound to cause
distress and qualify for relief through State intervention. At the same time, we feel that if this fund is used for all and sundry
occurrences, there will be very little available, if at all, when a really difficult and widespread situation of distress surfaces.
We are, therefore, of the view that only the natural calamities of cyclone, drought, earthquake, fire, flood and hailstorm
should be eligible for relief expenditure from the CRF. As regards providing relief to the people affected by man-made and
other disasters, the CRF should not be used and the concerned units from which it emanates should be made to pay for
it.

9.11 States have drawn our attention to the instructions issued by the Ministry of Finance for the maintenance of the
CRF outside the general revenues and Public Account of the State. The Second Finance Commission, while initiating the
practice of margin money for relief expenditure under ‘64 - Famine Relief’, had suggested that each State should invest
the unspent balance of this fund in readily marketable securities, to be drawn upon for future relief requirements. This
arrangement was endorsed by the Third, Fourth, Fifth, Sixth and the Seventh Finance Commissions. However, each of
these Commissions had also noted that this arrangement did not work as the States used it for their ways and means
requirements. The Eighth Finance Commission while recommending the contribution of the Centre at 50 per cent of the
margin money for each State also required that the unspent balance of the margin money contribution of the State as well
as of the Centre need not be invested in any securities but should remain notionally carried forward to the subsequent
years, to be released in the year of need. The Ninth Finance Commission, which originated the concept of CRF, had
recommended that this fund should be separate from the general revenues of the States and should be kept in a nationalised
bank administered by a committee headed by the Chief Secretary of the State. The Ministry of Finance laid down a more
elaborate pattern of investment to be made from the CRF which included Government of India securities (15 per cent),
182 days Treasury Bills and Public Sector Banks (25 per cent each), State Co-operative Banks (15 per cent), State
 89
Government Securities and Public Sector Undertaking bonds/units (10 per cent each). A number of States had raised
objections to this arrangement before the Tenth Finance Commission. The TFC recommended that the Ministry of Fi-
nance should, in consultation with the States, modify the existing instructions relating to the investment of the CRF money
so as to provide flexibility in the choice of avenues for investment subject to ensuring security and liquidity. Accordingly,
Ministry of Finance issued orders in October, 1995 that investment of the fund should be carried out by a branch of
Reserve Bank of India or, in its absence at the State headquarters, by a branch of State Bank of India or a nationalised
bank which conducts the State Government business. The Ministry’s orders also prescribed the revised investment
pattern which included interest earning deposits with Public Sector Banks (30 per cent), auctioned Treasury Bills (25 per
cent), interest earning deposits with State Co-operative Banks (15 per cent), Government of India securities of varying
maturities, State Government securities and Public Sector Undertaking, Unit Trust of India, Mutual Fund Bonds/Units (10
per cent each). However, the C&AG has reported that even now most of the States do not follow the prescribed invest-
ment norms and often use this fund for managing their ways and means requirements. Some States have given sugges-
tions in regard to investment to be made from this fund. Kerala and Rajasthan have suggested that deposits in nationalised
banks should be one of the avenues for investing the fund. Tamil Nadu has suggested that the pattern of investment of
CRF should be left entirely to the States. Uttar Pradesh has preferred that States may be permitted to deposit the amount
of CRF in the form of certificates of deposit for a period of 91 days in order to earn interest while having adequate liquidity.
Some States have also stated that when a State was in a situation of revenue deficits and had to borrow funds at high
rates of interest, there was no justification for keeping the fund in a bank or investing it on securities and bonds carrying
lower rates of interest. While there is some merit in the views expressed by the State Governments, it has to be realised
that the provision of grants for calamity relief is in addition to the normal anticipated non-Plan revenue expenditure and is
meant only for meeting unforeseen expenditure arising out of natural calamities. We are, therefore, of the view that the
CRF should be kept separately outside the Public Account of the State and invested in a manner approved by the Central
Government. Where, however, for some reasons, it is not possible to keep it in the manner approved by the Central
Government, it should be kept in a Public Account, on which the State Government should pay interest at a rate not less
than the market rate as indicated by the Reserve Bank of India.

9.12 Some State Governments have suggested that the list of items on which expenditure from CRF can be incurred
should be expanded to include works of capital nature. Andhra Pradesh has suggested that in severe drought conditions,
norms may be relaxed to allow for expenditure on capital works such as digging of borewells, installation of pumpsets, etc.
Haryana is of the view that restriction on expenditure for such capital works which may reduce the intensity and frequency
of natural calamities in future years should be removed. Haryana has also pointed out that the norms of relief fixed by the
Government of India are too inadequate compared to the actual requirements of the State. Karnataka has suggested that
the Finance Commission should itself lay down the rules for utilisation of CRF and not leave it for regulation by the Ministry
of Finance. Kerala has suggested that norms of assistance for loss due to natural calamities should be based on the
prevailing prices of the commodities and wage rates of labourers in the State. Ministry of Agriculture has, on the other
hand, suggested that States should be advised to strictly adhere to the guidelines of Government of India in respect of the
scales and pattern of expenditure. According to the Ministry, expenditure from the CRF for repair/reconstruction of
damaged public utilities should be discouraged and that such expenditure should be made from normal annual budget. In
our view, there are two issues. The first relates to the items approved by the Expert Committee as eligible for expenditure
from the CRF. The Tenth Finance Commission had recommended the constitution of such a Committee to draw up a list
of items, the expenditure on which would be chargeable to the CRF. Accordingly, the Expert Committee was constituted
and it identified the list of such items, in mid-1995. It is generally noticed that when a natural calamity occurs, there is
always a pressure on the State Government to incur expenditure on many more items, not included in the approved list,
as has been observed by the C&AG too. This tendency needs to be checked. We do hope and trust that this list should
be prepared after due consultation with each State, and local needs and requirements are duly taken care of. We further
suggest that, apart from having a list of items eligible for expenditure from the CRF on an all-India basis, State-specific
needs and practices should also find a place. A Committee of experts may be set up to review these items afresh. The
Committee should have representatives from the State Governments as earlier. The State-specific list should be finalised
in consultation with the representatives of the concerned State Government, and in case, the representative of a State
Government is not a member of the Committee, he may be either co-opted for this limited purpose or formal consultation
with the respective State Government may be done.

9.13 In regard to the amount to be incurred on each approved item of expenditure, we endorse the arrangements
recommended by the Tenth Finance Commission. The norms for amount to be incurred on each approved item of
expenditure is fixed by the State Level Committee. These are communicated to the Union Ministry of Agriculture which
modifies them only when they are significantly high. We feel that there is no need to make any change in this arrangement.
In times of natural calamity there is general tendency to exceed the approved limits on various items of expenditure due
to local pressure. This needs to be discouraged and in case any State Government exceeds the amount prescribed, the
excess expenditure should be borne from the normal budget of the State Government and not from the CRF.

9.14 Many States have suggested that the expenditure on works of capital nature which have the potential of prevent-
 90
ing natural calamity or reducing its severity should be permitted to be charged to the CRF. This is linked with the prepara-
tion of a long-term strategy for preventing the occurrence of the natural calamity. A number of programmes for preventing
droughts, floods etc. have been launched during the last five decades. These ought to have reduced the severity of impact
and frequency of occurrence of these calamities. We have indeed come across several instances where the implemen-
tation of projects relating to watershed development, rain water harvesting, augmentation and preservation of sub-soil
aquifer, etc., have resulted in considerable mitigation in the severity of the drought. Similarly, construction of nala-bunds
and check-dams, coupled with appropriate afforestation measures, have reduced the impact of floods. There is a need for
devising medium as well as long-term strategies in every part of the country to reduce the frequency of occurrences of the
natural calamities and their impact on the area and population. In our view, this task needs to be addressed by the
Planning Commission, which in consultation with the State Governments and the concerned Ministries of the Govern-
ment of India should be able to identify works of capital nature to prevent the recurrence of specific calamities. These
works may be financed under the plan.

9.15 A related issue is the restoration of works of capital nature damaged during a natural calamity, viz. roads, bridges,
power houses and other public works. The amount required for such purposes is sometimes huge, and, therefore, it
becomes difficult to provide for this expenditure from the limited corpus available in the CRF. We suggest that the expen-
diture on restoration of damaged capital works should ordinarily be met from the normal budgetary heads, except when it
is to be incurred as part of providing immediate relief such as restoration of drinking water sources or provision of shelters
etc. or restoration of communication links for facilitating relief operations. The expenditure from the CRF should be done
only for providing immediate relief to the affected population, and should, by its very nature, be of short duration.

9.16 Another issue relates to release of money by the Central Government to the CRF and monitoring of expenditure.
Some States have stated that there is undue delay in the release of funds, and undue insistence on the production of
utilisation certificates. Since the amount released by the Central Government has to be credited to the CRF, unless
required for meeting the expenditure on an on-going calamity, the releases should be done in a systematic manner on due
dates. In our view, the amount due to a State in a year should be released in two instalments - on 1st May and on 1st
November, respectively. Before an instalment is released, the State Government should give a certificate indicating that
the amount received earlier has been credited to the CRF, accompanied by a statement giving the up-to-date expenditure
and the balance amount available in the CRF. This statement itself should be treated as utilisation certificate, as in the
scheme of CRF the actual expenditure is incurred only at the time of occurrence of a natural calamity. We further suggest
that if in a particular year, the amount required to be spent on the natural calamity is more than the sum available in the
CRF, the State should be able to draw 25 per cent of the funds due to the State in the following year from the Centre to be
adjusted against the dues of the subsequent year. Any balance remaining in the CRF at the end of a five-year plan period,
should be used as a resource for the next plan.

9.17 The Seventh Finance Commission, while suggesting norms and limits for Central share in the expenditure of the
States in respect of droughts on the one hand, and cyclones, floods etc. on the other, had recommended that the Centre
should, in case the calamity is of rare severity, provide special assistance to the affected State over and above its pre-
scribed share. This recommendation was continued by the Eighth Finance Commission. The Ninth Finance Commission
expected that if any region faced a calamity of such dimension and severity as to warrant its handling at national level, the
Centre would take appropriate action and incur necessary expenditure, as the situation demanded. The Commission,
however, did not recommend any norms or guidelines for classifying a natural calamity as one of rare severity. It also did
not recommend any additional fund for this purpose. Consequently, the Government of India did not release any special
fund during 1990-95 to any State to meet the calamities of rare severity, though some of the States did face such situa-
tions, for example, the earthquake in Latur (Maharashtra), Kandla in Gujarat, Jabalpur in Madhya Pradesh, the devastat-
ing cyclone in Andhra Pradesh etc.

9.18 The Tenth Finance Commission considered the issue of calamity of rare severity. The Commission recommended
that a ‘National Fund for Calamity Relief’ should be created to which Centre and States contribute in the ratio of 3:1. This
Fund should be managed by a National Calamity Relief Committee (NCRC) in which both Centre and States should be
represented. The NCRC should be chaired by the Union Minister of Agriculture and have members including the Deputy
Chairman, Planning Commission and some State Chief Ministers. However, the Commission did not specify norms for
identifying calamities of rare severity on the ground that any definition would bristle with insurmountable difficulties and
was likely to be counter-productive. It felt that a calamity of rare severity would necessarily have to be assessed on a
case-by-case basis by taking into account, inter-alia, the intensity and magnitude of calamity, level of relief assistance
needed, capacity of the State to tackle the problem, the alternatives and flexibility available within the plans to provide
succour and relief etc.

9.19 Ministry of Agriculture have recommended that there is a need to lay down broad guidelines for declaring a
natural calamity as one of rare severity. They have stated that States in the past have been presenting cases for assis-
tance from NFCR in a routine fashion by projecting any calamity as one of rare severity and that whenever the corpus of
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CRF got exhausted, the States normally sought additional assistance from the NFCR even in the event of calamities of
minor nature. As a result, as many as 70 memoranda were received by the Central Government from 23 States during the
first three years of the award period of TFC, i.e. 1995-98, seeking a total assistance of Rs.24000 crore from the NFCR
while the total corpus of NFCR for the five-year period was barely Rs.700 crore. Further, in many cases, funds released
from the NFCR were not spent even in a year or so, after the date of release. Ministry of Agriculture are of the view that
there should be a time limit for utilization of funds given from the NFCR and unspent amounts should either be returned to
the NFCR or adjusted against the contribution of the Centre in the CRF. In a subsequent note submitted they have
favoured the discontinuance of the NFCR. States in general have suggested that the NFCR should continue with sub-
stantially larger fund and with clear guidelines for identifying calamities of rare severity, etc.

9.20 We are struck by two significant aspects in the operation of NFCR during the period of four years for which
information is available. The first relates to a definition or a view of a calamity of rare severity. The Tenth Finance
Commission indicated some of the parameters for forming a view, i.e. intensity and magnitude of the calamity, level of
relief assistance needed and capability of the State to tackle the problem. However, it also stated that the matter would
have to be judged on a case-by-case basis. The guidelines issued by the Ministry of Finance on 24th October, 1995
empower the NCRC to decide whether a calamity is to be treated as one of rare severity to qualify for relief from the NFCR.
In practice, however, it has meant a reversion to the pre-1990 situation. In other words, whenever a State is not in a
position to meet the expenditure on relief from the amount available in the CRF, a request followed by a memorandum is
made to the Central Government to provide funds from the NFCR. A Central Team is then deputed to make an on-the-
spot assessment. The report of the Central Team is considered by an Inter-Ministerial Group (IMG) which in turn makes
recommendations to the NCRC. The NCRC considers the report of the Central Team and recommendations of the IMG
and then takes a view. The long-drawn procedure often involves delay, sometimes unconscionably long, in release of
funds. We also came across occasions when the NCRC had bypassed the prescribed procedures, or went beyond the
report of the Central Team or the recommendations of the IMG. There have also been occasions when the recommenda-
tions made by the Central Teams and the IMG for providing relief were either not accepted or were modified and the
amount of relief was reduced.

9.21 The second important aspect relates to the corpus of the NFCR. The NFCR was to have a corpus of Rs.700
crore to be built over a period of five years with contributions from the Central Government and the State Governments in
the ratio of 75:25. The entire corpus is reported to have been exhausted in the first three years - i.e. during 1995-98, and
inevitably had to be supplemented. A calamity of rare severity is conceptually of such a nature that the intensity and
magnitude cannot be anticipated and provided for in advance through the CRF or regular budgetary mechanism. The
extent of funds required to meet such a calamity would only be a guesswork and whatever amount is provided in the
NFCR may, in a given situation, not be adequate. The Central Government’s responsibility does not get restricted to the
availability of the amount in the Fund. Additional financial support from the Central Government becomes necessary on
a case-to-case basis. The fixing of a ceiling on the corpus, therefore, becomes meaningless, except that it gets some
contribution from the State Governments. Past experience has shown occasions when the Central Government had to
step in on its own to provide physical and financial support without following the procedure of the visit of a Central Team,
IMG recommendations or NCRC decisions. In view of this situation, we feel that the existence of such a fund at the Centre
would only lead to more and more representations from the States for assistance even when a calamity could be met from
the State’s own resources. It only increases the procedural work and does not serve the purpose for which it was
established. We, therefore, recommend the discontinuation of this Fund in its present form, as it has not resulted in
making funds readily available for meeting the calamity of rare severity but has eroded the discipline and economy in
expenditure. The Ministry of Agriculture have also made the suggestion for discontinuing it in a later note sent to us.

9.22 This does not, however, mean that the calamity of rare severity should be left to be attended by the States from
their own resources alone. The super cyclone in Orissa (October, 1999) and the drought prevailing currently in some
States, are a pointer to the fact that a State faced with a severe natural calamity will not be able to provide relief to the
affected area and population all alone and will depend on the assistance from other States and the Central Government.
In a situation like this, the decisions will necessarily have to be made on an emergent basis without waiting for an assess-
ment of the damage by a Central team followed by confabulation in an Inter-Ministerial Group and decision by NCRC.
There is, therefore, a need to develop a system in which it should be possible to take suo motu cognizance of the
occurrence of calamities of rare severity by the Central Government without waiting for any memorandum from the State
Government or for the deputation of a Central team for getting an on-the-spot assessment of the damage and of the extent
of relief required. In our view, this task can be entrusted to an independent body of experts who should monitor the
occurrences of natural calamity on a regular basis in all the States. For this purpose, a National Centre for Calamity
Management (NCCM) may be established under the Ministry of Agriculture to monitor the natural calamities relating to
cyclone, drought, earthquake, fire, flood and hailstorm. This Centre should monitor such occurrences on a regular basis
and assess their impact on the area and population. The damage done to the capital assets and other infrastructure
should be done on a continuous basis. The Centre should also assess whether the State will be in a position to provide
relief in a specific case of calamity of severe nature from the CRF and its own resources. It should then make a
 92
recommendation to the Central Government on its own as to whether the calamity is of a severe nature and, therefore,
eligible for assistance from the Central Government and other State Governments. On the basis of such a recommenda-
tion, the Central Government should be able to take a view on the manner and extent of assistance which needs to be
provided to the State. In order to avoid extra burden on the Central budget and also to limit such expenditure only for
calamities of rare nature and of extraordinarily severe intensity, any assistance provided by the Centre to the States in this
regard, should be financed by levy of a special surcharge on the Central taxes for a limited period. A surcharge can also
instil a feeling of national participation for a national cause. Collection from such surcharge should be kept in a separate
fund, to be known as National Calamity Contingency Fund (NCCF), created in the public account of the Government of
India. The Government of India should contribute an initial core amount of Rs.500 crore to this fund so that funds for initial
operation are readily available. However, drawals from the fund should be accompanied by imposition of the special
surcharge proposed by us so that it is immediately recouped. The proceeds from the special surcharge be utilised to
finance the expenditure on natural calamity. Any balance left from the collection of the surcharge, after meeting the
exigency for which it was collected, should be credited to the fund and not treated as a resource for meeting the budgetary
expenditure. In order to ensure that there is no delay in the flow of funds to the States for administration of relief, a
legislation enabling the Central Government to levy surcharge may be enacted.

9.23 The National Centre should also take up studies on the recurrence of various types of natural calamities in
individual States and suggest measures that need to be taken to prevent them in the short, medium and long terms.
These may be given due consideration by the Planning Commission at the time of finalisation of plans. This Centre should
also keep in readiness an inventory of items needed for providing relief at the time of natural calamity and locate the
places/centres where these could be kept readily available. The National Centre should provide training to the State
cadres identified for deployment for calamity relief duties, on an annual basis for updating their knowledge and prepared-
ness. It should undertake documentation in terms of relief manuals, accounting procedures, case studies etc. It should
also undertake evaluation of the expenditure incurred out of CRF as well as out of Central assistance which may help in
evolving future course of action on this subject.

9.24 It has been suggested to us that a comprehensive insurance scheme should be evolved to cover the financial
burden of relief expenditure incurred at the time of occurrence of a natural calamity. Ministry of Agriculture have stated
that a comprehensive crop insurance scheme, called the Rashtriya Krishi Bima Yojana, covering failure of certain crops,
is already in operation. The scheme provides compulsory insurance coverage for crop loans taken by farmers from
financial institutions as a result of natural calamities, pests and diseases. It is available to non-loanee farmers also, on an
optional basis. The Ministry are of the view that this scheme should be implemented by all the States, failing which no
assistance should be given to the agricultural sector in the State at the time of natural calamities. Ministry of Finance have
suggested adoption of an insurance fund approach to the entire scheme of calamity relief to a State, with a limit on the
amount which could be drawn by the State as entitlement and should be related to the State’s contribution. Any assis-
tance beyond the agreed limits on entitlement should be only in the form of ways and means assistance. Tamil Nadu has
suggested that a National Crop Insurance Policy should be evolved under a simplified system wherein each State would
determine the amount of cover they would need, based on their past experience. A consortium of insurance companies
can be asked to develop scientific criteria for assessing likelihood of damages each year. The quantum of required relief
and the premium can be worked out in such a manner that in the long-run, the expenditure is met by payments through
insurance cover. The premium amount can be shared between the Centre and the States in the ratio of 90:10.

9.25 We have examined the possibility of evolving an insurance scheme to cover the expenditure on relief incurred at
the time of a natural calamity. In this regard, we held discussions with the Special Secretary (Insurance), Ministry of
Finance and the Chairman, General Insurance Corporation. They informed us that a scheme for floating Calamity Relief
Bonds on the pattern of Japan and the U.S.A., with the objective of using it for providing relief on the occurrence of a
natural calamity was under consideration. The details and the financial implications of this scheme were still being worked
out. They further stated that a crop insurance scheme was already in operation in some States and for some crops. The
scope of this scheme was being further extended to cover more crops. However, the crop insurance will be able to provide
financial assistance only to the extent of the amount guaranteed under the scheme to the insurers. It does not provide for
any assistance to non-farmers, destitutes, aged, or for cattle, etc., nor does it take care of the requirements of food, fodder
and drinking water at the time of a calamity.

9.26 The Ninth Finance Commission was required to examine the feasibility of establishing a national insurance fund
to which the States may contribute a percentage of their revenue receipts. The Commission had noted that a natural
calamity, by its very nature and magnitude, posed problems which no agency outside the government could tackle exclu-
sively and adequately. The process of getting the loss assessed by an external agency was bound to be complicated and
time consuming which would defeat the very purpose, that is, of providing timely succour to the affected people. Besides,
the largest group of sufferers in a natural calamity are the poor and the weak who have hardly any assets to insure. The
Ninth Finance Commission, therefore, found that the concept of an insurance fund for disaster relief was neither viable nor
practicable. We are also of the view that any insurance cover in which the premium is paid fully by the Centre and States
 93
may not reduce the financial burden of the Centre and States, as compared to a fund created at the Government level and
used for meeting expenditure on calamity relief. However, we concede that the crop insurance scheme will help individual
farmers, especially at the time of natural calamities, to recoup their losses. This scheme deserves to be strengthened.
But it would be a supplementary measure to what is done by the Government for providing relief at the time of natural
calamity.

9.27 The lack of availability of trained manpower to manage various types of natural calamities has been a major
handicap in providing timely relief to the affected area and population. The suddenness and intensity of the natural
calamity often leaves the administration stunned. Frequency of occurrence of natural calamities in different regions of the
country has drawn our attention to the measures required for disaster preparedness. The country is exposed to various
types of natural calamities because of its geographical location, geological factors, behaviour of monsoon, and long
coastal exposure. Recently, the country faced a super cyclone in Orissa which exposed the country’s unpreparedness in
management of severe disasters. The fury of the cyclone was such that it took nearly a week to understand the gravity of
its impact. Adequate preparations for management of a disaster is an essential concomitant for ensuring speedy admin-
istration of relief. Every major State needs to have trained manpower to cope with various types of natural calamities. In
our view, a core multi- disciplinary group of about 200-300 persons should be created in each State by drawing persons
from different cadres. This group should be given training in diverse fields such as communication, medical and public
health, sanitation, housing, etc. so that the country can have a set of about 3000-4000 trained personnel at any point of
time. During normal times these persons can continue to be in their respective cadre/field and discharge their usual
duties and, in times of natural calamities, they may be drawn out for such special duties. An honorarium as determined by
the Government of India from time to time may be paid to each such person as an incentive to participate in such a
Scheme. They may be provided training every year so that their knowledge and preparedness is updated and they know
each other, facilitating coordination and team spirit at the time of a crisis. They can be deployed in any place in the country
where their services are required in the event of a natural calamity. The expenditure on their training should be met from
the CRF.

9.28 Natural calamities of one type or the other have been occurring at a rather regular frequency in the country. Relief
is administered by the States from their own resources and, at times, supplemented by the Central Government. Docu-
mentation of these occurrences and their handling by various agencies is not done on a regular and systematic manner
by any State or by the Central Government. We recommend that every State should be required to prepare and send to
the Central Government an annual report recording the various types of calamities which required the stepping in of the
State for providing relief. The report should, inter alia, detail the causes, as perceived, the assessment of damages to
area and the population, the nature of relief provided, the sources from which it was drawn including the support made
available by the Central Government, other State Governments, and other donors/agencies, and lessons for the future
including the remedial measures which need to be taken. This report should be sent by every State Government to the
Ministry of Agriculture positively by 30th September every year. Even if the report is nil, it should still be sent. The Central
Government‘s contribution to the CRF of a State due on 1st November, as indicated earlier, should not be released until
this report is received by the Ministry. Based on the State-specific reports and evaluation reports of the NCCM, the
Ministry of Agriculture should prepare an Annual Report on Natural Calamities and their Management, latest by 31st
December of every year. The report should be released to the public.

9.29 To sum up:

(a) The scheme of Calamity Relief Fund (CRF) be continued with contributions from the Centre and the States in the
ratio of 75:25.
(b) The CRF should be used for meeting the expenditure for providing immediate relief to the victims of cyclone,
drought, earthquake, fire, flood and hailstorm.
(c) Expenditure on restoration of infrastructure and other capital assets, except those which are intrinsically con-
nected with relief operations and connectivity with the affected area and population should be met from the plan
funds on priority.
(d) Medium and long-term measures be devised by the concerned Ministries of the Government of India, the State
Governments and the Planning Commission to reduce, and if possible, eliminate, the occurrences of these ca-
lamities by undertaking developmental works.
(e) The CRF should be kept out of the Public Account of the State and should be invested in a manner approved by
the Ministry of Finance. If for some reasons, it is not possible to keep the Fund in a nationalised bank or invest in
a manner approved by the Ministry of Finance, it may be kept in the Public Account of the State, on which interest
should be payable by the State Government at a rate which is not less than the market rate of interest as indicated
by the Reserve Bank of India.
(f) The balance in the Fund at the end of the five-year plan period, may be made available to the State for being used
as a resource for the next plan.
(g) The State level Committee constituted under the existing scheme may continue to function and take all decisions
related to the financing of relief expenditure subject to general guidelines issued by the Ministry of Agriculture.
 94
(h) The Union Ministry of Agriculture will continue to be the nodal Ministry for coordinating relief works, and for
arranging physical and financial support including the assistance of the Union Ministries of Defence, Railways
etc.
(i) A Committee of Experts should be constituted to review the list of items approved for incurring expenditure from
the CRF, drawn up by the earlier Committee. The Committee should have representatives from the State Govern-
ments. Apart from the general list of items applicable to all States, State specific list may also be drawn up in
consultation with the representative of the concerned State Governments. A representative of the State Govern-
ment, not already represented in the Committee, may be co-opted for this limited purpose.
(j) The existing arrangement for fixing the norms of expenditure on each approved item may continue. In case the
norm is exceeded, the additional expenditure may be met from the budget of the State Government and not from
the CRF.
(k) The release of the funds from the Centre to the CRF of each State may be done in two instalments, viz. on 1st of
May and 1st of November, each year. The instalment due on 1st May should be released only after receiving from
the State Government a certificate indicating that the amount received during the preceding financial year has
been credited to the CRF, accompanied by a statement giving the updated expenditure and the balance amount
available in the CRF. This statement itself should be treated as utilisation certification.
(l) The Accountants General of the States should ensure that only the expenditure on approved items as per norms
is met out of the CRF.
(m) The Scheme of NFCR should be discontinued, in view of the difficulty in evolving an unambiguous definition of
calamity of rare nature, and the difficulty in providing adequate financial assistance to the States from the limited
amount available in the Fund.
(n) A National Centre for Calamity Management (NCCM) under the Ministry of Agriculture be established to monitor
all types of natural calamities, including calamities of rare severity, without any specific reference from the Central
or the State Governments. This Centre should be empowered to make recommendation to the Central Govern-
ment as to whether a calamity is of such severe nature that would call for financial assistance to the affected State
over and above what is available in the CRF or other plan/non-plan sources.
(o) Any financial assistance provided by the Central Government to the States in this regard, should be recouped by
levy of a special surcharge on Central taxes. Collections from such surcharge/cess should be kept in a separate
fund created in the public account of the Central Government, to which it should contribute Rs.500 crore as the
initial core amount. Outgo from this fund should be recouped by levy of the surcharge.
(p) This National Centre should also develop expertise for providing training to the States’ manpower on a regular
basis, keep an inventory of physical resources available at various places for meeting the calamities, and under-
take monitoring and documentation.
(q) Every State should develop an inter-disciplinary cadre under the Relief Commissioner comprising 200 to 300
persons who could be deployed for relief works on the occurrence of a natural calamity within the State or in any
other part of the country.
(r) Every State should prepare an Annual Report on natural calamities relating to the preceding financial year, and
submit it to the Union Ministry of Agriculture by 30th September every year. The Centre’s contribution to the CRF
of a State, due on 1st November, will be released only after this report has been received.
(s) The Union Ministry of Agriculture should bring out a Report on the Natural Calamities and their Management, by
31st December every year.
 95

Chapter X
Grants-in-aid to the States

10.1 The terms of reference require us to make recommendations, firstly, on the principles which should govern the
grants-in-aid of the revenues of the States out of the Consolidated Fund of India, and secondly, the sums to be paid to
the States which are in need of assistance by way of grants-in-aid of their revenues under article 275(1) of the Constitu-
tion for purposes other than those specified in the provisos to clause (1) of that article. This article also provides that
different sums may be fixed for different States after determining their needs. The primary responsibility has been given
to Parliament under article 275(1) of the Constitution to make provision for grants-in-aid by law every year; however, till
this is done the powers of Parliament are exercisable by the President subject to any provision that the Parliament may
make subsequently. The Finance Commission has to recommend the principles for determining the needs of each State
which may be the basis for giving grants-in-aid to the States.

10.2 States have given their views on the principles that should govern the grants-in-aid to the revenues of the States.
The relatively better off States like Karnataka, Tamil Nadu, Goa, Maharashtra and Gujarat have suggested an incentive-
based grants-in-aid for better fiscal management. The less developed States like Madhya Pradesh and Orissa have
suggested that the grants-in-aid should be given to meet the deficits in the plan and non-plan revenue expenditure and
should not be confined only to meeting deficit on non-plan revenue account. Uttar Pradesh has further suggested that the
Commission should give up gap-filling approach adopted by previous Commissions and ensure that States have ad-
equate revenue surplus to invest in various development programmes. States have also requested for giving grants-in-aid
for the upgradation and modernisation of administration and for meeting their special problems.

10.3 The principles for grants-in-aid to the revenues of the States have evolved over the course of last half a century
through recommendations of the various Finance Commissions. What came to be accepted is that the grants-in-aid may
be given to the States to cover the assessed deficit on non-plan revenue account, after devolution of taxes and duties. The
deficits are worked out after excluding any unusual or non-recurrent item of revenue or expenditure; the idea is that the
expenditure and revenues of the States should be comparable so that no State is allowed to take advantage of the
provisions of Article 275(1) by inflating the expenditure or understating the revenues. Secondly, grants-in-aid may be
recommended for the upgradation of the standards of administration of the States. The idea is to correct the disparities in
the availability of administrative and social services between the developed and the less developed States so that a
citizen, irrespective of the State boundary where he lives, is provided with certain basic minimum standards of such
services. And lastly, grants-in-aid may be recommended by the Finance Commission to provide assistance to a State to
meet expenditure on account of any special problems peculiar to that State.

10.4 The Finance Commissions have generally refrained from making any recommendations for giving any grants-in-
aid to cover the revenue component of the plan expenditure. In the past, the Second and Third Finance Commissions
were given the mandate to make recommendations in this regard. But since then, except the Ninth Finance Commission,
no Finance Commission assessed the revenue component of the plan or recommended any grants to provide for the
deficit on this account. In fact the Fourth Finance Commission observed that while it is within the purview of a Finance
Commission to make recommendations to cover expenditure on plan revenue account, it refrained from doing so because
the Planning Commission has been specially constituted for advising the Government of India and the State Govern-
ments in this regard. It noted that the importance of planned economic development is so great and its implementation so
essential that there should not be any division of responsibility in regard to any element of plan expenditure. We have
been required to take into consideration the plan and non-plan revenue expenditure of the States keeping in view the need
for generating surplus for investment and reducing deficit. Information on the revenue component of the plan for the years
2000-01 and 2001-02 is not available. The preparation for the Tenth Plan has not yet started. While assessing the
resources of the States and the Centre, we have taken this into account and have indicated the extent of funds that can be
transferred to the States as a percentage of gross revenue receipts of the Centre. What remains as a residual after the
transfer recommended by us for each State can be used by the Planning Commission to determine the revenue compo-
nent of the plan of each State after making their own assessment of the needs. We have, therefore, not made any
recommendation for any grants to be given to States to meet the deficit on the plan revenue account.

10.5 We have already made an assessment of the revenue receipts and non-plan revenue expenditure of the States in
an earlier Chapter where the concerns of the States have been taken into account in the assessment of revenue receipts
and non-plan revenue expenditure. The norms laid down by us together with the principles for sharing of Central taxes
recommended by us are expected to act as an incentive for better fiscal performance. However, the position emerging
after assessment of the budgetary position of each State on non-plan revenue account before the devolution of central
taxes and grants is given in Table 10.1.

95
 96
Table 10.1 : Pre-devolution Non-Plan Revenue Surplus/Deficit : 2000-05
(Rs. in lakhs)
State 2000-01 2001-02 2002-03 2003-04 2004-05 Total
2000-05
1 2 3 4 5 6 7
Andhra Pradesh -69246 37975 35758 193714 380081 578282
Arunachal Pradesh -37653 -40052 -42545 -45113 -49260 -214623
Assam -188655 -193961 -187762 -185794 -182471 -938643
Bihar -643599 -673518 -771067 -810205 -865526 -3763915
Goa -6721 -2556 -1464 4999 13007 7265
Gujarat 104347 221424 270527 446661 655118 1698077
Haryana 38770 88349 125961 202873 298711 754664
Himachal Pradesh -141870 -143264 -144850 -142472 -139494 -711950
Jammu & Kashmir -280904 -305390 -318748 -339648 -361881 -1606571
Karnataka 25122 104231 103058 214538 340573 787522
Kerala -136315 -102013 -128592 -71485 1069 -437336
Madhya Pradesh -266554 -233575 -269226 -221447 -145414 -1136216
Maharashtra 218301 450976 606538 956082 1382926 3614823
Manipur -55254 -58570 -62097 -65835 -70470 -312226
Meghalaya -52301 -54597 -57759 -59408 -61875 -285940
Mizoram -42982 -45437 -48034 -52078 -53609 -242140
Nagaland -76325 -81262 -88184 -92264 -98380 -436415
Orissa -309176 -322298 -399459 -418814 -438000 -1887747
Punjab -90428 -71694 -54098 -6491 56892 -165819
Rajasthan -391397 -373878 -392470 -362088 -300928 -1820761
Sikkim -26918 -28670 -30506 -32417 -34790 -153301
Tamil Nadu -199804 -132806 -99492 29568 192778 -209756
Tripura -75656 -79995 -85324 -89353 -94354 -424682
Uttar Pradesh -1172926 -1175991 -1273943 -1249683 -1205375 -6077918
West Bengal -607696 -614930 -648634 -629231 -599240 -3099731
Aggregate Deficit -4872380 -4734457 -5104254 -4873826 -4701067 -24285983
Aggregate Surplus 386540 902955 1141842 2048435 3321155 7800926

10.6 Share of each State in the Central tax revenues as recommended by the us is detailed in Chapter VI. The position
that emerges after the devolution of Central tax revenues is indicated in Table 10.2 below.

Table 10.2 : Post Tax Devolution Non-Plan Revenue Surplus/Deficit of the States
(Rs. in lakhs)
State 2000-01 2001-02 2002-03 2003-04 2004-05 Total
2000-05
1 2 3 4 5 6 7
Andhra Pradesh 347070 523330 601743 853875 1150289 3476307
Arunachal Pradesh -24463 -24674 -24612 -24196 -24857 -122802
Assam -11068 13076 53669 95810 146075 297562
Bihar 145569 246521 301813 441194 594479 1729576
Goa 4415 10427 13676 22658 33610 84786
Gujarat 256850 399217 477856 688488 937258 2759669
Haryana 89803 147845 195340 283796 393124 1109908
Himachal Pradesh -104947 -100218 -94653 -83923 -71185 -454926
Jammu & Kashmir -211166 -224087 -223939 -229064 -232863 -1121119
Karnataka 291638 414945 465388 637157 833642 2642770
Kerala 28946 90654 96082 190573 306812 713067
Madhya Pradesh 211229 323440 380323 536181 738510 2189683
Maharashtra 468707 742908 946967 1353156 1846191 5357929
Manipur -35468 -35503 -35198 -34460 -33865 -174494
Meghalaya -33813 -33042 -32623 -30090 -27670 -157238
Mizoram -32278 -32958 -33482 -35105 -33807 -167630
Nagaland -64432 -67396 -72015 -73404 -76377 -353624
Orissa -35849 -3643 -27868 14607 67671 14918
Punjab -28421 596 30201 91834 171608 265818
 97
1 2 3 4 5 6 7

Rajasthan -95526 -28942 9768 107080 246449 238829

Sikkim -16970 -17073 -16983 -16644 -16388 -84058
Tamil Nadu 91309 206583 296279 491191 731353 1816715
Tripura -49329 -49302 -49532 -47605 -45648 -241416
Uttar Pradesh -102674 71746 181074 447438 774652 1372236
West Bengal -168972 -103451 -52186 66462 212423 -45724
Aggregate Deficit -1015376 -720289 -663091 -574491 -562660 -3535907
Aggregate Surplus 1935536 3191288 4050179 6321500 9184146 24682649

10.7 After the devolution of Central tax revenues, some States will still have deficit on non-plan revenue account. We
recommend grants-in-aid to be given under article 275(1) of the Constitution, equal to the amount of deficits assessed for
each year during the period 2000-05. The amount of the grant for each State, having non-plan deficits is indicated in
Table-10.3 for each of the 5 years starting from the financial year 2000-01. In the interim report, we had recommended
provisionally grants-in-aid to be given to the States in the year 2000-01 at Rs.11000 crores. We have since completed the
reassessment of the States’ finances on the basis of the latest data on the States’ budgetary position. On the basis of the
grants to be given to the States having deficit on non-plan revenue account have been reassessed at Rs.10154 crore.

Table 10.3 : Non-Plan Revenue Grants: 2000-05

(Rs. in lakhs)
State 2000-01 2001-02 2002-03 2003-04 2004-05 Total
2000-05
1 2 3 4 5 6 7
Arunachal Pradesh 24463 24674 24612 24196 24857 122802
Assam 11068 11068
Himachal Pradesh 104947 100218 94653 83923 71185 454926
Jammu & Kashmir 211166 224087 223939 229064 232863 1121119
Manipur 35468 35503 35198 34460 33865 174494
Meghalaya 33813 33042 32623 30090 27670 157238
Mizoram 32278 32958 33482 35105 33807 167630
Nagaland 64432 67396 72015 73404 76377 353624
Orissa 35849 3643 27868 67360
Punjab 28421 28421
Rajasthan 95526 28942 124468
Sikkim 16970 17073 16983 16644 16388 84058
Tripura 49329 49302 49532 47605 45648 241416
Uttar Pradesh 102674 102674
West Bengal 168972 103451 52186 324609
Total 1015376 720289 663091 574491 562660 3535907

10.8 It would be observed that a substantial amount from the grants-in-aid recommended by us will go to the special
category States. In fact during the fourth and fifth year, only the special category States will get the grants-in-aid to meet
the deficit on non-plan revenue account. Since we are taking the entire requirement of these special category States on
non-plan revenue account, the practice of diverting a part of plan grants to meet the non-plan revenue expenditure should
be discontinued so that the plan evolved by the Planning Commission for each one of these States is directed towards
development especially for development of infrastructure. This would create the base, which has been lacking, for an
accelerated economic development in years to come. This also makes the budgetary position of the States more trans-
parent and helps in focusing expenditure in desired areas.

10.9 The dependence of the States in the grants-in-aid gets reduced by the terminal year i.e. 2004-05. As against
fifteen States getting non-plan revenue deficit grants in the first year i.e. 2000-01, only nine States will be entitled to these
grants. These are all Special Category States. Higher amount of grants for meeting the non-plan revenue deficit has
become necessary because of the discontinuance of the allocation of a percentage of excise duty for meeting the require-
ment of the deficit States alone as was done by Eighth, Ninth and Tenth Finance Commissions. This has made the
revenue budgets of some of the chronically deficit States more transparent, and the Central assistance more explicit. We
have given the position of the non-plan revenue accounts emerging after the devolution of Central taxes and duties and
revenue deficit grants in Table 10.4.
 98
Table 10.4 : Non-Plan Revenue Accounts of States after devolution of Taxes &
Duties and non-plan deficit grants
(Rs. in lakhs)
State 2000-01 2001-02 2002-03 2003-04 2004-05 Total
2000-05
1 2 3 4 5 6 7
Andhra Pradesh 347070 523330 601743 853875 1150289 3476307
Arunachal Pradesh 0 0 0 0 0 0
Assam 0 13076 53669 95810 146075 308630
Bihar 145569 246521 301813 441194 594479 1729576
Goa 4415 10427 13676 22658 33610 84786
Gujarat 256850 399217 477856 688488 937258 2759669
Haryana 89803 147845 195340 283796 393124 1109908
Himachal Pradesh 0 0 0 0 0 0
Jammu & Kashmir 0 0 0 0 0 0
Karnataka 291638 414945 465388 637157 833642 2642770
Kerala 28946 90654 96082 190573 306812 713067
Madhya Pradesh 211229 323440 380323 536181 738510 2189683
Maharashtra 468707 742908 946967 1353156 1846191 5357929
Manipur 0 0 0 0 0 0
Meghalaya 0 0 0 0 0 0
Mizoram 0 0 0 0 0 0
Nagaland 0 0 0 0 0 0
Orissa 0 0 0 14607 67671 82278
Punjab 0 596 30201 91834 171608 294239
Rajasthan 0 0 9768 107080 246449 363297
Sikkim 0 0 0 0 0 0
Tamil Nadu 91309 206583 296279 491191 731353 1816715
Tripura 0 0 0 0 0 0
Uttar Pradesh 0 71746 181074 447438 774652 1474910
West Bengal 0 0 0 66462 212423 278885
Total: All States 1935536 3191288 4050179 6321500 9184146 24682649

10.10 We have also made recommendations for upgradation of standards of administration and for special problems,
and for local bodies. We have also provided separately for the contribution of the Central Government towards the
Calamity Relief funds of the States which would also accrue to the States as grants. The position of total transfers made
to each State during the period 2000-05 on the basis of our recommendations is given in Table 10.5.

Table 10.5 : Total Transfer to States : 2000-05

(Rs.in lakhs)
State Share in Grants-in-aid Total
Central Non-Plan Upgradation Local Bodies Relief Total Transfer
Taxes & Revenue and Special Panchayats Municip- Expen- (Col.3 (Col. 2+
Duties Deficit Problems lities ditutrue to 8)
Col.7)
1 2 3 4 5 6 7 8 9
Andhra Pradesh 2898025 0 28523 76024 16466 82080 203093 3101118
Arunachal Pradesh 91822 122802 9059 2784 68 4983 139696 231518
Assam 1236205 11068 13254 23345 2154 42060 91881 1328086
Bihar 5493490 0 40160 78504 9390 51246 179300 5672790
Goa 77522 0 2728 927 464 515 4634 82156
Gujarat 1061593 0 23485 34804 13252 66888 138429 1200022
Haryana 355244 0 13265 14709 3664 33695 65333 420577
Himachal Pradesh 257025 454926 9116 6567 389 18020 489018 746043
Jammu & Kashmir 485450 1121119 12782 7441 1566 14464 1157372 1642822
Karnataka 1855248 0 31153 39412 12482 30903 113950 1969198
Kerala 1150404 0 12914 32963 7525 27866 81268 1231672
Madhya Pradesh 3325898 0 49452 71547 15601 37340 173940 3499838
Maharashtra 1743105 0 33197 65673 31625 65149 195644 1938749
Manipur 137732 174494 5859 1877 440 1189 183859 321591
Meghalaya 128701 157238 5739 2561 270 1632 167440 296141
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1 2 3 4 5 6 7 8 9

Mizoram 74511 167630 8984 786 384 1232 179016 253527

Nagaland 82790 353624 6284 1287 179 812 362186 444976
Orissa 1902664 67360 21505 34559 3996 45366 172786 2075450
Punjab 431637 28421 11001 15464 5473 50857 111216 542853
Rajasthan 2059588 124468 29985 49095 9942 85785 299275 2358863
Sikkim 69243 84058 6678 529 21 2863 94149 163392
Tamil Nadu 2026472 0 25186 46612 19337 42536 133671 2160143
Tripura 183267 241416 6018 2846 402 2155 252837 436104
Uttar Pradesh 7450156 102674 66991 131913 25163 74033 400774 7850930
West Bengal 3054009 324609 23945 57773 19749 41900 467976 3521985

Total All States 37631801 3535907 497263 800000 200000 825569 5858739 43490540

Dr. A. Bagchi, Member, has given a note on the “Need to Strengthen the Equalising Role of Fiscal Transfers”,
which is appended at the end of the Report.
 100

Chapter XI
Debt Position of the States and Corrective Measures

Introduction
11.1 The Commission is required, under paragraph 9 of the Terms of Reference, to (i) make an assessment of the
debt position of the States as on 31st March, 1999, and (ii) suggest such corrective measures as are deemed necessary,
keeping in view the long term sustainability of debt for both the Centre and the States. For the first time, a reference has
been made to ‘long term sustainability of debt’ for the Centre as well as the States. This was also a critical consideration in
the context of ‘restructuring of public finances’ which we have already dealt with in an earlier Chapter. Our concern here
is with the relevant corrective measures. While considering these measures, we have to keep in mind the question of the
long-term sustainability of debt of the States as well as of the Centre.
11.2 In the context of sustainability of debt, previous Commissions had also expressed concern over the growing debt
and had emphasised the need to consider the cost of debt, the use and the productivity of the borrowed funds, and the
arrangements for the amortisation of debt while resorting to borrowings. For example, the Ninth Finance Commission had
observed that "ultimately, the solution to the government debt problem lies in borrowed funds (a) not being used for
financing revenue expenditure; and (b) being used efficiently and productively for capital expenditure so as to earn returns
and/or increase productivity of the economy resulting in increased governmental revenues". The Tenth Finance Commission
also drew attention to three disturbing features of the debt profile of the States and its management as being "(i) diversion
of borrowed funds for meeting revenue expenditure; (ii) use of loans in unproductive enterprises, or enterprises which
were potentially productive but were beset by poor performance and currently yielding low or even negative returns; and
(iii) non-provision for depreciation or amortisation funds in respect of government owned assets, leading to repayments
out of fresh borrowings."
11.3 Accumulation of debt reflects the outcome of the fiscal operations of Centre/States on the revenue and expenditure
sides of their budgets. If expenditure, whether committed or discretionary, exceed revenues, tax and non-tax, the excess
can only be financed through fresh borrowing. If the mismatch in the growth of revenues and expenditure is of a temporary
nature, borrowing provides a mechanism by which the adjustment is smoothened out. However, if the mismatch persists
over a long period of time and grows in volume, debt tends to become unsustainable, and one has to look at the structural
causes of persistent and growing fiscal deficits, i.e., requirement of fresh borrowing.
11.4 We have already discussed the basic structural deficiencies and the underlying causes that have driven the
finances of States on to a course of mounting debt, deficits and debt-servicing burden. Bearing those considerations in
mind, we propose to suggest prudent corrective measures here. However, as required, first we make an assessment of
the existing position of debt of the States.

Debt Position of States

11.5 Total debt of the States including short-term debt is estimated to have risen from Rs. 4,00,754 crore as on 31st
March, 1999 to Rs.4,73,677 crore as on 31st March, 2000. The stock of debt and its composition at the end of these two
years is shown at Annexures XI.1 & XI.2 respectively. Loans from the Central government accounted for about 50 per
cent of the outstanding debt at the end of financial years 1998-99 and 1999-2000. The share of market loans (including
loans from banks and ways and means advances), and of provident funds etc. came to 19.5 and 15.8 per cent at the end
of 1998-99, and 20.1 and 16.0 per cent at the end of 1999-00 of the total outstanding debt, respectively.
11.6. In assessing the overall debt position of the States, the previous Finance Commissions followed the practice of
excluding the short-term component of debt. In keeping with this practice and for purposes of comparison, the profile of
estimated debt of State governments, excluding Ways and Means advances, and Reserve Funds and Deposits is shown
in Table 11.1.
Table 11.1: Total Outstanding Long Term Debt of State Governments
(Rs. in crores)

End of March 1995 1999 2000

Amount % of Amount % of Amount % of
total debt total debt total debt
1) Internal Debt
a) Market Loans 31200 17.06 61593 18.40 71720 17.86
b) Loans from Banks etc. 3458 1.89 10661 3.19 17294 4.31
2) Loans from Centre 115238 63.01 199007 59.46 236696 58.94
3) Provident Funds etc. 32991 18.04 63405 18.95 75860 18.89
Total 182887 100.00 334666 100.00 401570 100.00
100
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11.7 The share of Central loans in the total debt of States has been steadily declining as may be seen at Annexure
XI.3. In 1984, the share of Central loans was 72.34 per cent of the total long-term debt of the States. By 1995, this share
had declined to about 63 per cent and is estimated to have declined to about 59 per cent at the end of March, 2000. The
decline in the share of Central loans is reflected in the increasing share of internal debt and provident funds during this
period. However, Central loans still continue to be the single largest component of the total debt of the States. On the
whole, the long-term debt of States has been gradually shifting to relatively costlier sources.
11.8 Central loans due for repayment by the States during the period 2000-05 is shown in Table 11.2 below:

Table 11.2: Instalment of Central Loans* due for Repayment by States during 2000-05

Items (Rs. in crores)

1. Plan Loans 30947
(a) State Plan 30085
(b) Drought Loans 13
(c ) Others 15
(d) Central Sector 177
(e) Centrally Sponsored Schemes 657
2. Non Plan Loans 20422
(a) Small Savings Loans 19915
(b) Modernisation of Police 46
(c ) Housing for All India Services 50
(d) Others 411
Grand Total (1+2) 51369
*Pertains to Central loans outstanding as on March 31, 1999.

The State-wise position of repayment due during the period 2000-05 is given at Annexure XI.4.
11.9 Aggregate debt of States as percentage to Gross State Domestic Product (GSDP new series) has gone up from
20.71 per cent in 1996-97 to 22.98 per cent in 1998-99. The State-wise position in this regard for the year 1998-99 is
indicated in Table 11.3 below. Corresponding figures for earlier years are given in Annexure XI.5.

Table 11.3: Debt as Percentage to GSDP

(Per cent)
State 1998-99 State 1998-99
Andhra Pradesh 20.29 Manipur 44.66
Arunachal Pradesh 40.23 Meghalaya 23.35
Assam 23.23 Mizoram 58.39
Bihar 33.14 Nagaland 50.92
Goa 34.21 Orissa 37.79
Gujarat 18.13 Punjab 34.58
Haryana 21.14 Rajasthan 28.85
Himachal Pradesh 55.87 Sikkim 64.24
Jammu & Kashmir 47.98 Tamilnadu 16.41
Karnataka 17.48 Tripura 37.18
Kerala 27.13 Uttar Pradesh 27.97
Madhya Pradesh 18.63 West Bengal 26.19
Maharashtra 13.08 All States 22.98
Note: Debt includes internal debt (including ways and means advances outstanding at the end of the year), loans and advances from the Central
government, small savings, provident funds, and other accounts, excluding reserve funds and deposits.

11.10 State-wise share of debt to total debt of all States as on 31st March for the years 1993 to 2000 is indicated in
Annexure XI.6. Rates of interest on Central loans (other than small savings loans) and those on small savings loans to
 102
States are indicated in Annexures XI.7 & XI.8. These show that the burden of debt servicing has increased substantially
due to gradual and steady increase in interest rates, among other things.

Sustainability
11.11 In our discussion on restructuring we have considered various aspects of the issue of debt sustainability. To
recapitulate, we need to consider an answer to the following two questions: (i) at what level should debt be stabilised as a
percentage of GDP in the case of the Centre, and as a percentage of respective GSDPs in the case of the States; and, (ii)
given these debt-GDP/debt-GSDP ratios, what are the conditions under which these can be sustained by the respective
governments. In our view the answers to these questions depend critically upon the rate of growth of (nominal) GDP/
GSDP, the effective interest rate on borrowing by the concerned governments (Centre/States), the rate of growth of
revenue receipts and the proportion of primary expenditure (expenditure other than interest payments) relative to GDP/
GSDP that may be considered desirable. Given other things, a State which has a higher growth rate relative to interest
rate, can sustain debt at a higher level relative to GSDP. This issue has been discussed in Chapter III.
11.12 Since the question of desirable level of debt-GSDP ratio can be addressed in terms of the current burden of
interest payment as percentage of revenue receipts, we first look at the relative position of States in terms of interest
payment to revenue receipts. The revenue receipts here include the State's share of Central taxes and grants. The
relevant information is given at Annexure XI.9. It is observed that in the case of some States the ratio of interest payment
to revenue receipts is very high. For example the average ratio of payment of interest to revenue receipts (1996-97 to
1998-99) has been more than 25 per cent in the case of Punjab, Orissa, Uttar Pradesh and West Bengal. The position of
States is summarised in Table 11.4.

Table 11.4: Interest Payment as percentage of Revenue Receipts

Above 25 per cent Punjab, Orissa, Uttar Pradesh, West Bengal

20 - 25 per cent Bihar, Rajasthan
15 - 20 per cent Haryana, Kerala, Himachal Pradesh, Gujarat, Andhra Pradesh, Goa
10 - 15 per cent Madhya Pradesh, Maharashtra, Assam, Tamil Nadu, Karnataka, Jammu & Kashmir,
Nagaland, Tripura, Sikkim
Below 10 per cent Mizoram, Meghalaya, Arunachal Pradesh, Manipur.

11.13 Our terms of reference indicate that it is not only the sustainability of debt of the States that should be considered
but also the sustainability of debt of the Centre as well as Centre and the States considered together. We have discussed
the issue of sustainability of debt and deficit in Chapter III.
11.14 An important issue that needs consideration in this context is the manner in which the debt burden of the States
can be brought down over a period of time. This indeed is a difficult question. In our view, the ability of a State to service
its debt including the interest burden, depends on its ability to raise the revenue receipts to meet the incremental expenditure
on interest payments and the primary expenditure. Three steps are desirable for reducing the debt burden of the States:
(i) the incremental revenue receipts should meet the incremental interest burden and the incremental primary
expenditure.
(ii) a surplus may be generated on revenue account to meet future repayment obligation. This surplus should
be credited in a sinking fund for this purpose.
(iii) the State should have and maintain a balance in its revenue account.

Debt Relief: An Incentive Scheme

11.15 Previous Commissions have considered the matter of giving debt relief to States and have used a number of
ways for providing relief. Alternative ways of providing debt relief include waiving of repayment and/or interest payment
due, altering the terms of repayment, reducing interest rates and consolidation of loans.
11.16 In its memorandum to the Commission, the Centre has requested the Commission to suggest a plan for bringing
down the ratio of States’ debt to GDP during the period 2000-05. The Centre has urged that States’ debt to the Centre
should not be written off or rescheduled, as the Centre is no longer in a position to bear any additional burden on this
account. It has been further contended that debt relief should be conditional and linked to quantifiable improvement in
fiscal performance.
11.17 In their memoranda, Bihar, Gujarat and Orissa have desired that the general debt relief scheme linked to fiscal
performance should be continued with certain modifications. Arunachal Pradesh favours a scheme of general debt relief.
11.18 In proposing a scheme of debt relief we are guided by the objective of initiating corrective measures leading to
sustainability of debt. We are of the opinion that this can come about only when State governments make persistent effort
to put their finances on a sound footing by additional revenue effort, expenditure compression and reprioritization in line
with the restructuring plans that we have discussed earlier. An immediate focus of the fiscal reforms should be on
 103
achieving revenue balance or at least reducing revenue imbalance to the minimum. In this context, the performance
linked debt relief scheme introduced by the Tenth Finance Commission can be more effective if some modifications are
introduced.
11.19 The Tenth Finance Commission had recommended a scheme of general debt relief for all States linked to fiscal
performance. Improvement of fiscal management was measured by comparing the ratio of revenue receipts (including
devolution and grants from the Centre) to total revenue expenditure in a given year with the average of corresponding
ratios in the three immediately preceding years. The performance of each State was measured against its own past
performance. Twice the excess of the ratio over the average ratio of fiscal improvement during the preceding three years
was recommended for relief on loans contracted during the period 1989-95 and falling due for repayment after 31st March,
1995. The relief was admissible only to the extent of ten per cent of the amount due for repayment from these loans in any
year.
11.20 Estimated relief during the period 1995-2000 under the scheme of general debt relief for all States linked to fiscal
performance works out to about Rs.212 crore for various States. The statement at Annexure XI.10 shows State-wise
picture. During 1996-97 to 1999-2000, twenty States have been able to avail of debt - relief by showing improvement on
their revenue balance account. While the scheme has been able to record improvement in revenue balance, the relief
provided was of a limited amount. Under another scheme proposed by TFC viz., the scheme for encouraging retirement
of debt from the proceeds of disinvestment of equity holding of State Governments, not much headway could be made
during the period 1995-00 as only Tamil Nadu could avail of relief of about Rs. 10 crore under this scheme. We propose
to discontinue the schemes of debt relief based on disinvestment and fiscal stress, and focus only on debt relief linked to
improvement in revenue balance. However, since these two schemes are proposed to be discontinued, we intend to
increase the extent of potential relief in the fiscal performance linked scheme.
11.21 The scheme of general debt relief linked to fiscal performance with respect to Central loans relates to improvement
in the ratio of revenue receipts of a State to its total revenue expenditure. In our view, the incentive needs to be strengthened
for two reasons. One, we are discontinuing the other Schemes of debt relief recommended by the Tenth Finance Commission
and therefore the States should get an opportunity to get a higher quantum relief by improving their fiscal performance.
And two, a higher relief would itself act as an incentive for encouraging better performance. For determining the quantum
of relief a factor of 2 was used by the Tenth Finance commission on the extent of improvement. We therefore propose to
enhance this factor to 5. For the same reasons, we also recommend that the maximum magnitude of the stipulated relief
under the general incentive scheme be enhanced from 10 per cent to 25 per cent. In the calculation of revenue receipts
the revenue deficit grant under Article 275 recommended by us should not be included. We are excluding it as the Tenth
Finance Commission did not recommend revenue deficit grants for 1999-2000 for any State. The grants recommended by
us will suddenly improve the revenue balance of the recipient States, which will not be due to any reform action taken on
their part. Similarly, the revenue deficit grants recommended by us fall in magnitude over time. This will lead to a lowering
of revenue receipts relative to past years, which may not be attributable to any deterioration in the tax and non-tax
receipts. Only those repayments as pertain to fresh Central loans to the States during 1995-00 and as outstanding on 31st
March, 2000 will qualify for this relief.
11.22 The profile of amounts of fresh loans received from the Centre during 1994-99 outstanding as on 31.3.99 is at
Annexure XI.11 and repayments of these fresh loans (1994-99) during 2000-05 is at Annexure XI.12. The details of the
scheme have been given in Appendix XI.1. This scheme may be called the generalised debt relief scheme as recommended
by Tenth Finance Commission. However, the following main modifications in the scheme outlined by them may be noted:
(i) instead of a factor of 2, a factor of 5 is to be applied on the index of improvement on revenue balance;
(ii) the ceiling of stipulated relief is to be set at 25 per cent of repayment due in any one year instead of 10 per
cent, and
(iii) in the calculation of revenue receipts the revenue deficit grants recommended by us under article 275
should not be included.
It is difficult to indicate in advance the quantum of relief that would be available to each State, or the total burden on the
Centre on account of the debt relief as it would ultimately depend on the fiscal improvements that may be effected during
this period by the States. However, going by past performance, it may ultimately work out to around Rs.600 to Rs.700
crore during the entire period.

Relief on Special Term Loans to Punjab

11.23 The Government of Punjab in their memorandum to the Eleventh Finance Commission has, inter alia, stated that
out of the Special Term Loans of Rs. 5799.92 crore from the Centre, the instalments of repayment of principal (Rs.
1256.68 crore including debt relief of Rs. 495.22 crore provided as a follow up of TFC recommendations) and interest (Rs.
2156.43 crore) falling due during the years 1995-96 to 1999-00 has been waived by the Government of India. The State
has indicated that after having availed of the relief/waiver, the outstanding Special Term Loan as on 31st March, 2000
would be Rs.3772 crore. It has been further stated that regarding repayment /waiver for the year 2000-01 and beyond, as
per the record of the discussions of the meeting between the then Prime Minister and Chief Minister of Punjab on 8th
September, 1997, it was decided that “ the decisions of Government of India to waive the Special Term Loan granted to
 104
Punjab during the period 1984-94 for combating insurgency and militancy in the State shall be suitably conveyed to the
Eleventh Finance Commission for making appropriate recommendations regarding debt relief to Punjab”. The details of
relief provided to the State during 1995-2000 are given in Table 11.5.

Table 11.5: Relief Provided to the State during 1995-2000

(Rs. in crores)
Year Relief Provided
Principal Interest Total
1995-96 176.14 627.09 803.23
1997-98 123.29 460.86 584.15
1998-99 220.58 550.58 771.16
1999-2000 241.45 517.90 759.35
Debt relief as per the recommendations of the TFC 495.22 - 495.22
Total 1256.68 2156.43 3413.11

11.24 Consequently, the Government of India, Ministry of Finance, Department of Expenditure conveyed to the
Commission the decision of Government of India for making suitable recommendations regarding debt relief to Punjab.
The State has requested that the Special Term Loan of the order of Rs. 3772 crore outstanding as on 31st March 2000 and
payment of interest thereon be waived in tune with the decision of the Central Government.
11.25 It may be recalled that the Ninth Finance Commission had granted a moratorium of two years (1990-92) on
repayment of principal and payment of interest in respect of special term loans given to Punjab during 1984-89. The Tenth
Finance Commission had recommended that one third of the repayment of principal amounting to Rs. 490.63 crore falling
due during 1995-00 on special term loans advanced to the State of Punjab to fight militancy and insurgency be waived in
view of the special circumstances prevailing when these loans were advanced, and also keeping in view the need for the
State to reinvigorate its development efforts.
11.26 Andhra Pradesh, Assam and Jammu & Kashmir have also made request for giving relief on the lines similar to
Punjab as they have also been affected by insurgency. We had sought information from the Ministry of Home Affairs on
the security-related expenditure incurred by the States affected by insurgency and left wing extremism. The Ministry of
Home Affairs have informed us that they have a number of schemes under which the security-related expenditure are
reimbursed to the States affected by terrorism, insurgency and left wing extremists. Among the States, which have been
reimbursed this expenditure are: Jammu & Kashmir, Himachal Pradesh, Assam, Nagaland, Manipur, Tripura, Andhra
Pradesh, Madhya Pradesh, Maharashtra, Orissa and Bihar. The security related expenditure is being reimbursed to
Jammu & Kashmir from the year 1990-91 while in the case of other States, the scheme has been in operation for the last
four to five years.
11.27 We also sought information from the Planning Commission and the Ministry of Finance to find out whether any
loans have been specifically given to these States to meet the expenditure on terrorism/insurgency. We have been
informed that no Central loans have been given to any State specifically for this purpose. In the absence of any specific
information, it is difficult to determine the extent of debt burden which has arisen on account of security-related expenditure.
We find that the Ministry of Home Affairs which is basically concerned with this issue is the best agency to take a view on
this. As there are schemes in operation to share and reimburse the security-related expenditure, we do not find any
justification for giving any debt relief on this account.
11.28 The State Governments of Punjab and Jammu & Kashmir have repeatedly emphasised the need for giving them
relief on repayment of instalments of debt and interest as they had suffered a lot due to terrorism and insurgency. In fact
the State of Jammu & Kashmir continues to be affected by terrorism and insurgency. We notice that the security-related
expenditure is being reimbursed to this State with effect from 1990-91 regularly. However, we have no information about
the expenditure incurred on security prior to 1991. We recommend that the expenditure incurred on security by the State
of J&K prior to 1991 may be assessed by the Ministry of Home Affairs and the Ministry of Finance in consultation with the
State Government and debt relief to the extent of expenditure incurred on security may be provided to the State. In regard
to Punjab, we find from the information furnished by the Ministry of Home Affairs that there has been no reimbursement to
the State on account of security related expenditure under any scheme. We, therefore, recommend that a moratorium on
the payment of instalments of debt and interest on the Special Term loan due for repayment may be given to the State of
Punjab during the period 2000-05 so that the State is able to build its economy and be in a better position to repay the loan
and the interest accruing thereon in subsequent years. This would not extend to other loans and would be limited to total
amount of Rs.3,396.15 crores (Rs.1810.84 crores on account of principal and Rs.1585.31 crores on account of interest).
The year-wise schedule of repayment of principal and interest on these special term loans is given in Annexure XI.13. We
also recommend that the expenditure incurred on security be worked out by the Ministry of Home Affairs in consultation
 105
with the State Government of Punjab and the Ministry of Finance and, to the extent that the State is entitled to reimbursement
on account of security-related expenditure, the relief on the debt may be given to the State after the period of moratorium
is over, and after taking into account the waiver already given.

Loans against Small Saving Collections

11.29 In regard to loans on account of small savings, States, in their respective memoranda, have asked for:
(i) treating small savings loans as loans in perpetuity;
(ii) lowering of interest rate on these loans;
(iii) increasing the share of States.
Some other specific requests have also been made. For example, Orissa wants that all small savings loans outstanding
at the end of 1999-2000 be written off, and that such savings be passed on to the States as interest free loans.
11.30 West Bengal has urged that, in a particular year, if there is a positive surplus after making deductions on account
of disbursements of interest payments as well as management expenses, 75 per cent of the surplus be advanced to the
concerned States as grant; further, that interest on such past loans be either totally waived or substantially reduced and
the principal be allowed to be paid back in equal annual instalments spread over a period of 30 years. It was also
suggested that, if the advance from the Centre to the States on account of net small savings was treated as grants out of
shared surplus, then a corpus may appropriately be created outside the Union budget.
11.31 The Central Government had constituted a committee under the Chairmanship of Shri R.V. Gupta, former Deputy
Governor of Reserve Bank of India to review the scheme of on lending of the net collections of small saving schemes to
the States. This Committee had recommended the establishment of National Small Savings Fund (NSSF) in the Public
Account of India.
11.32 The 1999-2000 Budget brought about a salient change in the extant system by delinking small savings from
Centre’s fiscal deficit by creating a National Small Savings Fund [NSSF]. The amount of the States'/UTs' share has been
enhanced from 75 per cent to 80 per cent from 15.01.2000. The amount released to States and UTs out of net small
savings and Public Provident Fund (PPF) collections with effect from 01.04.1999 is treated as investment in the special
securities of the respective States and booked under investments of NSSF. Further, interest at the rate of 12.5 per cent is
payable from 15.01.2000 and these securities are to be redeemed from the 6th year over a period of 20 years. The
remaining part of the net small savings and PPF collections forming part of Centre's share are treated as investment in the
special securities of the Central Government. Similarly, the outstanding balances at the close of the last financial year i.e.
1998-99 under various small saving schemes and PPF would also be treated as investment of NSSF in the special
securities of the Central Government.
11.33 In essence, under the new accounting system, small saving collections are credited to the NSSF. All withdrawals
of small savings by the depositors are made out of the accumulation in the fund. The balance in the NSSF is invested in
the Central and State Government securities. The income of the NSSF consists of the interest earned from the government
securities while the servicing cost and the cost of management of small savings constitute the expenditure to be incurred
from the fund. All investments in Central Government securities out of the fund would form a part of internal debt of the
Centre from 1999-00.
11.34 The issue of treating borrowing of the States based on small saving as loans in perpetuity has been considered
by earlier Commissions also. No Finance Commission except the Seventh had agreed to this idea. Although the Seventh
Commission favoured it, the Central Government did not accept it. Loans in perpetuity imply continuing interest payments,
on a debt of high cost, leaving smaller amounts from current revenues for essential expenditure. The R.V. Gupta Committee,
after considering the views of the States, observed that the net collections under the small savings cannot be disbursed
as loans in perpetuity or grant for the reason that these are not revenue receipts of the Government of India but are
borrowings which are to be repaid to the subscribers. We also do not consider conversion of these loans into perpetuity as
desirable or viable.
11.35 We are unable to favour the scheme suggested by West Bengal, which provides for giving 75 per cent of the
surplus generated from the collections of small savings after meeting the expenditure on account of repayment, payment
of interest and management expenses as grants to the States. This surplus is in fact the excess of current borrowing over
the debt servicing requirements on past borrowing. The larger is current borrowing based on small savings, the larger
would be this excess. Larger current borrowings create larger liabilities for the future, and cannot be converted into a grant
as the debt has to be repaid.
11.36 The reduction in the interest rates on small savings with effect from 15.01.2000 to make them consistent with
lower interest rates prevailing in public sector banks is in line with the demands made by the States in their memoranda
submitted to the Commission. The interest rates of National Saving Schemes 1992, National Saving Certificates VIII
Issue, Post Office Monthly Income Scheme and Kisan Vikas Patra and Post Office Time and Recurring Deposits except
Post Office Saving Accounts were also reduced by margins of 0.5 to 1.0 percentage points with effect from 15.01.2000.
Similarly, the interest rate on Public Provident Fund was reduced from 12 per cent to 11 per cent. With the decision to
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reduce the interest rate on special securities of the States/UTs issued against small savings collections by one percentage
point, i.e. from 13.5 per cent to 12.5 per cent from 15.01.2000 the States’ demand has been met to some extent. The
increase in the share of the States in the net collections under small saving schemes from 75 per cent to 80 per cent with
effect from 15.01.2000 would also meet the long pending demand of the States, as the last revision in this share was done
in 1987. However, it may be further examined if certain economies in cost of collection and management of these savings
can be secured by introducing modern technology and other improvements. If so, corresponding reduction in the rate of
interest may be made.

Assistance for Externally Aided Projects

11.37 External assistance is passed on to the concerned States as Additional Central Assistance [ACA]. In this process,
the original terms and conditions of external assistance are recast. ACA is given to the States on the same terms and
conditions as Central Plan assistance. This means that irrespective of the original terms and conditions of external
assistance, it is passed on to the States as 70 per cent loan and 30 per cent grant in the case of general States and 10 per
cent loan and 90 per cent grant in the case of special category States. The rate of interest on the loan component has
varied in line with the interest rate on State Plan loans. At present, it is 12.5 per cent per annum. For 50 per cent of the
loan component a grace period of 5 years is given and thereafter the loans are to be repaid in 20 years.
11.38 Several States, e.g., Andhra Pradesh, Kerala, Rajasthan, Uttar Pradesh and West Bengal have suggested that
the external assistance should be passed on to the States on the same terms and conditions as agreed to by the lending
agency subject to the Centre collecting an amount from the States to cover the risk borne by it due to exchange rate
fluctuation. The modalities of the scheme could be worked out in consultation with the States. Karnataka has further
requested that the grants portion of the external assistance for various projects implemented by the States should be
passed on to them as grants.
11.39 The arguments in favour of putting all external assistance into a pool and passing them on to the States on
uniform terms and conditions have been based on the premise that: (i) this enables all States to participate on an equal
footing in the concessional external assistance; and (ii) this protects the States against exchange rate depreciation (exchange
risk).
11.40 Until now external assistance has come to a limited number of States only. Important among these are: Maharashtra,
Andhra Pradesh, Tamil Nadu, Karnataka and Gujarat. Among the low per capita income States, Uttar Pradesh and
Rajasthan appear to have got some assistance. Very few of the special category States [for example Assam] have got any
externally assisted projects. A large number of States have not benefited from the external assistance programme at all.
If external assistance were passed on to the States on original terms and conditions, it would imply that the States would
get it as 100 per cent grant in all cases of external assistance received in the form of grants and in all other cases it would
imply debt-servicing burden in terms of repayment of principal and payment of interest. External assistance from some
sources and for some projects is highly concessional while in other cases it may be costly. In the process of pooling and
fixing of a uniform interest rate in rupee terms, cross-subsidization takes places at two levels: between Centre and all-
States, and among the States. In the case of cross-subsidisation between the Centre and the States, the gain/loss to one
side vis-à-vis another depends on the rate of depreciation of the Indian rupee against major foreign currencies. In the
case of States, the cross-subsidisation takes place when States having a relatively larger share of grants and soft loans
(which may offer relief to social welfare and long gestation low return type of projects) in their assistance portfolio are
required to pay a higher rate of interest to help sustain the relatively larger share of high cost loans which may often relate
to commercial projects, used by some States.
11.41 A related issue is the guarantee required to be given for the loans negotiated directly by the external agencies.
The external agencies insist for a sovereign guarantee from the Central Government. In the case of some lenders, e.g.
Asian Development Bank, World Bank and a few countries, a commitment charge or a service charge is also required to
be paid. The Central Government may provide the guarantee, in such cases, as it does to Central Government undertakings
on payment of a guarantee fee.
11.42 The guarantee fees may bear a relationship associated with the risk of default. Since Government of India
releases loans to States after first deducting the debt servicing at source the chances of the States defaulting to Centre
are limited and guarantee fees need not be considered at the same level as for the PSUs.
11.43 In regard to foreign exchange risk implicit in the long term depreciation in the external value of rupee various
alternatives can be considered which may include the setting up of an Exchange Risk Fund, or charging a higher interest
rate to cover the expected depreciation of the rupee. It should be possible to evolve and work out an arrangement in which
the States can be made to bear the risk in this area, and in our view this should not act as a factor inhibiting the switch over
to the alternative system of the State's getting the benefit or the liability associated with a particular type of external
assistance.
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11.44 In an era of transparency and responsible fiscal behaviour, it would also help in informing the public about the real
cost of debt and ensure better utilisation of the funds through timely implementation of the externally aided projects. The
present system of intermediation and cross-subsidisation does not permit it. We recommend that the issue of passing on
external assistance on terms and conditions different from original terms and conditions be examined in detail, and the
system recast to meet the requirements of equity, efficiency and transparency.

Contingent Liabilities
11.45 Apart from the explicit borrowings and liabilities of the States, there has also been considerable growth of contingent
liabilities arising out of guarantees given by the State governments from time to time. Guarantees are not immediate
liabilities, but liabilities contingent on default by the borrower for whom the guarantee has been extended. In many cases,
the State governments have given guarantees for their Public Sector Enterprises. Sometimes, the Public Sector Enterprises
are used as instruments or indirect agent for borrowing by the State government itself. Since many State level public
enterprises are running in losses, the risk of default is also quite high. States are not alone in giving guarantees; Centre
has also given guarantees and counter guarantees for the debts contracted by various agencies, and thus has increased
its burden on this account. Based on the Finance Accounts data, the Reserve Bank of India in its Report on Currency and
Finance for the year 1998-99, has estimated that the outstanding guarantee obligations of the Central and State governments
together account for 9.4 per cent of GDP (at 1993-94 prices), with, Centre and States sharing responsibility in equal
measure (4.7 per cent of GDP each). In our view, contingent liabilities form an indirect burden on the State's and Centre's
finances as these have to be discharged in the event of the borrower failing to honour its obligation to the funding agency.
We feel that there is a need to fix a limit on the giving of such guarantees by enacting suitable legislation and such limit
should form part of the overall limits of borrowing under articles 292 and 293.

Debt Sustainability and Constitutional Provisions

11.46 The term "corrective measures" need not be taken to mean just schemes of debt relief. In particular, other
measures to keep a check on the growth of debt are relevant. Articles 292 and 293 refer, respectively, to borrowings by
the Government of India and borrowings by the States. In article 292, a limit on the borrowing as well as on guarantees to
be given by the Union government can be fixed by Parliament by law. Similarly article 293 provides that the legislature of
a State can fix limits on borrowing by a State as well as limits on guarantees to be given by it. Further, under this article
the Central government may make loans to States provided the limit on Central government borrowing under article 292
is not exceeded. It may also give guarantees in respect of loans raised by any State. Clause 3 of article 293 provides that
if any Central loan is outstanding with a State, or a loan in respect of which a guarantee given by the Central government
is outstanding, then a State may not raise any loan without the consent of the Government of India. A time has come
when, as a part of the overall thrust towards fiscal responsibility, concrete steps are taken under the provisions of articles
292 and 293. In particular, Parliament and respective State Legislatures may consider fixing limits on total borrowing as
well as on guarantees to be given by them. This limit should also include the borrowings by the Governments from Public
account and other sources, which are not borne on the security of the Consolidated Fund of the Central Government and
the State Governments, respectively. Any statutory or constitutional amendment, if required in this regard, may also be
considered. This issue has been discussed earlier in Chapter III.

Amortisation and other Funds

11.47 A few States like Rajasthan, Goa, Nagaland and Gujarat have suggested the need for creating a `Fund' for
meeting the debt repayment liabilities. Goa, in its memorandum to the Commission, has stated that in order to even out
existing repayment burden equally across a time horizon of say 10 years, total outstanding debt should be equally
apportioned for repayment to each of the years over a 10 year span. If the apportioned amount exceeds the amount
scheduled for repayment, the surplus should be credited in the sinking fund constituted for the purpose. If the scheduled
repayment exceeds the apportioned amount, the shortfall would be made good by withdrawal from the sinking fund.
Gujarat has stated that to meet obligations on account of guarantees given by the State, it has been decided to set up a
risk fund for meeting obligations of the order of Rs. 200 – 250 crore per annum. Nagaland has asked the Commission to
consider creation of reserve funds for meeting financial requirements of backward States like Nagaland in times of financial
crisis. Rajasthan has stated that the Commission may recommend the implementation of the scheme of redemption fund
prepared by the RBI, and the Centre may contribute a token amount of, say, one per cent of the outstanding amount of
market loans at the beginning of every year to the redemption fund created by the States.
11.48 The Ninth Finance Commission had observed that in order that the capital stock of the country might be
maintained intact, there should be adequate provision for depreciation and loan should be repaid out of amortisation/
sinking funds. The Tenth Finance Commission had recommended the establishment of sinking funds as desirable for
overall fiscal discipline. We would also like to emphasise the need for setting up a sinking fund in each State for the
amortisation of debt.
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Chapter XII
General Observations

12.1 In the preceding chapters, we have addressed the tasks entrusted to us under our terms of reference and put
forward our recommendations on the various terms except the additional term referred to us on April 28, 2000. Our
recommendations on the additional term of reference will be submitted as per the time schedule indicated in the Presidential
Order dated June 19, 2000.
12.2 The terms of reference (ToR) of our Commission were considerably wider as compared to those given to the
earlier Commissions. We were required to make recommendations not only on the sharing of resources between the
Centre and the States but also to suggest measures for the restructuring of public finances of the Union and the States
jointly and severally in order to restore budgetary balance and maintain macro economic stability. In addition, the Commission
was required to suggest the measures required to augment the Consolidated Funds of the States to supplement the
resources of the panchayats and the municipalities.
12.3 Many of the special category States especially from the North East have suggested that the Finance Commission
should consider favourably the pre-1989-90 financing pattern of their plan and accordingly provide sufficient grant to meet
their non-plan revenue expenditure. We have examined the finances of all States including special category States and
have adequately provided resources to meet their non-plan revenue expenditure. We feel, therefore, that the plan revenue
grants provided to the States especially special category States should be fully utilised for plan purposes only and diversion
to non-plan revenue expenditure should be avoided.
12.4 Jammu and Kashmir and Assam have represented that the Central assistance provided to these States in the
ratio of 90 per cent grants and 10 per cent loans should be given effect from 1969-70 instead of 1990-91. This is a part of
the Gadgil formula which was adopted by the National Development Council and implemented by the Planning Commission.
We understand that grant-loan ratio was adopted by the Planning Commission, taking note of the specific budgetary
situation of special category States. These issues concern the Planning Commission and, therefore, it would be appropriate
that the concerned States address the matter to the Planning Commission.
12.5 The Ministry of Health and Family Welfare suggested that the cost of maintenance of infrastructure under the
Family Welfare Programme may be transferred to the State Budget. Under this programme, a large infrastructure has
been created at the district and sub district levels over successive plan periods and the cost of maintenance of these
centres is met through plan expenditure of the Central Government. The Ministry has pointed out that in the absence of
adequate budgetary support it has not been possible to fully reimburse the expenditure incurred by the States on
maintenance of these centres in time. We have examined this proposal in consultation with the Planning Commission and
the Ministry of Finance. The Planning Commission has forwarded the proposal for transfer of maintenance expenditure
to the States under non-plan. Ministry of Finance was of the view that such a transfer might weaken the resources of the
States which are already poor and there would be no guarantee that the transferred funds would be used for Family
Welfare Programme as the fund would no longer be earmarked. We feel that in order to strengthen family welfare programme
aiming at control of growth of population, it would get better attention if the status quo is maintained and expenditure is not
transferred to the non-plan expenditure of the States.
12.6 The Ministry of Social Justice & Empowerment has referred to one of the recommendations of the National
Commission for Scheduled Castes (SCs) and Scheduled Tribes (STs) contained in the Fourth report for the period 1996-
97 and 1997-98. They have referred to this Commission the recommendation that the States should get their full requirements
of their non-plan funds for post matric scholarship and pre-matric scholarship to children of those engaged in unclean
occupations as a part of Finance Commission's award. If the States are not able to meet the requirements from the non-
plan side, the Central Government may continue to release funds under these schemes to protect the interest of SCs and
STs for their educational development. This was examined in consultation with Ministry of Finance. They have pointed out
that post-matric scholarship and pre-matric scholarship to the children of those engaged in unclean occupations are
already under operation and continued in the Ninth Plan. As for non-plan component after the end of the Ninth Plan ,
funds have been provided from 2002-03 on an aggregate basis.
12.7 Sikkim has represented that 1991 Census population may be considered as the base year for Sikkim instead of
1971. They have argued that in view of the fact that the State became part of the Union in 1975 only and from then on
there has been a tremendous rise in population due to influx of people from other parts of India. As the figures have
drastically risen, it would be fair to a small State like Sikkim if the figures of 1991 are considered by the Finance Commission.
As per the terms of reference, we are required, while making our recommendations, to adopt the population figures of
1971 in all cases where population is regarded as a factor for determination of devolution of taxes and duties and grants-
in-aid. We feel that there is merit in the argument that the latest available population figures should be taken into
consideration while taking them as a factor for determining the share of the States in taxes and grants. In response to
representation of Sikkim, the Ministry of Finance has pointed out that this has been put as a part of the ToR consciously
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taking note of the resolution in the Parliament on population policy. However, the 1971 population basis makes substantial
difference to many States as it gives less per capita revenue resources and assistance to a large section of people. We
do feel that it is better to avoid a conditionality like this in the ToR and a decision on such matters should be left to the best
judgement of the Finance Commission. In the case of Sikkim, we would like to point out that a change in the base year
population from 1971 to 1991 may not make any difference to the flow of resources to the States during the period 2000-
05 as any additional amount that the State would get from the Centre by adopting 1991 population figures would be
negated through reduced grants-in-aid to fill the non-plan revenue deficit.
12.8 Another matter which has a significant bearing on the plans of the State Governments and also the working of
the Finance Commission is the issue of synchronisation of the period of Five Year Plans and the period of the Finance
Commission. In the absence of such synchronisation, there are practical difficulties in the estimation of committed liabilities
of plan schemes, provision for maintenance of assets, estimation of plan revenue expenditure for the forecast period and
so on. A related issue is the close coordination between the working of the Finance Commission and the Planning
Commission. These issues have to be kept at the time of the constitution of the next Finance Commission.
12.9 Since Finance Commissions are required to be constituted at the expiry of every five years or earlier under article
280(3) of the Constitution, and since they cease to exist after the submission of the report, the difficulties faced in making
the new Commission operational are increasing every time. The Government accommodation is generally not available,
private accommodation is difficult to get to house the staff and the Chairman and members under one roof. In our view,
the Commission should now have a permanent headquarter with either a building of its own conveniently located or a few
floor exclusively given to it on a permanent basis from the existing available accommodation. Till this is organised the
present accommodation be retained.
12.10 Previous Finance Commissions have been recommending the creation of a permanent secretariat for the Finance
Commission to facilitate collection of data and information. A Finance Commission Division is presently working under
the Department of Expenditure in the Ministry of Finance. Its sole job is to monitor the expenditure and release of
upgradation grants to the States. It has not devoted itself to building a data base on Central/State finances or a conduit for
research in specified areas. It has been only keeping the record left by the previous Finance Commissions, without any
proper referencing. The Commission, when constituted, has to recruit fresh staff, as far as possible, from the Central
Ministries and train them on the job during the stipulated period in which the report is given. The work of the Commission
is of a highly technical nature and cannot be performed by normal secretariat functionaries nor can it be done by research
staff which does not have any orientation in public finance. There is a need to have a permanent secretariat with a core
research staff placed under an officer of the level of Additional Secretary to the Government of India. This would facilitate
coordination with the Ministries/Departments of the Government of India, as also with the State Governments at appropriate
level. This would also ensure an up-to-date building of data base on Central - State finances, and documentation which
could be used by the Commission when it is constituted.
12.11 The Finance Commissions require a minimum of two and a half to three years for formulation of recommendations
and preparation of report, after the office becomes fully operational. In order to ensure that the Central Government has
adequate time for processing its recommendations for including it in their budget, it must have the report at least three
months before presentation of the budget for the year from which it has to be implemented. In our view this time schedule
may be kept in view at the time of notifying the time frame for submission of the report by the Commission.
12.12 Development of a strong database on public finances is very necessary at the State level. This may start with the
recasting of budget documents on the lines of the Central budgets. Separate books on Expenditure Budgets and Receipts
Budgets which give volume of information on employment, expenditure on salaries and allowances, subsidies, budgetary
support to public sector enterprises, aided institutions, besides a time series on the actuals of the past ten years. The
budget documents of the States need to be modelled on these lines so that information on these points is available in the
budget documents itself.
12.13 Expenditure on salaries constitutes a very significant percentage of the revenue expenditure of a State. Almost
all States have done the revision of pay-scales and allowances after the acceptance of the recommendations of the Fifth
Pay Commission by the Central Government. However, surprisingly, information on the number of employees in each pay
scale were not readily available in any State. On our insistence, it was collected and sent to us but it took a long time
leading to considerable delay in our assessment of the States' expenditure on this account. We suggest that the statistical
information on the number of employees in each pay- scale as on 1st April should be collected regularly every year. Similar
information should be collected about the employees of local bodies and other aided institutions where State Governments
have undertaken the responsibility for reimbursing the full or part expenditure on employees salaries from the Consolidated
Funds of the States.
12.14 We have already made reference to the mounting expenditure on pensions. Growth in the expenditure across the
States does not bear any pattern. Information on the number of pensioners is not collected and maintained by the Central
and State Governments. A data base on pensioners should be developed and updated on a year-to-year basis.
12.15 Lastly, the Finance Commission makes recommendations having financial and non-financial implications. Those
which have a direct bearing on the outflow or inflow of funds are generally implemented. The implementation of non-
financial recommendations should be given equal weights as these also have an impact on the financial position of the
Centre and States.
 Chapter XIII
Concluding Observations

13.1 At the time of the setting up of the XI Finance Commission, the fiscal profile of the country was, perhaps, worse
than ever before with almost every key fiscal variable sinking into highly disturbing magnitudes and moving in a negative
direction. All the States of the country, both special category States and others, had fallen into large revenue deficits as
well as fiscal deficits and were showing no signs of improvement. The rate of growth of revenues had slowed down
considerably and the rate of increase of expenditure was taking an ugly turn. The shift nearly everywhere in the direction
of mounting non-plan revenue expenditure, had become the cause of a decline in developmental and capital expenditure
so that the building of infrastructure, so essential to the growth and sustenance of the economy, had become nearly
impossible. With a series of huge revenue deficits and all round fiscal deficits, indebtedness of the States as well as the
Centre had mounted to undesirable levels and interest payments on the debts and salary payments had become the
largest items on the side of expenditure. There was no appreciable sign of containment in subsidies of the merit and non-
merit varieties and no sign generally of rationalization of expenditure nor of the downsizing of the secondary and the
tertiary activities of the governments. The prevalence of recession in the last three years or so, had compounded the
problems on the revenue as well as the expenditure side. The ratio of tax revenues to GDP, at the Central level, and of tax
revenues of GSDP, at the State level, was falling disturbingly and, meanwhile, the deficits were getting compounded from
the direction of revenues as well as expenditure. Non tax revenues and non-plan expenditure were in a bad shape and no
let up was in evidence. Public sector undertakings, both with the Centre and the States, barring a few exceptions, were
moving more and more into the red and loss-making had taken the place of profitability quite universally. The electricity
boards, the transport corporations and many other public ventures were scenes of stark inefficiency and non-profitability
and were making little contribution to the revenue budgets.
13.2 In this disturbing scenario, growing worse and worse over time, it was clear that without major structural reform no
improvement was going to be possible. In fact, the Commission was grateful that the President of India gave us the
challenging task of suggesting the restructuring of the finances of the Centre as well as the States and the Commission
endeavoured its best to meet it. We were clear in our mind that with a mere tinkering with public finance and making minor
and routine recommendations, nothing was to be gained and only innovative thinking and breakthrough recommenda-
tions, within the realm of possibility and do-ability but with the generation of a strong will for fiscal innovations and vigorous
implementation was going to work.
13.3 We hope and trust that the recommendations made by us would be able to reverse the negative trends and
change the fiscal variables from a negative to a positive direction thus bringing to an end the era of revenue deficits and
unsustainable fiscal deficits and consequent indebtedness. We believe that we have succeeded in making a set of
recommendations that would stop the rot and bring to an end the period of negative fiscal finance. We also believe and
trust that our recommendations, if implemented with a strong will and imaginativeness, would inaugurate an era of macro
economic stability together with the strengthening of the consolidated funds of the Centre and the States as well as an era
of stronger and dynamic local governments.
13.4 We have so tailored our recommended structural reform and other fiscal changes that by the end of our period of
reference i.e. 2004-05, the State governments at the aggregate level should reach an era of zero revenue deficits and
should revert to the healthier situation which once prevailed in this country more than a decade-and-a-half ago. At the
Centre too, our recommendations, if implemented, should lead to a relatively minor revenue deficit which ought to be
annihilated completely just two or three years beyond the end of our reference period. Towards these ends, we have
made strong proposals for the enhancement of revenues through the enlargement of tax base and the expansion of non-
tax revenues, in marked contrast with the happenings of the recent past. On the side of expenditure too, we have strong
recommendations for a major rationalization of government expenditure, both at the Centre and the States, cutting out the
enormous wastage and even recommending some downsizing and abolition of activities which have become irrelevant.
13.5 As mandated under Paragraph 4 of our ToR, after reviewing the finances of the Union and the States, we have
worked out a scheme of restructuring designed to restore budgetary balance on a sustainable basis. The scheme envis-
ages reduction of combined fiscal deficit of the Centre and the States from the present level of 9.84 per cent of GDP to 6.5
per cent for 2004-05. Revenue deficit will be reduced to 1 per cent as against 6.77 per cent at present. There will be no
revenue deficit at the State level though the Centre may have a revenue deficit of 1 per cent, down from 3.81 per cent in
1999-00. Fiscal deficit of the Centre will decrease from 5.64 per cent to 4.5 per cent and that of the States from 4.71 per
cent to 2.5 per cent. Capital expenditure of Centre and States (combined) should go up from 4.17 per cent to 6.6 per cent.
Now that the recessionary clouds are lifting, we are anticipating a healthy economic growth in the range of seven to 7.5%
per annum with a contained inflation rate around 5% per annum.
13.6 The improvement in fiscal balance will be brought about through an increase in revenue as well as a compression
of expenditure. Revenue receipts of the Centre will go up by 1.73 percentage points from 11.54 per cent to 13.27 per cent
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while revenue expenditure will go down by 1.63 percentage points from 13.1 per cent to 11.47 per cent. Revenue receipts
of the States also will go up by 1.65 percentage points of which 1.15 will come from tax revenues and 0.5 per cent from
non-tax revenue. Revenue expenditure of the States will decrease from 13.33 per cent to 12.96 per cent.
13.7 We have taken a comprehensive and an overall view of the transfer of revenues from the Centre to the States,
even though they take place from several channels. We have set an indicative limit of 37.5% of the Centre’s gross revenue
receipts for these transfer protecting the interests both of the Centre and the States, and imparting them a measure of
certainty. It consists of States’ share in Central taxes, grants-in-aid to States, to cover deficits on non-plan revenue
account, as per our assessment, up gradation grants, grants meant for local bodies, grants for calamity relief, and plan
revenue grants.

13.8 Share of Central taxes – all of which now form the pool of divisible taxes – which will devolve to the States will be
28 per cent plus 1.5 per cent on account of additional excise duties levied in lieu of sales tax.
13.9 Our overall scheme of resource transfers is characterized by providing a structure of incentives which is designed
to reward fiscal prudence and discourage fiscal profligacy. This is underlined in our scheme of tax devolution through
indices of tax effort and fiscal discipline. This is also implicit in our normative assessment of the States’ resources and
expenditure wherever possible.
13.10 The scheme of debt relief proposed by us is designed to promote improvement in revenue balances without resort
to such doubtful methods as writing off of debt, extensive rescheduling and moratorium, barring a few exceptional cases.
13.11 On the side of expenditure, we have given a clear priority to social sectors like elementary education, primary health,
water supply and sanitation and have emphasised the building of various infrastructures, both in social and economic services.
We believe and recommend that the building of infrastructures is a necessary condition for the sustainability and the growth of
the economy especially in the special category States. It also has vast fiscal implications in terms of the expansion of fiscal
resource generation. Knowing that the judicial system has huge backlog of cases and that the domestic security system needs
to be toned up adequately, we have provided substantial resources for the upgradation of both systems.
13.12 We have suggested that future Pay Commissions may be few and far between and should use, among other
things, the norms of paying capacity of governments as well as local conditions and take a comprehensive and coordi-
nated view of the finances of the Centre and the States. We have also suggested autonomous Tariff Commissions which
can undertake the task of periodically revising tariffs and user charges bearing in mind the interest of the consumers and
the rising costs of inputs which have significant budgetary implications. We have provided linkages between the input
costs and corresponding user charges in order that the users and consumers bear a substantial part of the costs without
resort to inordinate subsidies.
13.13 This Commission has no bias towards public enterprises nor, indeed, towards private enterprise but has judged
the performance of enterprises not on ideological terms but on the criteria of accountability, efficiency and profitability.
There is no wholesale recommendation for the closure of public enterprises, nor for enhancing privatization. However, on
the other hand, our report contains recommendations for closing, downsizing, encouraging or enhancing the activities of
the public sector undertakings in such segments as electricity boards, transport undertakings and many other public
sector projects.
13.14 In the important area of calamity relief, we have introduced some substantial innovations by recommending the
establishment of a “National Centre for Calamity Management”. We have also recommended the creation of National
Calamity Contingency Fund, with an initial contribution by the Centre of Rs.500 crore to be replenished by a levy of
surcharge on Union taxes and duties for providing assistance to the States at the occurrence of a calamity of rare severity,
thus ensuring the participation of the tax paying community throughout the nation in fighting such calamities.
13.15 We have unhesitatingly recommended the reduction, and even abolition of non merit subsidies perhaps not all at
once, but in a graduated way which puts our recommendations in the realm of feasibility provided governments develop a
strong will towards the correction of false postures which prevailed in the past towards such major structural reforms, as
we have recommended.
13.16 Guided by the terms of reference of panchayats and municipalities as well as the 73rd and the 74th amendments
to the Constitution, and taking note of the reports of the State Finance Commissions, we have endeavoured to translate
these institutions into a third tier of government and have put our faith in the great potential that these institutions have to
enhance the quality of life of the people in the towns and villages across the country. We have made strong recommen-
dations for these institutions to raise their own resources, for the States to transfer responsibilities, finances and staff to
them and for the Centre to augment the Consolidated Funds of the States in order that they, in turn, augment the re-
sources of the local bodies.
 Chapter XIV
Summary of Findings and Recommendations

14.1 Our major findings and recommendations are summarised below:

14.2 In the overall scheme of the transfer, 37.5 per cent of the gross revenue receipts of the Centre is suggested to be
transferred to the States. (Para 2.51)
14.3 In assessing the revenue gaps of the States, a normative approach has been followed as far as possible.
(Para 2.53)
14.4 For an enduring solution to the problem of budget deficits, attention needs to be paid to the system of budgeting
and budgetary control. The newly constituted Expenditure Reforms Commission is expected to go into the system of
budgetary practices and controls and make recommendations for reforms in this direction. (Para 2.65)
14.5 The main features of the fiscal profile in 2004-05 under the restructuring programme envisaged are: (i) growth
rate of the economy is projected in nominal terms at 13 per cent per annum with inflation component of 5 to 5.5 per cent,
(ii) current account deficit below 1.5 per cent of GDP, (iii) revenue account balance is restored in the States, (iv) a revenue
deficit of 1 per cent of GDP is left in the Central budget, (v) the combined fiscal deficit is brought down to 6.5 per cent of
GDP, (vi) capital expenditure of the Centre and the States taken together will rise to 6.6 per cent of the GDP, (vii) the tax
- GDP of the Centre will go up by 1.48 percentage points and that of the States, by 1.15, (viii) non-tax revenue of the
Centre will go up by 0.25 percentage points and that of the States, by 0.5. (Para 3.33)
14.6 As services are emerging as a fast growing sector of the economy and constituting over 50 per cent of the GDP,
they should be brought increasingly under the tax net for improving the buoyancy of indirect taxes. (Para 3.41)
14.7 The tax base of the States and the local bodies needs to be widened by better exploitation on land based taxes,
better administration of property taxes, and other taxes. (Para 3.45)
14.8 Constitution may be amended to empower the Parliament to revise the ceiling on profession tax. (Para 3.46)
14.9 Administration of direct as well as commodity taxes, should be fully computerised to facilitate checking of tax
evasion through exchange of information between the Central and the State Governments and among the States.
(Para 3.47)
14.10 Massive arrears of assessed but uncollected revenues remain on the account books of both Central and State
Governments. Effective steps for collecting these arrears in the next few years should be taken. (Para 3.48)
14.11 User charges should be index-linked to input costs and the process of periodic revision should become auto-
matic. Autonomous tariff commissions should be appointed to advise the Government on the revision of power tariff,
railway tariffs, bus fares and other administered prices so that their link to cost is maintained while protecting the interest
of the consumers. (Para 3.50)
14.12 There should be regular revision of the royalties on minerals. In case, the process of revision is not completed by
the due date, the States should be entitled to compensation. The task of making recommendations on royalty rates
should be entrusted to an independent body. (Paras 3.52, 3.53 and 3.54)
14.13 Revenues from forests can be augmented even while observing the objectives of the national forest policy. For
this, States should expeditiously prepare scientific work plans for management of forests. (Para 3.55)
14.14 The composition of government expenditure should be restructured in favour of priority areas like elementary
education, primary health care, water supply, sanitation and infrastructure like roads and bridges. Expenditure on sala-
ries, pensions, interest payments and subsidies requires a tight rein. (Para 3.56)
14.15 There is no need to appoint Pay Commissions as a routine at the intervals of ten years. As the recommendations
of the Central Pay Commission have a bearing on the States, its terms of reference, if and when appointed, should be
determined in consultation with the States. The level of salaries and allowances should bear a relationship with the
revenue expenditure of the States to be laid down by an Expert Committee. (Para 3.57 a)
14.16 Consideration needs to be given to evolving a system under which pensions do not become an unsustainable
burden on the States’ exchequer. A large share of the pensions goes to the defence sector. A suitable scheme to absorb
the retirees from the armed forces in other government departments may be devised. (Para 3.57 b)
14.17 The requirements of the States for plan revenue expenditure should be assessed with reference to their deficien-
cies in the basic minimum needs and not be given on the basis of the Gadgil formula. A fresh look needs to be given to this
formula itself. (Para 3.58a.i)
14.18 Assessment of excess manpower in the government departments and public enterprises may be done expedi-
tiously, and suitable schemes evolved for their redeployment. (Para 3.60)
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14.19 Government may examine the feasibility of introducing a multi-year budgeting process, and stipulate the time by
which the reports of the Comptroller and Auditor General of India should be scrutinised by the Public Accounts Committee
and the Parliament or the Legislature, as the case may be. (Para 3.65)
14.20 The revenue gaps of the special category States should be met out of the Finance Commission grants. The
responsibility for the development of infrastructure of vital importance to the region requiring large investment should be
that of the Centre. (Para 3.77)
14.21 For maintenance of capital assets, the States should make budgetary provisions each year at least to the recom-
mended levels. The recommendation of the TFC in this regard for monitoring by a high power committee should be
actively operationalised. Further, the budgetary provisions for maintenance of capital assets and for committed liabilities
on plan schemes may be assessed by the Planning Commission at the time of assessment of the States’ resources and
estimation of the balance from current revenues. Planning Commission may consider devising a suitable mechanism for
this purpose. (Para 5.57)
14.22 Levy of surcharge on any Central tax should not be resorted to as a measure to fill the budgetary gaps. It should
be for a specific purpose and for a limited period. (Para 6.14)
14.23 The share of the States is fixed at 28 per cent of the net proceeds of all shareable Union taxes and duties for each
of the five years starting from 2000-01 and ending in 2004-05. The recommendations made in the interim report of the
Commission for the sharing of income tax and Union excise duties consequently stand modified. (Para 6.15)
14.24 As a consequence of the Constitution (Eightieth) Amendment Act, 2000, the net proceeds of the additional excise
duties levied under the Additional Excise Duties (Goods of Special Importance) Act, 1957, cannot now be passed on to
the States as article 272 of the Constitution stands deleted. These now form part of the tax revenue receipts of the Central
Government and are shareable with the States. In view of these changes, there is a need for review of the existing
arrangements. Pending that, 1.5 percent of the net proceeds of all Union taxes and duties be allocated to the States
separately. This will bring the share of the States in the net proceeds of Union taxes and duties to 29.5 per cent. Inter-se
distribution of this additional 1.5 percent of the net proceeds of Union taxes among the States be done in the same
manner as for the distribution of 28 per cent of the net proceeds of Union taxes and duties. If any State levies and collects
sales tax on sugar, textiles and tobacco, it will not be entitled to any share from this 1.5 per cent. (Para 6.16)
14.25 The criteria and relative weights for determining inter-se share of States are population (10 per cent), distance
(62.5 per cent), area (7.5 per cent), index of infrastructure (7.5 per cent), tax effort (5 per cent) and fiscal discipline (7.5 per
cent). (Para 6.34)
14.26 The share of each State in the net proceeds of the shareable Central taxes and duties, except the expenditure tax
and service tax, in each of the financial years from 2000-01 to 2004-05, is as follows :
States Share (per cent)
Andhra Pradesh 7.701
Arunachal Pradesh 0.244
Assam 3.285
Bihar 14.597
Goa 0.206
Gujarat 2.821
Haryana 0.944
Himachal Pradesh 0.683
Jammu & Kashmir 1.290
Karnataka 4.930
Kerala 3.057
Madhya Pradesh 8.838
Maharashtra 4.632
Manipur 0.366
Meghalaya 0.342
Mizoram 0.198
Nagaland 0.220
Orissa 5.056
Punjab 1.147
Rajasthan 5.473
Sikkim 0.184
Tamil Nadu 5.385
Tripura 0.487
Uttar Pradesh 19.798
West Bengal 8.116
All States 100.000
(Para 6.36)
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14.27 Expenditure tax and service tax are presently not leviable in the State of Jammu and Kashmir and, therefore, no
share has been assigned to the State from these taxes. The entire proceeds from these two taxes may be distributed
among the remaining States by proportionately adjusting their shares. (Para 6.37)
14.28 An amount of Rs.4,972.63 crore is recommended for the States towards upgradation of standards in non-devel-
opmental and social sectors and special problem grants for the period 2000-05. (Para 7.7)
14.29 The power to sanction individual schemes as well as to determine the unit costs in respect of projects to be taken
up under the upgradation and special problem grants should vest with the State Level Empowered Committee (SLEC).
There is no need for any case to be sent to the Government of India for sanction of a project. Once a project has been
sanctioned by the SLEC, a copy of the same indicating the time schedule for various stages of the project and for
requirement of funds should be submitted to the Government of India, who should release the funds according to the time
schedule indicated in the project. The unutilised grants for a particular year may be carried forward to the next year.
However, the grants that remain unutilised as on March 31, 2005 shall lapse. (Para 7.53)
14.30 The States should show greater commitment for timely and qualitative implementation of the projects undertaken
through the upgradation and special problem grants. The physical and financial monitoring of the projects should be done
by the SLEC. The States should send quarterly report to the Ministry of Finance of the Government of India, to facilitate
release of grants. (Para 7.54)
14.31 Article 243I should be amended to enable the States to set up the State Finance Commissions (SFC) at the
expiration of every fifth year or earlier, akin to the provision that already exists under article 280 for constituting the
Finance Commission. The synchronisation of availability of the SFC reports may also be ensured through either a
Central legislation or an appropriate provision in the Constitution. (Para 8.11 a)
14.32 SFC reports may contain specific chapters, as indicated in para (8.11 b), so as to make them more useful to the
Finance Commission. (Para 8.11 b)
14.33 State Governments should take their decision on the recommendations of the SFC, specially in regard to matters
relating to resource transfer, and place the ATRs on the floor of the State Legislature within six months. Amendments to
the laws, if necessary, should be made to ensure this at the earliest. (Para 8.11 c)
14.34 The words ‘on the basis of the recommendations made by the Finance Commission of the State’, appearing in
sub-clauses (bb) & (c) of article 280(3) of the Constitution, may be deleted. (Para 8.11 d)
14.35 States should, by legislation, ensure that the chairpersons and members of the SFCs may be drawn from amongst
experts in specific disciplines such as economics, law, public administration and public finance. (Para 8.12)
14.36 Taxes on land/farm income may be levied in suitable form to strengthen the resource base of the local bodies. The
amounts so collected may be passed on to these bodies for improving and strengthening the civic services. Local bodies
may also be involved in collection of these taxes. (Para 8.15 a)
14.37 Cess on land based taxes and other State taxes/duties may be levied and devolved to the local bodies for aug-
menting specific civic services. (Para 8.15 b)
14.38 States should levy profession tax with a view to supplementing the resources of local bodies, or they should
empower the local bodies to levy it. The rates should be suitably revised from time to time. (Para 8.15 c)
14.39 Property tax/house tax has not been exploited to its full potential. The relevant tax legislation should be suitably
modified to delink this tax from the rent control laws. Where a property has been let out, the property tax should be made
recoverable from the occupier. (Para 8.16 a)
14.40 Abolition of octroi should invariably be accompanied with its replacement by a suitable tax that is buoyant and can
be collected by the local bodies. (Para 8.16 b)
14.41 The rate structure of user charges levied by the local bodies should be revised regularly to keep pace with
inflation and to recover at least, as far as possible, the full operations and maintenance cost. Local bodies should have the
power to fix the rates of taxes and user charges. (Para 8.16 c)
14.42 The grants recommended for local bodies in this report should be given to those local bodies which have the
primary responsibility for maintenance of civic services. The grant should be untied, but should not be used for payment
of salaries and wages. (Para 8.18)
14.43 States should review the existing accounting heads under which funds are being transferred to the local bodies.
For each major head/sub-major head, six minor heads should be created- three for the panchayati raj institutions and
another three for the urban local bodies. This may be done in consultation with Comptroller and Auditor General of India
(C&AG) and the Controller General of Accounts, to ensure uniformity among the States. (Para 8.19 a)
14.44 The C&AG should be entrusted with the responsibility of exercising control and supervision over the maintenance
of accounts and their audit for all the tiers/levels of panchayats and urban local bodies. (Para 8.19 b)
14.45 The Director, Local Fund Audit, or any other agency made responsible for the audit of accounts of the local
bodies, should work under the technical and administrative supervision of the C&AG. In no case, should be the Director
 115
for Panchayats or for Urban Local Bodies be entrusted with this work. The prescribed authority entrusted with the audit
and accounts of the local bodies should not have any functional responsibility in regard to these bodies, so as to ensure
his independence and accountability. (Para 8.19 c)
14.46 The C&AG should prescribe the format for the preparation of budgets and for keeping of accounts by the local
bodies, which should be amenable to computerisation. (Para 8.19 d)
14.47 Local bodies, which do not have trained accounts staff, may contract out the upkeep of accounts to outside
agencies/persons. The C&AG may lay down the qualification and experience required for this purpose. The Director,
Local Fund Audit, or his equivalent authority, may do the registration of such agencies/persons. (Para 8.19 e)
14.48 Audit of accounts of the local bodies may be entrusted to the C&AG, who may get it done through his own staff,
or by engaging outside agencies on payment of remuneration fixed by him. An amount of half per cent of the total
expenditure incurred by the local bodies should be placed with the C&AG for this purpose. (Para 8.19 f)
14.49 The report of the C&AG, relating to audit of accounts of the panchayats and the municipalities, should be placed before
a committee of the State Legislature constituted on the same lines as the Public Accounts Committee. (Para 8.19 g)
14.50 An amount of Rs.4,000 per panchayat per annum, on an average, should be adequate to meet the expenditure on
maintenance of accounts on contract basis, if the staff/facilities are not available within the panchayat. The amount may
be paid from the grants that are recommended for the rural local bodies. Any additional fund required for this purpose
should be met from the grants given to the States for the panchayats. Where a panchayat has got staff available for upkeep
of accounts, these funds need not be so earmarked. If any municipality does not have a regular staff for this purpose, the
grants provided to it may also be so earmarked. (Para 8.20)
14.51 A database on the finances of the panchayats and municipalities should be developed at the district, State and
Central Government levels and be easily accessible by computerising it and linking it through V-SAT. The Director, Local
Fund Audit, or the authority prescribed for conducting the audit of accounts of the local bodies, may be made responsible
for this task. The Chief Secretary of the State may do the State level coordination and monitoring. The C&AG should be
involved at all stages. (Para 8.21)
14.52 A total grant of Rs.1,600 crore for the panchayats and Rs.400 crore for the municipalities is recommended to be
given to States for each of the five years starting from the financial year 2000-01. The amounts indicated for maintenance
of accounts, audit of accounts and for the development of database, would be the first charge on these grants and would
be released by the concerned Ministries of the Government of India, after the arrangements suggested become opera-
tional. Shares in respect of the scheduled, tribal and other excluded areas should be made available to the respective
States only after the relevant legislative measures are taken extending the provisions of the 73rd and 74th amendments to
such areas. (Para 8.22)
14.53 Inter-se share of States in the grants provided for the panchayats and the municipalities is based on the rural/
urban population of the State (40 per cent), index of decentralisation (20 per cent), distance from the highest per capita
income (20 per cent), revenue effort of the local bodies (10 per cent) and geographical area (10 per cent).
(Paras 8.23, 8.24, 8.25 & 8.26)
14.54 While all the States barring Arunachal Pradesh have either enacted a new Panchayat/Municipal Act or have
amended the existing legislation in conformity with the 73rd and 74th amendments, the schemes relating to the subjects
included in the Eleventh and Twelfth Schedules have not yet been transferred to these bodies in most of the States as
contemplated in articles 243G and 243W. Transfer of functions and schemes to the local bodies should be specifically
provided by legislation. (Para 8.28 a)
14.55 The roles of the three tiers of the panchayats have generally not been delineated in the State legislations and the matter
has usually been left to be decided by way of executive instructions. Legislative arrangements should be made to clearly indicate
the role that these bodies have to play in the system of governance in the rural areas of a district. (Para 8.28 b)
14.56 The two Union Ministries- the Ministry of Rural Development and the Ministry of Urban Development- have to
ensure that the local bodies function as institutions of self-government and all impediments to the realisation of this ideal
are removed. These Ministries should take the initiative for transferring the schemes related to their subjects included in
the Eleventh and Twelfth Schedules, to the local bodies. (Para 8.28 c)
14.57 The three-tier panchayati raj system is very rigid arrangement. States may be provided flexibility to decide whether a two-
tier system would operate with greater efficiency and economy or a three-tier structure would be essential. (Para 8.28 d)
14.58 For extending the provisions of the 74th amendment to the Fifth Schedule areas, Parliament is yet to enact the
enabling legislation. This may be speeded up. (Para 8.28 e)
14.59 The Legislatures in the States of Meghalaya, Mizoram and Nagaland should take suitable action for extending the provisions
of the 73rd amendment to the non-Sixth Schedule areas. Alternatively, the existing village level institutions in these areas may be
recognised as panchayats for the purposes of the 73rd amendment, by appropriate legislative changes. (Para 8.28 f)
14.60 Suitable enabling provisions in the Constitution may be introduced so that the hill areas in the State of Manipur
and in the district of Darjeeling in West Bengal could get the benefit of the 73rd amendment. (Para 8.28 g)
 116
14.61 Administrative reorganisation of panchayats is necessary to ensure their development as viable institutions of
self-government. (Para 8.28 h)
14.62 The District Planning Committees and the Metropolitan Planning Committees should be constituted and made
functional. (Para 8.28 i)
14.63 All Government properties of the Centre as well as the States, should be subject to the levy of user charges. It
should be regulated by suitable legislation. (Para 8.32)
14.64 The existing scheme of providing for contribution of 25 per cent by the States and 75 per cent by the Centre to the
Calamity Relief Fund (CRF), may be continued. (Para 9.7)
14.65 The amount of CRF for 2000-05 has been worked out at Rs.11,007.59 crore. This includes the Centre’s share of
Rs.8,255.69 crore and the States’ share of Rs.2,751.90 crore. (Para 9. 8)
14.66 Only the natural calamities of cyclone, drought, earthquake, fire, flood and hailstorm should be eligible for relief
expenditure from the CRF. The CRF should not be used for providing relief to the people affected by man-made and other
disasters and the concerned units from which a man-made disaster emanated, should be made to pay for it. (Para 9.10)
14.67 The CRF should be kept separately outside the Public Account of the State and invested in a manner approved by
the Central Government. Where, however, for some reasons, it is not possible to invest it in the manner approved by the
Central Government, it should be kept in Public Account, on which the State Government should pay interest at a rate not
less than the market rate as indicated by the Reserve Bank of India. (Para 9.11)
14.68 The State Government should incur expenditure from the CRF only on items included in the approved list. A committee
of experts, having representatives from the States too, may be set up to review the list from time to time. (Para 9.12)
14.69 Regarding the amounts to be incurred from the CRF on the approved items of expenditure, the arrangements
recommended by the TFC may be continued. In case any State Government exceeds the amount prescribed, the excess
expenditure should be borne from the normal budget of the State Government and not from the CRF. (Para 9.13)
14.70 There is a need for devising medium as well as long term strategies in every part of the country to reduce the frequency
of occurrences of the natural calamities and their impact on the area and population. The Planning Commission, in consultation
with the concerned State Governments and Ministries of the Government of India, may identify works of capital nature to
prevent the recurrence of specific calamities. These works may be financed under the plan. (Para 9.14)
14.71 The expenditure on restoration of damaged capital works should ordinarily be met from the normal budgetary heads,
except when it is to be incurred as part of providing immediate relief such as restoration of drinking water sources, provision of
shelters, or restoration of communication links for facilitating relief operations. The expenditure from the CRF should be
incurred only for providing immediate relief to the affected population, and should be of short duration. (Para 9.15)
14.72 The National Fund for Calamity Relief (NFCR) may be discontinued in its present form. (Para 9.21)
14.73 A National Centre for Calamity Management (NCCM) should be established under the Ministry of Agriculture.
This centre should be empowered to make recommendations regarding eligibility of a State for assistance from the
Central Government. (Para 9.22)
14.74 Any assistance provided by the Centre to the States for calamity relief should be financed by the levy of a special
surcharge on the Central taxes for a limited period. Collections from such surcharge should be kept in a separate fund to
be known as National Calamity Contingency Fund (NCCF) created in the Public Account of the Government of India. The
Government of India should contribute an initial core amount of Rs.500 crore to this fund, to be replenished by the levy of
the special surcharge as and when any drawals are made from it. In order to ensure that there is no delay in the flow of
funds to the States for administration of relief, a legislation enabling the Central Government to levy such surcharge may
be enacted. (Para 9.22)
14.75 The NCCM should also undertake studies on recurrence of various types of natural calamities, keep in readiness
an inventory of materials needed for providing relief, locate the places/centres where these could be kept readily available,
provide training to the State cadres identified for deployment for calamity relief duties, besides documentation and evalu-
ation of calamity related matters. (Para 9.23)
14.76 The crop insurance scheme should be strengthened, but as a supplementary measure to what is done by the
government for providing relief at the time of natural calamity. (Para 9.26)
14.77 Every major State needs to have trained manpower to cope with various types of natural calamities. A core multi-
disciplinary group of about 200 to 300 persons should be created and trained suitably in each State for being deployed in
any place in the country for calamity relief operations. An honorarium, as may be determined by the Government of India
from time to time, may be paid to each such person as an incentive to participate in this scheme. The expenditure on their
training should be met from the CRF. (Para 9.27)
14.78 Every State should be required to prepare and send to the Central Government an annual report on the calami-
ties for which the State had incurred the relief expenditure. Based on the State-specific reports and the evaluation reports
of the NCCM, the Ministry of Agriculture should prepare an annual report by the 31st December every year. The report
should be released to the public. (Para 9.28)
14.79 After the devolution of Central tax revenues, some States will still have deficit on non-plan revenue account.
Grants-in-aid amounting to Rs.35,359 crore have been provided to such States under article 275(1) of the Constitution,
equal to the amount of deficits assessed during the period 2000-05. (Para 10.7)
14.80 The scheme of general debt relief linked to fiscal performance, introduced by the TFC, may be continued with
certain modifications. (Para 11.21)
14.81 Expenditure incurred on security by the State of Jammu & Kashmir prior to 1991 may be assessed by the Ministry of
Home Affairs (MHA) and the Ministry of Finance (MoF) in consultation with the State Government and a debt relief to the extent
of such expenditure may be provided to the State. In regard to Punjab, a moratorium on the instalments of debt and interest,
 117
relating to the special term loan only, due for payment, may be given during the period 2000-05. The expenditure incurred on
security may be worked out by the MHA in consultation with the State Government of Punjab and the MoF and, to the extent the
State is entitled for reimbursement on account of security related expenditure, the relief on debt may be given to the State after
the period of moratorium is over and after adjustment of any waiver earlier given. (Para 11.27)
14.82 Treating the borrowings of the States relating to small saving, as loans in perpetuity is neither desirable nor viable.
(Para 11.33)
14.83 Limits on the guarantees given by the Centre and States may be fixed by suitable legislation and should form part
of the overall limits to borrowing under articles 292 and 293, respectively. This limit also should include borrowings from
Public Account and other sources. (Para 11.44 and 11.45)
14.84 There is a need for setting up of a sinking fund in each State for the amortisation of debt.(Para 11.46 and 11.47)
14.85 Since Finance Commission is required to be constituted at the expiration of every five years or earlier under article
280(3) of the Constitution, and since it ceases to exist after the submission of its report, the difficulties faced in making the new
Commission operational are increasing every time. The Commission should have a permanent headquarters in a building
either of its own, conveniently located, or a few floors be exclusively given to it on a permanent basis from the existing available
accommodation. Till this is organised, the present accommodation may be retained. (Para 12.9)
14.86 The Finance Commission should have a permanent secretariat with a core research staff placed under an officer
of the level of Additional Secretary to the Government of India. (Para 12.10)
14.87 The Finance Commission requires a minimum of two and a half to three years for formulation of recommenda-
tions and preparation of report. (Para 12.11)
14.88 Development of a stronger data base on public finances is very necessary at the State level. This may start with
the recasting of budget documents on the lines of the Central budget. (Para 12.12)
14.89 Statistical information on the number of employees in each pay-scale as on the 1st April should be collected
regularly every year by the States. Similar information should be collected about the employees of local bodies and other
aided institutions where the State Government has undertaken the responsibility for reimbursing the full or part of the
expenditure on such employees’ salaries etc. from the Consolidated Fund of the State. (Para 12.13)
14.90 A database on the pensioners should be developed and updated on a year-to-year basis by the Central and State
Governments. (Para 12.14)
14.91 Finance Commission’s recommendations having a direct bearing on the outflow or inflow of funds are generally
given effect to promptly. However, implementation of the non-financial recommendations of the Commission should be
given equal weight as these too have impact on the financial position of the Centre and the States. (Para 12.15)

(A.M. Khusro)
Chairman

(J.C. Jetli) (N.C. Jain) (A.Bagchi)

Member Member Member

(T.N. Srivastava )
Member-Secretary
New Delhi
June 28, 2000

We would like to place on record our deep appreciation of the help, co-operation and contribution received from
our Member Secretary, Shri T.N. Srivastava. He organised the work of the Commission in all its depth and breadth,
provided leadership to the Secretariat and himself did considerable basic work painstakingly. His vast experience in
public administration, both at the Centre and the State, was of great benefit in the completion of this stupendous task.

(A.M. Khusro)
Chairman

(J.C. Jetli) (N.C. Jain) (A.Bagchi)

Member Member Member

New Delhi
June 28, 2000
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Note of Shri N.C. Jain on Restructuring: Suggestions for some Constitutional and Legal Changes
(Para 3.76)
1. I am raising some basic and constitutional issues delineating scope of Articles 280/282/275 calling for making
some suitable legal and Constitutional amendments.
Co-operative Federalism
2. Indian federal structure is a pleasant admixture of the unity of India on one part and States’ autonomy on the other
and, therefore, to deal with the fiscal problems, Part XII was enacted in the Constitution. To iron out the creases of
inequalities, a system of distribution and devolution of taxes was retained more or less in consonance with the Government
of India Act,1935. To add flavour of non-favouratism in such devolution, an independent body like the Finance Commission
was contemplated which was enjoined the Constitutional duty not only to distribute the taxes but also to settle the principles
which should govern grants-in-aid to such States that may be in need of assistance. Beyond this, any other matter could
also be referred to it in the interests of sound finance. Later, it was also given powers to suggest measures for supplementing
resources of the local bodies by way of augmenting the Consolidated Funds of the States. The founding fathers of the
Constitution further contemplated that despite all these arrangements, there may arise cases of emergency whereby
immediate grants for public purposes become necessary and, therefore, a provision to that effect was made under article
282.
Finance Commission- a continuing (permanent) body
3. Article 280 provides for constituting a Finance Commission at the expiration of every fifth year or at such earlier
time, as the President of India considers necessary. Even after accepting the necessary principles of interpretation of the
statute, it cannot mean that a particular Commission would be given a short tenure of 1½ or 2 years for delineating certain
fixed principles for 5 years in advance. A look at the articles 109, 110 and 112 and similar articles in respect to the State
Assemblies may be necessary to have a complete grasp of the matter. (Similar provisions for States may be treated as
included). Article 110 defines the Money Bills, which includes within itself the imposition, abolition, remission, alteration or
regulation of any tax etc. Thus a Money Bill has to be introduced each year whereby a tax may be abolished or altered or
imposed which is bound to make an essential difference in the financial status of the Centre or the State as the case may
be. As per article 112, the Annual Financial Statement is to be laid in both the Houses containing a statement of the
estimated receipts and expenditure of the Governments, which may also vary each year as per the circumstances. Thus,
the legislatures in their wisdom have been given exclusive powers to add to the revenue or expenditure as per the
circumstances prevailing in each year. Besides this, supplementary, additional or excess grants may also be made in view
of article 115 in each financial year. The practical effect of this may be that the forecasts of the Finance Commission as
gathered from the States‘ or the Union’s representations may get substantially disturbed as per the circumstances prevailing
in a particular year. Article 275 speaks of sums to be charged on Consolidated Fund of India in each year for the purpose
of grants-in-aid to the States in need thereof. The question that arises then is, year by year tax and non-tax revenues of
the States may not remain static or normatively progressive and may be illusory. Constitutional provisions have been
made to solve practical problems and not illusions or hypothetical and astrological calculations, since imaginary and not
real needs have been considered. For a long time all the Finance Commissions had been dwindling between “gap filling”
approach and “normative” approach. In fact, and for real benefit to the States, there should be a realistic approach which
needs to be adopted by the Finance Commission which can only be ascertained every year and not estimated futuristically
for a period of 5 years. Thus the words “every fifth year” appearing in article 280 can only be interpreted to mean that after
every fifth Year the Finance Commission should be reconstituted but it has to be a continuing body sometimes also termed
as a Permanent body. The words “at such earlier time” in article 280 would only mean that if in case of large vacancies
occurring earlier by resignation or otherwise, before the 5 years‘ tenure, the President feels the need for earlier constitution
of the Commission, he has been empowered to do so. This has to be the ratio of the concerned provisions of the
Constitution. The practice of Finance Commissions being of a tenure of 1½ years or 2 years, may be a historical fact but
has nowhere been forwarded in the Constitution nor does it fulfil the aspirations as conveyed by the letter and spirit of that
sacred law. It should be treated as a continuing body and its personnel may change every fifth year.
4. There is one more interesting feature in the provisions of the Constitution. Under article 280(3) (a), the Constitutional
duty of the Finance Commission is to make recommendations for actual distribution between Union and the States of net
proceeds of the taxes. This provision has to be read with article 270(2) which says that such percentage of the net
proceeds in any financial year of any such tax shall be assigned to the States and distributed amongst them as may be
prescribed by the Finance Commission. The words, “in any financial year”, are very important to be ignored consideration.
The latest (80th) amendment also speaks of taxes leviable in that year. All this would only mean that the powers of
distribution under article 280(3)(a) have to be exercised in respect to the net proceeds in any financial year and distribution
thereof. It may be repeated that the words “in each year” appearing under article 275 also add stress to this contention.
Hence in each financial year, a Finance Commission should exist for this purpose of factual distribution of taxes and
evolution of principles regarding grants if it has to be a meaningful Finance Commission to deliver real goods in the
system of cooperative federalism. In case a short-tenured Finance Commission is constituted after a gap of 5 years or so,

118
 119
it shall be left to do a lip service only on guess-work calculations or normative approach (as scientifically called) without
faithfully performing its duty. Time constraint, short time for study, lesser time for State interactions and hypothetical
calculations may be some of the main obstacles.
5. There are four important words appearing in sub Art. 280(3); one is ‘distribution’, another is ‘principles’, the third is
‘measures’ and the last one is ‘matter’. All these words have got different connotation and their distinction has got to be
kept in mind while interpreting the provisions of article 280. Apparently enough, the mention of the words “5 years” in
article 280 was contemplated by the founding fathers on the belief that both Lok Sabha and Assemblies would continue for
full 5 years tenure. But due to political upheavals, their hope and belief have been belied. This change of circumstances
cannot be ignored from consideration. Thus the true intention of the Constitution is discernible that it wanted the Finance
Commission to be a live body for all the 5 years (or earlier under the circumstances stated above) though after every fifth
year, a change may be made in personnel. Any other interpretation given to this provision would militate against its letter
and spirit.
Planning Commision - Case For According Constitutional Status
6. Several decades back, Planning Commission was constituted which is a continuing (permanent) body and since
then the concept of grants-in-aid got bifurcated into “plan” and “non-plan” grants. But these apparently, were distortions
and digressions. The founding fathers had not contemplated the existence of Planning Commission at the time of drafting
and passing the Constitution and it was under executive resolution that the Planning Commission was set up, probably
with the aid of article 73, which envisages that the executive powers of the Union shall extend to the matters with respect
to which Parliament has powers to make laws. Thus it has a legal status though the Constitutional status was never given
to it. Contrary to the provisions of the Constitution, Planning Commission started dealing with devolution of huge funds for
investment of a capital nature while Finance Commission concentrated in the fields of revenue expenditure with of course,
some over-lappings. The new terms of “plan grants” and “non-plan grants” were then got introduced with no provision
much less indications therefor in the Constitution of India. In my humble view, the economy of the Nation must be looked
as a whole. Following the example of human eyes, one can deduce a principle that there must be convergence of vision
in an unified manner to have a clear and complete picture of a sight to be seen. One need not hypothetically attempt that
left eye may be directed to see the left landscape only and the right eye, the right one. One can safely say that any such
attempt shall give a distorted vision. For this reason, my suggestion in paras below is that both the Finance and Planning
Commissions be merged into one Commission under article 280 by making necessary Constitutional amendments to
have a full view of both plan and non-plan sides of the economy. For study purposes, they may have to arrange for having
two separate cells within itself. This would also amount to accepting the arguments of some economists that multiplicity
of channels/agencies through which resources are transferred to the States should be drastically reduced.
7. Then, with the present structure, there is one more difficulty that after the completion of a Plan, the maintenance
part thereto becomes “non-plan”.
8. This raises the question of the maintenance of the capital assets which more often than not gets neglected due to
paucity of funds. States have, therefore, started making demands from the Finance Commission for upgradation and
special problems, some of which were for adding capital assets and others for their maintenance. Thus dichotomy got set
in against the provisions of article 275, clause (1) which reads as under: -
“275. Grants from the Union to certain States - (1) Such sums as Parliament may by law provide shall be charged
on the Consolidated Fund of India in each year as grants-in-aid of the revenues of such States as Parliament may
determine to be in need of assistance, and different sums may be fixed for different States:”
9. This has to be read with the provision of sub-clause 2 that till the Parliament does not exercise those powers, they
shall be exercised by the President and if the Finance Commission has been constituted by that time, its recommendations
will be considered by the President. Thus article 275 speaks of grants-in-aid as a complete entity without its sub-
categorization as plan and non-plan grants. Ouster of the jurisdiction of the Finance Commission from considering the
plan grants, both revenue and capital, is not warranted under the Constitution but the system has remained prevalent for
nearly half a century. Appreciating the role of Planning Commission, Justice Sarkaria says in his Report:
“Planning Commission is a dynamic process and as such its continuous appraisal and adjustments are essential.
A static five-year frame would not meet the requirements of planning. The Planning Commission reviews annually
the resources and plan needs of the States and recommends plan assistance. In a dynamic situation, net
resources available for transfer from Union to the States towards plan assistance will also be known only on a
yearly basis.”
10. I have absolutely no dispute with this proposition but I am simply wondering as to why the Planning Commission
was not given a Constitutional status even by now. I agree that its role is dynamic but the role of the Finance Commission
is no less dynamic. And its static 5 years‘ frame does not faithfully work to the betterment of nation’s economy. If the
economy of the nation remains divided into two water-tight compartments like plan and non-plan, the whole concept of the
economy cannot be fully envisioned which is necessary for the betterment of the Union as also the States. I, therefore,
propose that an appropriate Constitutional amendment be made in article 280 of the Constitution of India for giving
Planning Commission, a Constitutional status by merging it with the Finance Commission with powers to look into the
 120
distribution of taxes and devolution of grants both on plan and non-plan sides. By this method, several goals may be
reached:-
(1) Article 275 speaks of grants-in-aid as a whole without dividing it into plan and non-plan. Its letter and spirit will
then be truthfully followed without distortions and breach thereof.
(2) The Finance Commission itself may divide its working between two cells about the capital assets and revenue
side and ultimately take the decision as a whole with its vision fully set on the economy of the nation, for both
capital and revenue side.
(3) The Finance Commission would become a continuing, or call it a permanent, Commission in the sense that
the term of members would be 5 years after which the personnel would stand changed but the Commission
would continue. This would also get an added advantage that at present the studies which are got conducted
by the Finance Commission and the library thereof would be available at a proper place without disruptions.
This is not the current position. This difficulty was envisaged by the 7th Finance Commission when it said that
a new Commission that is appointed has to start on a clean slate, collect the required material and then initiate
such studies and analyse as it prefers. The Eighth Finance Commission did not venture on the question of a
Commission being a permanent one stating that it was beyond their terms of reference. In the Ninth Finance
Commission Report, Justice A.S. Qureshi did opine in favour of the Finance Commission having a tenure of 5
years. The Tenth Finance Commission also agreed with the contention of Ninth Finance Commission on this
point but added that in order to ensure an advance preparation, a permanent Finance Commission Division
may be created in the Ministry of Finance with an officer-oriented composition.
11. According to me, even this recommendation substantiates my point because Tenth Finance Commission felt the
absence of continuity and advance preparation. My contention is that advance preparation has to be made by the Commission
and not Finance Commission Division or a Cell. Several legal luminaries have also opined in favour of Finance Commission
being a ‘permanent’ one with a tenure of 5 years. I also hold the same view because as a Member of 11th Finance
Commission, I feel that the short term given to it was not sufficient for truthfully and fruitfully making its recommendations.
Time constraint and lack of availability of material was faced by us.
12. The Finance Commission cannot be treated as one constituted under the Commission of Inquiries Act wherein the
terms of reference are required to be given. The basic duty of Finance Commission is spelt out from article 280. Only the
provisions under sub clause 3 (d) says that the President may refer to the Finance Commission “any matter ... in the
interest of sound finance.” The rest of the matter of distribution of taxes, devolution of grants and measures for local bodies,
are part of its duty even without reference. The words “grants-in-aid of the revenues of the States” has a compact meaning
and its artificial bifurcation, whether for historical reasons or otherwise, does not go hand-in-hand with the Constitutional
provisions either in letter or in spirit.
13. If my recommendations given at the end are accepted, the dynamism, continuity, coordination, advance preparation
and all other factors for which the current improvements were suggested by different Finance Commissions and even by
Justice Sarkaria Commission will get ensured. The added advantage would be that the Planning Commission would be
given the Constitutional status which, looking to its role, has not been given to it so far. Further gain would be that
multiplicity of the authority of devolution would be lessened.

THE SCOPE OF ARTICLE 282

14. At the end, I would like to say that I read article 282 as a residuary clause for making any grant for public purpose.
Democracy is one of the basic features of the Constitution. It means that the rule of law and Parliament are supreme and,
thus, if a provision is made giving the Government or any other institution a right to make grants, notwithstanding that the
purpose is not one with respect to which Parliament or legislature of the State may make laws, it essentially means that it
was in relation to certain emergent grants for urgent use and thus it has only to serve a purpose of providing room for
some flexibility like “play in the joints”. It was never contemplated as an alternative scheme for devolution of large parts of
grants, as has presently been the aberrations.
15. The above suggestions would serve as a remedy for this malady.

RECOMMENDATIONS
16. I, therefore, recommend the following as re-structuring programme -
1. For giving Planning Commission the Constitutional status, Finance Commission and Planning Commission
be merged into one unit and, if need be, the membership envisaged under article 280 be raised to 6.
2. This Finance Commission be made a continuing or a permanent body which should be reconstituted every
fifth year or prior to it if exigencies of circumstances so desired.
3. This Finance Commission shall be entitled to recommend the grants-in-aid of revenue of the States, both on
plan and non-plan side. For study purposes, it may have two separate cells.
Sd./-
(N.C. Jain)
Member (EFC)
26.6.2000
 121

A Note of Observations by Dr. Amaresh Bagchi, Member

(Para 10.10)
On the Need to Strengthen the Equalising Role of Fiscal Transfers
1. As noted at the outset in chapter II, the two basic objectives of fiscal transfers in a federation are, one, to bridge
the vertical gap that is common in federations and two, to redress the horizontal imbalances that also prevail in most
federations in varying degrees. The instruments used principally for these purposes are, sharing of federal revenues and
grants. The transfer of Union government’s revenues through revenue sharing and grants in our system are also meant to
meet the vertical imbalances as well as the horizontal disparities among the States arising from variations in their revenue
base. As far as possible, the design of fiscal transfers should be such as can serve the objectives of closing the vertical
gap and reducing, if not removing, the horizontal disparities simultaneously so that all States can provide basic public
services to their people at reasonably comparable levels. It may be possible to meet the vertical gap without addressing
the horizontal imbalances adequately, as for example, when the vertical gap is met by sharing the central revenues only
on the basis of realisation or collection. However, such a system would not help to reduce the horizontal imbalances,
rather may accentuate them. Hence, the emphasis has been in established federations like Canada and Australia to base
the transfers on the principle of equalisation.
2. Equalisation in a federation is done primarily by equalising the revenue capacity of the States. For this purpose
the revenue capacity of each State is worked out on a normative basis using some standard statistical technique like the
“representative tax system” method. States whose per capita revenue capacity as determined normatively with reference
to its tax base is deficient, that is, below the average or the stipulated standard, are given grants to make up for their
deficiencies. Since the States may also face variations in unit cost of providing services because of factors like demographic
composition or terrain or any other factor beyond their control, the revenue equalisation grants are supplemented with
grants to take account of the cost disabilities as well. The approach adopted by this Commission also seeks to follow
normative principles and while meeting the vertical gaps has tried to bring about some equality in the revenue capacity
across the States as well. However, for reasons mentioned in chapter V, it has not been possible for the Commission to
apply the normative principle fully. The implication is that the level of services which the States can provide to their people
currently as reflected in their per capita non-Plan revenue expenditures (NPRE) varies widely across States.
3. From the assessment of the revenues and expenditures and the States made by the Commission, it is noticed
that in several States (mainly in the low income group) the per capita NPRE (excluding interest and pensions) is far below
the national average. For instance, in Bihar the per capita NPRE for the year 2000-01 works out to less than 60 per cent
of the average of the general category States. Similar is the case with a few other low income States. Even with the
State’s share in Central taxes recommended by the Commission, the per capita revenue capacity of Bihar remains at well
below the group average for the year 2000-01. Paradoxically, Bihar does not get any non-Plan revenue deficit grant
although its revenue capacity even after it is augmented by statutory transfers, that is to say its revenue availability in the
non-plan account falls significantly below the average. This is because, with tax devolution, the non-plan revenue account
of the State goes into a surplus.
4. The reasons for this paradox are three-fold. One, the dominance of tax devolution in the package of statutory
transfers and its downward inflexibility; two, the limitations of the normative approach adopted by us in assessing the
States’ revenue expenditure; and three, the flow of Central funds through other channels that may not necessarily conform
to the principle of equalisation of revenue capacity. For various reasons, partly historical, the proportion of revenues
flowing to the States through tax devolution in the statutory transfers has been in the range of 80 to 90 per cent and in
recent years, is hovering around 90 per cent. Tax devolution now is based on a formula in which collection or realisation
is given no weight and the attempt of the successive Finance Commissions has been to make the devolution formula
more and more progressive and this Commission also has tried to move further in that direction while keeping the
considerations of efficiency also in view. But there is a point beyond which progressivity cannot be pushed through tax
devolution. Since all States are entitled to a share in Centre’s taxes – again, this is to be expected given the vertical
imbalance – with tax devolution, even if relatively small in their case, States with relatively strong revenue bases are able
to generate handsome surpluses in their non-Plan revenue budget. The burden of revenue capacity equalisation therefore
falls heavily on the grants-in-aid. Although in determining the requirements of grants-in-aid of different States the revenue
and expenditure of each State has been assessed by the Commission on the basis of some normative principles, the
starting point for the normative exercises remains largely the actuals of the past. Strictly speaking, the normative assessment
should correct these deficiencies, but in order not to cause any severe disruption, strict norms could not be imposed in the
base year estimates of expenditure. This constitutes an impediment to equalisation. The picture would have been different
if the fiscal needs of the States could be determined on the basis of the average per capita expenditure (or a standard level
of expenditure), allowing for appropriate cost differentials as well, multiplied by their population, and the gap between the
requirements of revenue to meet the needs so determined and what the States could be expected to raise as revenue by
making average effort, could be provided as grant. But as indicated above, our transfer scheme, despite our effort to go
by the normative principle, falls short of such equalisation.
121
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5. Another factor that hinders the process of equalisation is the flow of funds through channels where equalisation
is not used as a criterion (e.g. with assistance for Centrally Sponsored Schemes and for externally aided projects). If the
equalisation principle is to be implemented in a full-fledged manner, the transfers for purposes of equalisation would have
to be determined as a whole and not in the form of tax devolution and grants alone. This is what “the general revenue
recurrent grants” in Australia seek to achieve. These are supplemented by specific purpose grants and some grants
through the States to be passed on to the local governments. But the general recurrent revenue grants are given on a
normative assessment of revenue capacity and expenditure needs based on the relativities of the States in the matter1. It
is relevant to note that in Australia the general revenue recurrent grants have come to replace the tax reimbursement
grants which were in vogue earlier to compensate the States for the loss of tax powers to the federal government.
6. In our system, tax devolution i.e., tax sharing has come to occupy a central role in fiscal transfers. This is partly
because of the general feeling that tax devolution constitutes a source of transfers which is guaranteed by the Constitution
and since it is dispensed by the Finance Commission, it has the merit of certainty and impartiality. In fact there is a
persistent demand for raising further the proportion of Union taxes that goes via tax devolution to the States. With the
recent amendment of the Constitution and pooling of all Central taxes for sharing with the States, the fraction of the
Centre’s revenues to be devolved to the States has now become almost inflexible, at least downward, and with tax
devolution constituting 90 per cent of the statutory transfers the room for equalisation through grants-in-aid to meet the
non-Plan revenue deficits has become quite narrow. In fact, the normative exercises to determine the non-Plan revenue
gap lose much of their significance when the share of grants-in-aid remains so small.
7. In this situation, if equalisation has to be carried to its logical end, there is a need either to reduce the share of tax
devolution in the total statutory transfers to allow more room for the deficit grants or to supplement the revenue deficit
grants through equalisation grants to narrow the gaps in the revenue capacity of the States in providing at least some of
the basic public services like elementary education, primary health, water supply and sanitation. The Commission has
made some recommendations for upgradation of general administration and social sectors in the States. But these
transfers are only marginal and do not go far to reduce the disparities in revenue capacities of the States to the extent
necessary to enable them to provide these services at an average level. Given the reality, namely that it may not be
possible to lower the proportion of tax devolution in the statutory transfers in the near future, I feel that some equalisation
grants need serious consideration if the disparities in the revenue capacity of the States are to be reduced. If it is not
possible to meet the gaps fully in one or two years, the equalisation grants can be staggered over a number of years. This,
I feel, is needed so that the Central transfers can play a more positive role in equalising the capacities of the States to
provide the basic services. The weakening of the equalisation role of the statutory transfers should also be kept in view
before any increase in the proportion of Union taxes to be passed to the States through tax devolution is considered.

(A. Bagchi)
Member

5
 123
Annexure I.1
(Para 1.3)

THE GAZETTE OF INDIA

EXTRAORDINARY PART II-Section 3-Sub-section (ii)

PUBLISHED BY AUTHORITY

MINISTRY OF FINANCE
(Department of Economic Affairs)

NOTIFICATION

New Delhi, the 28th December, 1999

S.O.No.1299(E).– The following Order made by the President is published for general information:

ORDER

In pursuance of the provisions of article 280 of the Constitution read with sections 6 and 8 of the Finance Commission
(Miscellaneous Provisions) Act, 1951 (33 of 1951), the President hereby directs that in the Order dated the 3rd July, 1998
published in the notification of the Government of India in the Ministry of Finance (Department of Economic Affairs) SO
No.557(E), dated the 3rd July,1998-

(a) in paragraph 2, for the words, figures and letters “ the 31st day of, December, 1999”, the words, figures
and letters “the 30th day of June, 2000” shall be substituted;
(b) for paragraph 11, the following paragraph shall be substituted, namely:-

“11. The Commission shall make-

(a) an Interim Report available by the 15th January, 2000 for enabling provisional arrangements to be made
for devolution of share in the Central taxes and other grants-in-aid to the States during the year com-
mencing on the Ist day of April, 2000; and
(b) the Final Report available by the 30th June, 2000 on each of the matters aforesaid covering a period of
five years commencing on and from the Ist day of April, 2000.”

Sd/-
20th December,1999 (K.R.NARAYANAN)
PRESIDENT OF INDIA

[No.10(12)-B(S)/99]

J.S.MATHUR
Addl.Secy. (Budget)
 124
Annexure I.IA
(Para 1.20)

THE GAZETTE OF INDIA

EXTRAORDINARY PART II-Section 3-Sub-section (ii)

PUBLISHED BY AUTHORITY

MINISTRY OF FINANCE
(Department of Economic Affairs)

NOTIFICATION

New Delhi, the 28th April, 2000

S.O.No.425(E)– The following Order made by the President is published for general information:

ORDER

In pursuance of the provisions of article 280 of the Constitution read with sections 6 and 8 of the Finance Commission
(Miscellaneous Provisions) Act, 1951 (33 of 1951), the President hereby directs that in the Order dated the 3rd July, 1998
published in the Notification of the Government of India in the Ministry of Finance (Department of Economic Affairs) No.
S.O. 557(E), dated the 3rd July, 1998, in paragraph 4, the following shall be added at the end, namely:-

“In particular, the Commission shall draw a monitorable fiscal reforms programme aimed at reduction of revenue
deficit of the State and recommend the manner in which the grants to States to cover the assessed deficit in their Non-
Plan Revenue account may be linked to progress in implementing the programme”.

Sd/-
28th April, 2000 (K.R.NARAYANAN)
PRESIDENT OF INDIA

[No.10(12)-B(S)/99]

D. SWARUP
Jt. Secy. (Budget)
 125
Annexure I.1B
(Para 1.22)

THE GAZETTE OF INDIA

EXTRAORDINARY PART II-Section 3-Sub-section (ii)

PUBLISHED BY AUTHORITY

MINISTRY OF FINANCE
(Department of Economic Affairs)

ORDER

New Delhi, the 21st June, 2000

S.O.592(E)– The following Order made by the President is published for general information:

ORDER

In pursuance of the provisions of article 280 of the Constitution read with sections 6 and 8 of the Finance Commission
(Miscellaneous Provisions) Act, 1951 (33 of 1951), the President hereby directs that in the Order dated the 3rd July, 1998
published vide notification of the Government of India in the Ministry of Finance (Department of Economic Affairs) No. S.O.
557(E), dated the 3rd July, 1998, as amended vide Order dated 20th December, 1999 published vide notification of the
Government of India in the Ministry of Finance (Department of Economic Affairs) No.S.O. 1299(E), dated 28th December,
1999-

(i) in paragraph 2, for the words, figures and letters “30th day of June, 2000”, the words, figures and letters
“31st day of August, 2000” shall be substituted;
(ii) paragraph 7 shall be omitted;
(iii) for sub-paragraph 11(b), the following sub-paragraphs shall be substituted, namely:-

“(b) a Report by 30th June, 2000 on each of the terms of reference contained in the Order dated 3rd July,
1998 published vide notification of the Government of India in the Ministry of Finance (Department
of Economic Affairs) No. S.O. 557(E), dated 3rd July, 1998 (excluding paragraph 7 thereof) covering
a period of five years commencing on and from the 1st day of April, 2000;
(c) a Report by 31st August, 2000 on the term of reference as notified in the Order dated 28th April,
2000 published vide notification of the Government of India in the Ministry of Finance (Department
of Economic Affairs) No. S.O. 425(E), dated 1st May, 2000".

Sd/-
19th June, 2000 (K.R.NARAYANAN)
President”

New Delhi.
[No.10(12)-B(S)/99]

D. SWARUP
Jt. Secy. (Budget)
 126
Annexure I.2
(Para 1.4)

Memoranda submitted to the Commission

during the visit to the States

Andhra Pradesh · Memorandum submitted by the Rashtriya Janata Dal,

· The Andhra Pradesh State Panchayat Sarpanches Bihar
Association · Memorandum submitted by the Bihar Pradesh Samata
· Chairman, Zilla Parishad, Krishna District, AP Party
· Panchayati Raj & Rural Development Department Goa
· All India Manufacturers’ Organisation, Andhra Pradesh · Goa Small Industries Association
State Board · Goa Chambers of Commerce and Industry
· Confederation of Indian Industry · Goa Mineral Ore Exporters Association
· Communist Party of India (Marxist) · General Secretary, Communist Party of India
· The Federation of Andhra Pradesh Chambers of · President, Maharashtravadi Gomantak Party
Commerce and Industry
Gujarat
· Department of Economics, Osmania University · Ahmedabad Municipal Corporation
Arunachal Pradesh · Surat Municipal Corporation
· Memorandum submitted by Accountant General, · Gujarat Chambers of Commerce and Industry
Arunachal Pradesh · Rashtriya Janta Party
Assam Haryana
· Janata Dal · Perspective Plan for Haryana Police (2000-05), Home
· Assam Pradesh Congress (I) Committee Department
· Guwahati University Himachal Pradesh
· Indian Tea Association · Memorandum submitted by PHD Chamber of
Commerce and Industry
· Federation of Industries of North Eastern Region
(FINER) · Memorandum submitted by Confederation of Indian
Industry
· Assam Sectt. & Head of Deptt. Government Grade-
IV Employees’ Association · Memorandum submitted by Communist Party of India
(M), HP State Committee
- Assam State Workers & Employees Sanmilan
(ASWES) · Memorandum submitted by Congress Legislature Party
and Members of the CLP, HP
· Coordination Committee (of 28 Officers’ Associations)
· Memorandum submitted by HP Fruit & Vegetables
- Heads of the Department Ministerial Officers’ Growers Association Shimla
Association
· Memorandum submitted by Rajya Panchayat Parishad
· Sadou Assam Zila Prasashan Karmachari Sansthan - HP
· Sadou Asom Karmachari Parishad · Memorandum submitted by Vice Chancellor, Himachal
· Sadou Asom Mahila Karmachari Sansthan Pradesh University
· All Assam Small Scale Industries Association · Memorandum Submitted by Accountant General,
· Devcrop Employees’ Association Himachal Pradesh
· Assam Civil Services Association · Memorandum submitted by Himachal Pradesh Non-
Gazetted Service Federation
· All Assam Assistant Engineers’ Association
· Assam State Employees’ Federation Jammu & Kashmir
· Memorandum submitted by Federation Chamber of
· Rabha Hasong Autonomous Council Industries, Kashmir
· Mising Autonomous Council · Memorandum submitted by Chambers of Commerce
· Lalung (Tiwa) Autonomous Council and Industry, Jammu
· The North Cachar Hills Autonomous Council · Memorandum submitted by Kashmir Traders and
· Rural Multi Media-Publicity & Promotion (NGO) Manufacturers Federation
· Memorandum submitted by Kashmir Chambers of
Bihar Commerce and Industry, Kashmir
· Note on the issues before the EFC prepared by the
Asian Development Research Institute, Patna · Memorandum Submitted by Accountant General,
Jammu & Kashmir
· Memorandum submitted by the Bihar Industries
Association · Memorandum submitted by Jammu & Kashmir
Employees Joint Action Committee (J&K Civil
· Memorandum submitted by the Bihar Chambers of Secretariat Non- Gazetted Employees Union)
Commerce
· Memorandum submitted by TASK, House Boat Owners
· Memorandum submitted by the Bihar Pradesh Association, Hotel Association and Traders Association
Congress Committee (submitted during Field Visit)
 127
Karnataka Meghalaya
· The Greater Mysore Chamber of Industry · The Khasi Hills Autonomous District Councils
· Federation of Karnataka Chambers of Commerce and · The Jaintia Hills Autonomous District Councils
Industry · The MSEB
· MLC, Bellary District · The NEC
Kerala · The Meghalaya Chambers of Commerce
· Communist Party of India (Marxist) · The Meghalaya Government Employees Federation
· Kerala Pradesh Congress Committee · The North-Eastern Hill University
· Kerala Congress (Jacob) · By Shri Hopingstone Lyngdoh, MLA, Opposition
· Kerala Secretariat Employees Association Member
· The Ernakulam Chamber of Commerce Mizoram
· The All Kerala Private College Teachers Association · Memorandum submitted by Mizoram Peoples’
· Dr. M. Kunhaman, Member, University Grants Conference Party
Commission · Memorandum submitted by Tangrual Pawl
· Kerala Research Programme on Local Level · Memorandum submitted by Sh Dunglena, Consultant
Development, Centre for Development Sudies Engineer, (Rtd Secretary, PWD, P&E, PHED, Aizwal
· Kerala State Road Transport Corporation · Memorandum submitted by President, FMGE&W
Madhya Pradesh · Memorandum submitted by Leaders of Chakma
· Note submitted by Accountant General, Madhya Autonomous District Council
Pradesh · A copy of D.O. Letter No. D.O. No. DYCM.4/P/99/MOM
· Hard-prints of slides of presentation made by officers dated 19.4.99 of Deputy Chief Minister, Mizoram,
of Finance Department before the Commission Aizawl
· Memorandum submitted by Devi Ahilya · A copy of brief of Chief Secretary address
Vishwavidyalaya, Indore · Memorandum submitted by existing MLAs
· Hand-outs of presentation regarding Education · Memorandum submitted by General Secretary, MPCC,
Guarantee Scheme Aizawl
· Memorandum submitted by Mizoram Engineering
Maharashtra
Service Association
· Dr. Ratnakar Mahajan (Ex-President, State Planning
Board, Government of Maharashtra) Nagaland
· Bombay Chambers of Commerce and Industry · Memorandum submitted by Town Committees of
· Indian Merchant’s Chamber Nagaland
· Memorandum submitted by Village Development
Manipur Boards
· Memorandum submitted by All Manipur College
· Memorandum submitted by Kohima Chamber of
Teachers Association
Commerce
· Memorandum submitted by United Voluntary Youth
· Memorandum submitted by Nagaland Police
Council
· Memorandum submitted by Village Development Board
· Memorandum submitted by Council for Social
of Tuophema Village, Chiephobozou Block, Kohima
Awareness and Development, Heibongpokpi
District
· Memorandum submitted by Joint Administrative
· Memorandum submitted by the President, Kewhimla
Council (JAC) of All Manipur Trade Union Council and
for VDB Women Members of Nagaland
All Manipur Government Employees Organisation
· Memorandum submitted by Autonomous Hill District Orissa
Council of Manipur · Assessment Report on the Financial Management of
· Memorandum submitted by the Public of Hill Districts the State of Orissa for the years from 1993-94 to 1997-
of Manipur 98, by PAG, Orissa
· Memorandum submitted by the Cultural Research & · A Note on Power Sector Reforms, submitted by
Analysis Wing Manipur Government of Orissa
· Memorandum submitted by Manipur University · Memorandum by OSRTC
· Memorandum submitted by All Manipur Aided · Speech delivered by Chief Minister of Orissa on
Secondary Schools’ Headmasters Association 10.2.1999
· Memorandum submitted by Federal Party of Manipur · Additional memorandum submitted to EFC for the
demands of Law Department
· Memorandum submitted by Manipur People’s party
· A note on transfer of functions and powers after 74th
· Memorandum submitted by CPI (M) Amendment of the Constitution submitted by the
· Memorandum submitted by Minor Irrigation Government of Orissa
Contractors’ Association (Hill) Manipur · Memorandum on upgradation of standards of
· Memorandum submitted by Manipur State Women’s administration and special problems submitted by Co-
Development Corporation Ltd. operation Department, Government of Orissa
 128
· A note on Restructuring of Public Enterprises in Orissa, Tamil Nadu
by Government of Orissa · MDMK party
· A note on Bio-diversity project submitted by Chilika · AIADMK party
Development Authority · The Madras Chambers of Commerce and Industry
· Memorandum submitted by Utkal Chamber of · The Southern India Chambers of Commerce and
Commerce and Industry, Cuttack Industry
· Memorandum by Shri Biswa Bhusan Harichandan, · Hindustan Chamber of Commerce
MLA, Leader, BJP Legislative Party, Orissa and others · Confederation of Indian Industry (Southern Region)
· Memorandum by Dr. Debendra Nath Mansingh, · Confederation of Indian Industry (Tamil Nadu State
Government Chief Whip and Shri Ganeswar Behera, Council)
Secretary, Congress Legislature Party
· DMK Party
· Memorandum by Sarbashree Ramakrushna Patnaik
and Satchidananda Dalal, on behalf of Biju Janata Dal · Tamil Nadu State Committee of the CPI (M)
· Memorandum by Janata Dal, Orissa · CPI Party
· Madras Institute of Development Studies
· Memorandum by Shri Bhakta Charan Das, General
Secretary, Convenor, KBK Sangram Cell, Orissa · Representatives of urban local bodies
Pradesh Congress Committee Tripura
· Memorandum by Bhubaneshwar Municipal · Tripura Tribal Areas Autonomous District Council
Corporation · Government Pensioners Association
· Memorandum by Chairperson, Jeypore Municipality · Panchayati Raj Institutions, Tripura
· Memorandum by All Orissa Panchayat Parishad · Agartala Municipal Council
· Memorandum by Shri Pradeep Kumar Sahu, · Tripura Government Employees’ Association
Chairperson, Bolangir Municipality
· Shri Samir Ranjan Barman, Leader of the Opposition,
· Memorandum by Shri Brundaban Mahji, President Zilla Tripura Legislative Assembly
Parishad, Sambalpur
· Tripura Upajati Juba Samity
· Memorandum by Shri Digambar Kar, Vice President,
Z.P. Jajpur · Janata Dal
· Tripura Employees Co-ordination Committee (HB
Punjab Road)
· Punjab Pradesh Congress Committee, Chandigarh · Indira Gandhi Memorial Hospital, Agartala
· Communist Party of India (Marxist) · Tripura Pradesh Congress Committee
· Bharatiya Janata Party, Punjab · Tripura Left Front Committee
· Punjab Chambers of Commerce and Industry · Tripura Chambers of Commerce and Industry
· Confederation of Indian Industry · Prof. A. Saha, Subhas Basu Professor of Economics,
Rajasthan Tripura University
· Note titled ‘Material for the XI Finance Commission’, Uttar Pradesh
sent by the Accountant General, Rajasthan · Supplementary Memorandum of the State Government
· Speech of the Finance Minister, Rajasthan on the requirements of Uttaranchal Region
· Memorandum submitted by Shri B.L. Pangariya · Memorandum submitted by Shri A.K. Singh, Giri
· Memorandum submitted by Shri Om Prakash, former Institute of Development Studies, Lucknow
Vice-Chancellor and Editor, Indian Journal of · Joint Memorandum submitted by Prof. A.K. Sengupta
Economics and Prof. A.K. Tiwari, Institute of Development Studies,
· Memorandum submitted by Prof. Narain Sinha, University of Lucknow
Associate Professor, Department of Economics, · Memorandum submitted by Prof. R.K. Sinha, MJP
University of Rajasthan Rohilkhand University, Bareilly
· Memorandum submitted by Prof. Surjit Singh, Institute · Joint Memorandum submitted by Prof. S.N. Chaturvedi
of Development Studies, Jaipur and Dr. A.K. Srivastava, DDU Gorakhpur University
· Memorandum submitted by Shri L.M. Nathuramka, · Memorandum submitted by ASSOCHAM of UP
retired Reader in Economics, University of Rajasthan, · Memorandum submitted by PHD Chamber of
Jaipur Commerce and Industry
· Memorandum submitted by Dr. S.N. Acharaya, Director, · Memorandum submitted by Confederation of Indian
Institute of Development Studies, Jaipur Industry
· Memorandum submitted by the Rajasthan Chambers · Memorandum submitted by Indian Industries’
of Commerce and Industry Association
Sikkim West Bengal
· Memorandum submitted by Sikkim Sangram Parishad · Bengal National Chambers of Commerce and Industry
· Memorandum submitted by Sikkim Democratic Front · Bhartiya Janta Party
· Memorandum submitted by AG, Sikkim, Gangtok · Indian National Congress
· Memorandum submitted by Sikkim Chamber of · Communist Party of India (Marxist)
Commerce · Socialist Unity Centre of India
· Memorandum submitted by Time Corporation Limited · Communist Party of India, West Bengal State Council
 129
Annexure I.2A
(Para 1.4)

Memorandum received from Individuals/Organisations

Shri Ramesh Kumar Gandhie, All India Council of Mayors,

156/26, Solapur Road, 8, Bhai Veer Singh Marg,
Hadapsar Gole Market,
Pune – 411 028 New Delhi – 110 001

Shri S.K. Kumaran,

National Fellow, Dr. K. Venkataraman,
UGC, New Delhi – 1 Public Expenditure Round Table (PERT),
SG Lecturer in English 37, Main Road, Dr Radhakrishna Nagar,
AM Jain College, Meenambakkam Chennai - 600 041
Chennai – 600 114
Shri Sukomal Sen,
Shri Sujit Sikandar, General Secretary,
Professor, All-India State Government Employees’ Federation,
Post Graduate Deptt of Commerce
Karmachari Bhavan,
Guwahati University
10A, Shankharitola Street,
Gopinath Bardoloi Nagar,
Guwahati – 781 014 Calcutta - 700 143
Assam
Dr. R.K. Mishra,
Shri B.R. Gupta, Professor & Dean,
G-12, Dilshad Garden Colony, Institute of Public Enterprises,
Shahadra Osmania University Campus,
Delhi – 110 032 Hyderabad - 500 007

Shri Ravi K Kohli,

Dr. A.A. Dange,
C-II/C, Gangotri Enclave
Alaknanda Reader in Public Finance,
New Delhi – 110 019 Department of Economics,
Shivaji University,
Shri Santhosh Kumar Kolhapur - 416 004
Yuva Kalyan Sangathan,
(Youth Welfare Organisation), Prof. V. Suguna,
Katra, Hazipur – 844 101 Head, Department of Economics,
Bihar
Osmania University,
Hyderabad
Shri H. Rajesh
‘Ushas’, TC 6/430-5,
Mulamoodu Lane Shri G. Giridhar Prabhu,
Vattiyoorkaru PO 190, Industrial Area,
Thiruvananthapuram – 695 013 Baikampady,
Kerala Mangalore - 575 001

Shri Trilochan Kanungo, Shri Pradeep Rawat, (MP),

New Rausa Patna,
‘Trimurti’ 484/93,
Cuttack – 753 001
Mitramandal Colony,
Shri C.B. Ranbhor, Pune - 411 009
B/2-11, Yogayog Housing Society,
Bibervadi Shri Pradeep B. Chinai,
Pune – 411 037 President,
Indian Merchants Chamber,
Western India Forum for Panchayati Raj, Indian Merchant Chamber Marg,
Ahmedabad Study Action Group,
Church Gate,
Dalal Building,
Mumbai - 400 020
Ahmedbad
 130
Annexure I.3 Annexure I.3A
(Para 1.7) (Para 1.8)

List of the eminent economists who met the Meetings with the Planning Commission
Commission on 26th August, 1998 and
4th December, 1998 27th September, 1999
1. Shri K.C. Pant, Deputy Chairman
2. Dr. M.S. Ahluwalia, Member
26th August, 1998
3. Dr. S.P. Gupta, Member
1. Dr. C.H. Hanumantha Rao 4. Dr. N.C. Saxena, Secretary
2. Dr. Raja J. Chelliah 5. Dr. N.J. Kurian, Adviser (FR)
3. Prof. Mihir Rakshit 6. Dr. Pronab Sen, Adviser (PPD & IE)
4. Dr. B.S. Minhas, Indian Statistical Institute 7. Shri P.M. Rangasamy, Additional Adviser (FR)
5. Dr. Ashok Lahiri, Director, NIPFP
14th December, 1999
1. Shri K.C. Pant, Deputy Chairman
4th December, 1998
6. Dr. A. Vaidyanathan, Professor, Madras Institute of 2. Shri Som Pal, Member
Development Studies 3. Dr. S.R. Hashim, Member
7. Shri S. Venkitaramanan, Former Governor, RBI 4. Shri Venkata Subramaniam, Member
8. Dr. G. Thimmaiah, Institute for Social & Economic 5. Dr. N.C. Saxena, Secretary
Change 6. Dr. Pronab Sen, Adviser (PPD)
9. Dr. M.S. Ahluwalia, Member, Planning Commission 7. Dr. N.J. Kurian, Adviser (FR)
10. Dr. D.R. Mehta, Chairman, SEBI 8. Shri Pradeep Kumar, Adviser & JS (SP)
11. Dr. Y. Venugopal Reddy, Deputy Governor, RBI 9. Shri J.S. Kochher, Deputy Adviser (FR)
12. Dr. Rakesh Mohan, Director General, NCAER 10. Shri M.R. Anand, Deputy Adviser (FR)
11. Shri Dinesh Kapila, R.O. (FR)

22nd December, 1999

1. Shri N.C. Saxena, Secretary
2. Dr. Pronab Sen, Adviser (PPD)
3. Dr. N.J. Kurian, Adviser (FR)
4. Dr. Joseph Abraham, Joint Adviser (FR)
 131
Annexure I.4 Annexure I.5
(Para 1.10) (Para 1.11)

Details of Studies Commissioned List of the Members of the Group on Panchayats

Name of the Study Name of the Institute 1. Shri B. N. Yugandhar,

Retd. Secretary to the
Study on State Road Dr. S. Sriraman, University Government of India,
Transport Corporations of Mumbai Hyderabad

Study on Performance Prof. Jyoti Parikh & 2. Prof. Indira Rajaraman,

of State Electricity Dr. Anjana Das, Indira Gandhi National Institute of Public
Boards Institute of Development Finance and Policy,
Research, Mumbai New Delhi

Study on Budgetary Dr. B.B. Bhattacharya, 3. Prof. Abhijit Datta,

Policy & Macro Economic Institute ofEconomic Institute of Social Sciences,
Stability and Debt Growth, Delhi New Delhi
Burden of the States and
Centre 4. Prof. M.A. Oommen,
Institute of Social Sciences,
Study on Inter-State Prof.K.L. Krishna, New Delhi
Differentials in Shri R.K. Das, Shri T.C. Anant,
Infrastructure Prof. Uma Dutta, Centre for 5. Shri R.C. Choudhury,
Economic Development, Delhi Director General,
National Institute of Rural Development,
Study on Functional and National Institute of Rural Hyderabad
Financial Devolution on Development, Hyderabad
Panchayati Raj Institutions 6. Prof. Atul Goswami,
Director,
Study on Municipalities National Institute of Public Omeo Kumar Das Institute of
Finance and Policy, New Delhi Social Change and Development,
Guwahati
Study on Tax Performance Indian Statistical Institute,
and Taxable capacity Calcutta 7. Mrs. Vasanthi Pai,
- Analysis and Projection Chairperson,
for Selected States Bharatiya Vikasa Trust,
Udupi,
Study on Measuring Institute for Social and Karnataka
Expenditure needs Economic Change,
of the States Bangalore 8. Shri B. Nayak,
Director,
Study on Defence Forum for Strategic and Finance Commission
Expenditure Security Studies, New Delhi and Convenor

Study on Tax Revenue National Institute of Public

Forecasts of Centre & Finance and Policy,
States New Delhi
 132
Annexure I.6 Annexure I.7
(Para 1.11) (Para 1.11)

List of the Members of the Group on Municipalities List of the Members of the Group on Defence

1. Prof. O.P. Mathur, 1. Shri A.K. Ghosh,

Senior Adviser, Controller of Finance and Accounts,
National Institute of India International Centre,
Public Finance and Policy, New Delhi
New Delhi
2. Air Marshal S.R. Deshpande (Retd.),
2. Shri Jannat Hussain, M-274, Sector – 25, Jalavayu Vihar,
Secretary, Department of NOIDA (U.P.)
Agriculture, & Former Municipal
Commissioner, Hyderabad, 3. Major General Afsir Karim (Retd.),
Government of Andhra Pradesh, 1728, Sector – 29,
Hyderabad NOIDA (U.P.)

3. Shri S.G. Kale, 4. Vice Admiral K.K. Nayyar (Retd.),

Ex- Commissioner, Chairman, Forum for Strategic & Security Studies,
Greater Mumbai Municipal Corporation, Res: L-1/4, Hauz Khas Enclave,
Mumbai New Delhi

4. Shri Tapan Banerjee, 5. Lieutenant General S.S. Sethi (Retd.),

Institute of Local Government Former Deputy Chief of the Army Staff,
and Urban Studies, B-5/133, Safdarjang Enclave,
Calcutta New Delhi

5. Prof. Vinod K. Tiwari, 6. Air Commodore Jasjit Singh (Retd.),

Director, Director, Institute of Defence Studies & Analyses,
National Institute of Urban Affairs, Old JNU Campus,
New Delhi New Delhi

6. Smt. Kiran Wadhwa, 7. Shri K. Subrahmanyam,

Economic Adviser, Defence Analyst and Former Director,
Housing and Urban Institute of Defence Studies & Analyses,
Development Corporation, New Delhi
New Delhi
8. Shri Sudhir Krishna,
7. Shri Ramaswamy, Joint Secretary,
Swabhimana Initiative, Malleswaram, Finance Commission
Bangalore and Convenor

8. Shri B. Nayak,
Director,
Finance Commission
and Convenor
 133
Annexure I.8 Annexure I.9A
(Para 1.12) (Para 1.12)

Dates of discussions with State Governments at List of Participants who attended the discussions
State Headquarters/Field Visits with Principal Accountants General during the
visits of the Finance Commission
Sl.No. Name of the State Dates of visit
Andhra Pradesh
1. Goa January 13 to 15, 1999 Shri Surendra Pal, Principal Accountant General
2. Gujarat January 28 to 30, 1999 Shri A. Srinivasa Kumar, Accountant General
3. Orissa February 9 to 12, 1999 Smt.Subhashini Srinivasan, Accountant General
4. Madhya Pradesh March 5 to 8, 1999
(Jabalpur) Assam
Shri D.J. Bhadra, Accountant General
5. Assam March 14 to 16, 1999
Shri N. Basu, Deputy Accountant General (AU)
6. Meghalaya March 17 to 19, 1999 Shri D. Chakravarty, Senior Accounts Officer (A&E)
7. West Bengal April 5 and 6, 1999 Shri Promoth Das, Assistant Accounts Officer (A&E)
8. Mizoram April 14 and 15, 1999
9. Tripura April 16 and 17, 1999 Arunachal Pradesh
Shri Rochila Saiawi, Accountant General (Audit)
10. Madhya Pradesh April 21 to 24, 1999 Shri E.R. Solomon, Accountant General (A&E)
11. Sikkim May 2 and 3, 1999 Shri Shibaji Choudhury, Assistant Audit Officer
12. Nagaland May 15 to 17, 1999
13. Manipur May 18 and 19, 1999 Bihar
Shri H.P. Das, Principal Accountant General
14. Karnataka May 28 to 30, 1999
Shri A.K. Singh, Accountant General (A&E)II
15. Himachal Pradesh June 14 and 15, 1999 Shri K.K. Srivastava , Accountant General(Audit)II
16. Andhra Pradesh June 24 to 27, 1999 Shri Nandlal, Accountant General (A/c)I
17. Bihar July 5 and 6, 1999
18. Kerala October 22 to 24, 1999 Goa
Shri B.R. Mandal, Accountant General
19. Tamil Nadu November 1 to 3, 1999 Shri P.G.N. Nair, Senior Deputy Accountant General
20. Punjab November 16 and
17, 1999 Gujarat
21. Haryana November 18 and Shri B.M. Oza, Principal Accountant General
19, 1999 Shri Dhiren Mathur, Deputy Accountant General
22. Rajasthan November 29 to (Commercial Audit)
December 1, 1999
Haryana
23. Uttar Pradesh January 11 and 12, 2000
Smt. Mouha Chatterjee, Principal Accountant General
24. Maharashtra January 20 and 21, 2000 Ms. Rita Mitra, Accountant General (Accounts)
25. Arunachal Pradesh April 5 and 6, 2000 Shri A.K. Kaushik, Deputy Accountant General
26. Jammu & Kashmir May 15 and 16, 2000 Ms. Varsha Verma, Deputy Accountant General
Shri P.P. Kaushik, Senior Accounts Officer
Shri R.K. Pathak,, Senior Accounts Officer
Shri S.K. Sabharwal, Accounts Officer
Shri Rambir Singh, Assistant Accounts Officer
Shri S.R. Narang, Assistant Accounts Officer

Himachal Pradesh
Smt. Revathi Bedi, Accountant General
Smt. Rashmi Aggarwal, Deputy Accountant General
Shri Manmohan Kumar, Deputy Accountant General
Shri Ram Nath, Senior Deputy General (A&E)
Shri Bipan Vyas, Senior Audit Officer
Shri G.N.Sharma, Senior Audit Officer
Shri H.R.Gupta, Senior Accounts Officer
Shri Khem Sharma, Senior Audit Officer
Shri T.C.Chopra, Senior Audit Officer
Shri Om Parkash, Assistant Accounts Officer
 134
Jammu & Kashmir Shri E.M. Patton, Deputy Accountant General (A&E)
Shri H. Pradeep Rao, Accountant General Shri S. Deb Roy, Account Officer (A/E)
Shri L.A.C. Singh, Senior Deputy Accountant General Shri P.C. Das, Senior Account Officer (Report)
Shri R.L. Koul, Senior Deputy Accountant General
Shri V.K. Dhar, Senior Audit Officer Orissa
Shri V.K. Chaloo, Audit Officer Shri D.C. Sahoo, Principal Accountant General
Shri B.K. Koul, Senior Accounts Officer Shri R.K. Ghose, Accountant General (Audit – I)
Shri S.K. Mishra, Accountant General (Audit – II)
Karnataka
Ms. A.L.Ganapathi, Principal Accountant General Punjab
Shri S. Nagal Samy, Accountant General (Audit)-I
Smt. M. Chatterjee, Principal Accountant General
Shri R. Naresh, Deputy Accountant General (Accounts)
Shri Amrik Singh Bhatia, Senior Deputy Accountant General
Shri V. Narasimhan Rao, Accountant General (Audit)-II
Shri Daulat Ram, Senior Deputy Accountant General
Shri T.N. Nagarajan, Senior Accounts Officer
Shri P.K. Verma, Deputy Accountant General
Shri Gururaja Rao, Senior Accounts Officer (Audit)II
Shri Balwinder Singh, Accountant General
Shri B.C. Adiga, Senior Accounts Officer (Reports)
Shri C. Vinod, Audit Officer (Commercial) Shri R.D. Chaudhry, Assistant Accounts Officer
Shri R. Shridhara, Audit Officer Shri Khushwant Singh, Assistant Accounts Officer
Shri S. Gopal, Assistant Accounts Officer (Commercial)
Rajasthan
Kerala Smt. Sushma Dabak, Accountant General (Audit – I) and
Dr. A.K.Banerjee, Principal Accountant General (A&E)
Shri R.K.Verma, Accountant General (Audit) Shri Sunil Chander, Accountant General (Audit-II)
Ms. Sujatha Jayaraj, Senior Deputy Accountant General Shri R.K. Goel, Deputy Accountant General
Shri Rajesh Singh, Senior Deputy Accountant General Shri K.S. Ramotra, Deputy Accountant General (State
(A&E) Receipt Audit)
Shri V.K. Mohan, Deputy Accountant General (Accounts)
Madhya Pradesh Shri Promod Kumar, Deputy Accountant General (Inspection
Shri B.R. Khairnar, Accountant General Civil)
Shri S.G. Gupta, Deputy Accountant General (Accounts) Shri S.S. Pandit, Senior Accounts Officer (Report)
Shri G.P. Singh, Deputy Accountant General (Audit-II)
Shri S.S. Ranawadkar, Deputy Accountant General (Works) Sikkim
Shri P.K. Khandelwal, Senior Deputy Accountant General Shri A.W.K. Langstieh, Accountant General (Audit)
(Commercial)
Tamil Nadu
Maharashtra Shri C.V. Avadhani, Principal Accountant General (Audit)
Shri Dhirendra Swarup, Principal Accountant General (Audit-I) Shri Narendra Singh, Accountant General (A&E)
Shri Jayanta Chatterjee, Accountant General (A&E-I) Shri T. Theethan, Accountant General (Audit)-II
Shri Murugrah, Accountant General (A&E-II) Ms. Kestur Kavita, Senior Deputy Accountant General
Ms. Mridula Sapru, Accountant General (Commercial)
Ms. Nivedita Raju, Deputy Accountant General (A&E)
Tripura
Ms. Archana Shivsat, Deputy Accountant General (Audit)
Shri J.C. Sarkar, Senior Deputy Accountant General
Shri Niranjan Baidya, Deputy Accountant General (Audit)
Manipur
Shri Dilip Kumar Chaudhuri, Audit Officer
Shri Kaihau Vaiphei, Accountant General
Shri Dilip Ranjan Chakraborty, Supervisor
Shri Athikho Chalai, Deputy Accountant General
Shri Y. Manoobi Singh, Senior Accounts Officer
Uttar Pradesh
Meghalaya Shri Y.C. Satyavadi, Principal Accountant General
Shri Ashwini Attri, Accountant General (Audit-I)
Shri Rochila Saiawi, Accountant General (Audit)
Shri Sword Vashom, Accountant General (A&E) Shri P. Mukherjee, Accountant General (Audit-II)
Shri N. S. Purkayastha, Senior Audit Officer Shri R.S. Singh, Senior Deputy Accountant General, AG(A)-II
Shri D. Dev Choudhury, Senior Audit Officer Smt. A.G. Mathew, Senior Deputy Accountant General,
Shri Biresh Deb, Senior Accounts Officer AG)A)-II
Shri Ram Dihal, Senior Deputy Accountant General, AG(A)-II
Mizoram Shri Abhishek Gupta, Deputy Accountant General, AG(A)-II
Shri Rochila Saiawi, Accountant General (Audit)
Arunachal Pradesh, Meghalaya and Mizoram West Bengal
Smt. Bharti Prasad, Principal Accountant General
Nagaland Smt. H. Narayanan, Accountant General
Shri E.R. Solomon, Accountant General (Audit) Shri Navin Kumar, Accountant General (Audit) II
 135
Annexure I.9B
(Para 1.12)

List of Chief Ministers/Ministers/State Government Officials

who met the Commission during visits

Andhra Pradesh Shri D. Prabhakar Rao, Director (Finance), Transmission

Shri N. Chandrababu Naidu, Chief Minister Corporation (TRANSCO), Vidut Soudha,
Shri P. Ashok Gajapathi Raju, Minister of Finance Shri Dinesh Kumar, Secretary to Government, Irrigation and
Shri A. Madhava Reddy, Minister of Home Command Area Development Department
Dr. K. Sivaprasada Rao, Minister, Panchayati Raj Shri K. Jaganmohan Rao, Special Secretary, Environment,
Shri V. Ananda Rau, Chief Secretary Forest, Science and Technology Department
Shri P.V. Rao, Special Chief Secretary & Commissioner Land Shri G. Somashekar Rao, Financial Advisor, Andhra Pradesh
Revenue State Road Transport Corporation (APSRTC)
Shri N.S. Hariharan, Principal Secretary, Municipal Shri D. Giridhar Reddy, Deputy Chief Administrative Officer,
Admninistration & Urban Development Department APSRTC
Shri J. Rambabu, Principal Secretary, Revenue Department Shri M.V. Subrahmanyam, Registrar (Management), High
Shri V.P.B. Nair, Principal Secretary, Home Department Court of Andhra Pradesh
Shri S.K. Arora, Principal Secretary, Finance & Planning Shri P.V. Rama Raju, Engineer-in-Chief, (R & B)
(FW) Department
Shri S.P.K. Naidu, Principal Secretary, Finance & Planning Arunachal Pradesh
(FW) Department Shri Mukut Mithi, Chief Minister
Shri V. Sampath, Principal Secretary, Energy Department Shri Taxo Dabi, Agriculture Minister
Shri P.P. Williams, Principal Secretary & Commissioner, Shri Techi Teli, Revenue Excise & Urban Development
Public Enterprises Management Board (PEMB) Minister
Shri V.P. Jauhari, Principal Secretary, Environment, Forest, Shri Dera Natung, Education Minister
Science & Technology Department
Shri Chowna Mein, Public Health & Works Minister
Smt. Sheela Bhide, Principal Secretary, Industries &
Shri T. Gyusme, Industry, Textile and Handicraft Minister
Commerce Department
Shri T. Sanjay, Information Minister
Shri P.K. Aggarwal, Principal Secretary, Irrigation &
Shri K. Borang, Cooperation Minister
Command Area Development Department
Shri P.M. Nair, Chief Secretary
Shri P.K. Rastogi, Secretary, Finance & Planning (W&P)
Shri T. Barn, Commissioner, Public Works Department &
Department
Home
Shri M. Sahoo, Secretary, Finance & Planning (FW)
Shri J.M. Tangu, Commissioner, Personnel
Department
Smt. Naini Jayaseelan, Commissioner, Finance
Shri K. Pradeep Chandra, Secretary, Finance & Planning
Shri G.S. Patnaik, Commissioner to Chief Minister
(FW) Secretary
Shri S.R. Mehta, Secretary, Forest & PCCF
Shri G.R. Reddy, Special Secretary, Finance
Shri A.K. Parida, Secretary, Finance & Planning (FW) Shri S.R. Chakravarty, Chief Engineer, Power
Department Shri T. Taloh, Secretary, Panchayat, RD & RR
Smt.Chaya Ratan, Secretary, Education Department Shri S.R. Dey, Superintending Engineer, PHED
Shri S. Bhale Rao, Secretary, Transport, Roads & Buildings Shri S.J. Sinha, Consultant, Finance
Department Shri D.Y. Perme, Secretary, Cultural Affairs
Shri P. Bhaskar Prasad, Special Commissioner (Relief), Shri G. Koyer, Secretary, Industry & Social Welfare
Revenue Department Shri H. Khoda, Secretary, Agriculture
Shri P.V.R.K. Prasad, Director General, Human Resource Shri R.I. Jayprakash, CEO
Development Institute of Andhra Pradesh Shri T. Norbu, Chief Engineer, EZ/PWD
Shri R.P. Singh, Commissioner, Commercial Taxes Shri B. Megu, Chief Engineer, PWD/WZ
Shri M.V.P.C. Sastry, Commissioner, Excise Shri S.L. Shengha, Secretary, Education
Shri Malayadri, Additional Commissioner, Transport Shri A. Arya, Deputy Inspector General of Police
Shri H.J. Dora, Director General of Police Shri R.K. Bhattacharjee, Director, Planning
Shri J. Satyanarayana, Inspector General, Registration Shri K.A.P. Rao, Secretary, Law
Stamps Shri K.D. Singh, Special Secretary to Chief Minister
Shri A.K. Kutty, Chairman, Transmission Corporation Shri Jitendra Narain, Secretary to the Governor
(TRANSCO) Shri P. Shyam, Chief Engineer, RWD
Shri V. Appa Rao, Vice Chairman & Managing Director, Shri T. Bagra, Secretary, GA
Andhra Pradesh State Road Transport Corporation Smt. B. Deori, Special Secretary, Finance
(APSRTC)
Shri T.V. Chowdhary, Director, Mines and Geology Assam
Shri Ajoyendra Pyal, Director, Municipal Administration Shri P.K. Mahanta, Chief Minister
Shri G. Sudhir, Secretary to Govern ment, Revenue Shri T. Boro, Minister Education
Department Shri G. Hazarika, Minister Industries
 136
Shri N. Sarma, Minister, Public Works Department (PWD) Corporation
Shri S.A. Choudhury, Minister, Panchayat & Rural Shri R.S. Prasad Director, Panchayat & Rural Development
Development Department
Shri A. Rabha, Minister, Soil Conservation Shri K.N. Chetia, Managing Director, Assam State Transport
Shri H.N. Goswami, Minister, Power, HAD Corporation
Shri R.N. Kalita, Minister, Sericulture Shri P.K. Barua Director, Agriculture Department
Shri A. Jabbar, Minister, Minorities Shri M.M. Sagar, Chairman & Managing Director, Assam
Shri B. Goala, Minister, Relief & Rehabilitation Police Housing Corpn. Ltd
Dr. K. Kalita, Minister, Health Shri B.C. Thakur, Chief Accounts Officer, Assam State
Smt. R.R. Das, Boro Minister, Welfare Electricity Board
Shri J. Toppo, Minister of State Shri K.D. Phukan, Joint Secretary, Judicial Department
Shri Aminul Islam, Minister, Forest Shri J. Barua, Managing Director, Assam Industrial
Shri Babul Das, Minister, Fisheries Development Corporation
Shri Hiranya Konwar, Minister, Veterinary Shri S. Barua Director, Sports & Youth Welfare Department
Shri P.K. Bora, Chief Secretary Shri B.B. Hagjer, Director, Industries Department
Shri P.K. Dutta, Chairman, Assam State Electricity Board Shri J. Mipun, Director, Fire Services
Shri P.V. Sumant, Director General of Police Shri P.M. Dastidar, Director, Police (Communication)
Shri M.S. Pangtey, Additional Chief Secretary Dr. K. Goswami, Director, Forensic Science Laboratory
Shri S.C. Das, Commissioner & Secretary, Finance Shri P.K. Das, Managing Director, AMTRON
Department Shri M.C. Lekharu, Director of Accounts & Treasuries
Shri O.P. Agarwal, Commissioner & Secretary, Transport Dr. S.K. Choudhury, Director, Non-Formal & Adult Education
Department Shri S.R. Saikia, Chief Engineer, PHE,
Shri C.K. Das, Commissioner & Secretary, Revenue Shri S. Thiek, Secretary, Karbi Anglong Autonomous Council
Department Shri D. Saikia, Director of Training
Shri A. Jain, Commissioner & Secretary, Forest Department Dr. G.N. Talukdar Director, Secondary & Higher Education
Shri L. Rynjah, Agricultural Production Commissioner Shri H.C. Das Director, State Council for Education Research
Shri P.C. Sarma, Commissioner & Secretary, Municipal & Training
Administration Department Shri B.B. Goswami, Chief Engineer, Irrigation Department
Shri H.S. Das, Commissioner & Secretary, Planning & Shri K.C. Sarma, Chief Engineer, Flood Control Department
Development Department Shri I.Dutta, Director, Soil Conservation Department
Shri K.K. Mittal, Commissioner & Secretary, Panchayat & Shri A. Rahman, Chief Engineer P.W.D. (Roads)
Rural Development Department Shri P.K. Saikia, Chief Engineer P.W.D. (Building)
Smt. E. Chowdhary, Commissioner & Secretary, Hill Areas Shri R.K. Barooah, Chief Electrical Inspector cum Adviser
Department Shri A.C. Thakur, Director, Town & Country Planning
Shri V.B. Pyarelal, Commissioner & Secretary, Health & Department
Education Department Smt. N. Dewri Dutta, Deputy Secretary, Tourism Department
Shri P.K. Chowdhary, Commissioner & Secretary, Power Dr. H.N. Kakaty, Director, AM & Vet. Department
Department Dr. R.N. Baruah, Director, Dairy Development Department
Shri J.P. Meena, Commissioner & Secretary, Industries & Shri N.C. Dhekial Phukan, Director, Economics & Statistics
Commerce Department Department
Shri P.P. Varma, Commissioner & Secretary, Excise Shri M.C. Malakar, Chief Conservator of Forests (Territorial)
Department Shri S.K. Sen, Conservator of Forests (HQ)
Shri D.C. Borah, Commissioner & Special Secretary, Public Shri B. Bhattacharjee, Director, Geology & Mining
Works Department Department
Shri R.K. Bora, Secretary, Finance Department Shri A.K. Varma, Director, Public Enterprises Department
Shri P.Neog, Secretary, Irrigation Department Shri S. Thadou, Director, Fisheries,
Shri S. Sarma, Secretary, Flood Control Department Shri N. Haque, Director, Municipal Administration
Shri M.K Barooah, Secretary, Home Department Department
Shri D.C. Barman, Secretary, Education Department Shri A.K. Baruah, Director, Financial Inspections
Dr. P. Saran Secretary, A. R. Training Department Shri A.N. Borah, Director, Employment & Craftsman Training
Shri P.K. Duarah, Secretary, P.H.E. Department Shri N.M. Hussain, Director, Handloom & Textiles
Dr. B.K.Gohain, Secretary, General Administration Shri H.Ali, Registrar of Co-operative Societies
Department Shri U.N. Bora, Additional Registrar, Co-operative Societies
Shri C.K. Sharma, Secretary, Public Enterprise Department Shri H.P.Das, Officer on Special Duty, Finance Department
Shri S. Prasad, Secretary to the Governor Shri R.R. Hazarika, Senior Research Officer, Finance (E.A.)
Shri R.N. Mathur, Inspector General of Police (Admn.) Assam Department
Shri T.R. Dey, Commissioner of Taxes Shri H.N. Sarma, Senior Research Officer, Finance (E.A.)
Shri P. Dutta, Commissioner, Transport Department
Shri H.N. Borah, Inspector General, Prisons Shri J. Choudhury, Research Officer, Finance (E.A)
Shri K. K. Jakharia, Commissioner, Assam State Housing Department
Board Shri G.C. Hazarika, D.C.T. (Statistics)
Shri K.K. Hazarika, Commissioner, Guwahati Municipal Bihar
 137
Smt. Rabri Devi, Chief Minister, Bihar Shri N.M. Nadkarni, Director of Accounts
Shri Shankar Prasad Tekriwal, Finance Minister Smt.Rinku Dhugga, Commissioner of Sales Tax
Shri Jagdanand Singh, Minister for Water Resources Shri Sanjeev Khirwar, Commissioner of Excise
Shri Upendra Prasad Verma, Minister for Commercial Taxes Shri J.B. Singh, Managing Director, KTC
Shri Tulsi Das Mehta, Minister for Forest & Environment Shri U.D. Kamat, Director of Tourism
Shri Aklu Ram Mahatva, Minister for 20 Point Programme Shri R.N. Ray, Chief Town Planner
Shri Ram Naresh Prasad, Minister for Registration Shri K.V. Prabhugaonkar, Director of Information & Publicity
Shri S.N. Biswas, Chief Secretary Shri S.V. Elekar, Joint Secretary, Finance (Expenditure)
Shri Mukund Prasad, Principal Secretary to the Chief Shri Rajiv Misra, Joint Secretary, Finance (Budget)
Minister Shri Rajib K. Sen, Joint Secretary, Finance Commission
Shri G. Krishnan, Development Commissioner Shri Kewal Sharma, Secretary, Transport
Shri Pratyush Sinha, Finance Commissioner Shri R.A. Ghali, Chief Electrical Engineer
Shri Bhanu Pratap Sharma, Additional Finance Shri Pal, Managing Director, Goa Housing Finance and
Commissioner, Expenditure Construction Corporation
Dr. A.K. Pandey, Additional Finance Commissioner, Shri R.G. Prabhudesan, Accounts Officer, Directorate of
Resources Transport
Dr. K.N. Tewari, Retired Director, Statistics & Evaluation
Directorate, Planning Department Gujarat
Shri Tilak Raj Gauri, Under Secretary, Finance Commission Shri Keshu Bhai Patel, Chief Minister
Division, Finance Department Shri Vaju Bhai Vala, Minister, Finance
Shri P.K. Basu, Secretary, Commercial Taxes Shri Suresh Mehta, Deputy Chief Minister & Minister,
Shri S.P. Keshav, Secretary, Transport Industries
Shri R.R. Prasad, Managing Director, Bihar State Road Shri Ashok Bhatt, Minister, Roads/Health
Transport Corporation Shri Narottam Patel, Minister, Water Supply
Shri Jayant Das Gupta, Excise Commissioner Shri Bimal Shah, Minister, Water Supply
Smt. Radha Singh, Secretary, Water Resources Shri Kaushik Patel, Minister, Transport
Shri S.P. Seth, Mines Commissioner Shri S.K. Shelat, Advisor to Chief Minister
Shri D.P. Maheshwari, Commissioner, Land Reforms Shri L.N.S. Mukundan, Chief Secretary
Shri K.D. Sinha, Commissioner, Forests Shri R. Ramabadran, Principal Secretary, Education
Shri B.B. Shrivastava, Secretary, Energy Shri Rama Rakhiani, Principal Secretary, Agriculture
Shri Shivendu Kumar, Secretary, Bihar State Electricity Shri Swaminathan, Head of Technical Education
Board Shri K.V. Bhanujan, Additional Chief Secretary, Finance
Shri Anil Kumar, Secretary, Planning & Development Dr. V.V. Rama Subbarao, Additional Chief Secretary, Home
Shri S.K. Sharma, Commissioner, Urban Development Shri P.K. Mishra, Additional Chief Secretary, Revenue
Shri K.S. Subrahmanyan, Commissioner, Rural Development Shri P.K. Lehri, Personal Secretary to Chief Minister &
Shri Gopal Shanker Prasad, Director, Panchayati Raj-cum- Additional Chief Secretary (Information)
Secretary, State Finance Commission Dr. Manjula Subramaniam, Additional Chief Secretary, Urban
Development
Goa Shri Ashok Koshy, Additional Chief Secretary, Transport
Shri D.G. Narvekar, Dy.Chief Minister/Finance Minister Shri G. Subba Rao, Additional Chief Secretary, Energy
Dr. Wilfred Mesquita, Power Minister Shri Ashok Narayan, Additional Chief Secretary, Rural
Shri S.D. Zuvarkar, Minister for Transport Development
Shri S.R. Sharma, Chief Secretary Shri P.N. Roy Chowdhury, Secretary (Economic Affairs),
Shri Rakesh Mehta, Development Commissioner Finance
Shri Vivek Rae, Secretary, Finance Shri R.K. Tripathi, Secretary, Water Supply
Shri Kewal Sharma, Secretary, Urban Development Shri H.P. Jamdar, Secretary, Roads/Buildings
Shri B.S. Subana, Secretary, Law Shri A.K. Joti, Secretary, Industries
Shri Pukh Raj Bumb, Secretary, General Administration Shri Rajesh Kishore, Commissioner of Sales Tax
Dr. K.R.V.S. Chalam, Director of Planning, Statistics and Shri Nalin Bhatt, Chairman, Gujarat State Electricity Board
Evaluation Shri J.S. Rana, Member, Finance
Shri S. Rajagopalan, Chief Engineer, Public Works Shri Sanjay Gupta, Joint Secretary, Energy
Department Shri Pramod Kumar Mishra, Managing Director, Gujarat
Shri S. M. Nadkarni, Chief Engineer, Irrigation State Electricity Board
Shri R.A. Ghali, Chief Electrical Engineer Shri Varesh Sinha, Managing Director, State Road Transport
Shri P.R.S. Brar, Inspector General of Police Corporation
Shri G.G. Kambli, Director, Panchayats
Shri N. S.S. Nair, Director of Municipalities Haryana
Dr. P.K. John, Director, Emergency & Fire Services Shri Om Prakash Chautala, Chief Minister
Smt. Suman Pednekar, Director of School Education Shri Sampat Singh, Finance Minister
Dr. A.V. Salelkar, Director of Health Services Shri Dhir Paul Singh, Town & Country Planning Minister
Shri P.S. Reddy, Director of Transport Shri R.S. Chaudhry, Deputy Chairman, Planning Board
 138
Shri R.S. Varma, Chief Secretary Horticulture
Shri Vishnu Bhagwan, Principal Secretary to Chief Minister Shri Ajay Prasad, Financial Commissioner, Tourism
Shri L.M. Jain, Financial Commissioner, Revenue Shri S.S. Parmar, Financial Commissioner, Animal
Shri L.M. Goyal, Financial Commissioner, PWD (Buildings Husbandry
&Roads) Shri Ravi Dhingra, Financial Commissioner, Food &
Shri A.N. Mathur, Financial Commissioner Supplies/Urban Development
Shri M.K. Miglani, Financial Commissioner, Local Shri S.S. Negi, Financial Commissioner, Revenue
Government Ms. Asha Swarup, Financial Commissioner, Health & Family
Shri Virender Nath, Financial Commissioner, Transport welfare
Shri G. Madhavan, Financial Commissioner, Health and Shri Yogesh Khanna, Financial Commissioner, Finance &
Medical Education Planning
Smt. Komal Anand, Financial Commissioner, Public Health Shri D.K. Sharma, Principal Advisor Planning
Department Shri C. Balakrishanan, Secretary, Education
Smt. Meenaxi Anand Chaudhary, Financial Commissioner, Shri Rajwant Sandhu, Secretary, Forest/Rural Development
Power & Social Welfare Shri S. Behuria, Secretary, Public Works Department
Shri B.D. Dhalia, Financial Commissioner, Home Ms. Harinder Hira, Secretary, Labour, Employment & Printing
Smt. Asha Sharma, Financial Commissioner Development Shri S.C. Negi, Secretary, Personnel
& Panchayats Shri V.K. Bhatnagar, Secretary, General Administration
Shri Prem Prashant, Financial Commissioner, Education & Department/Secretariat Administration Department
languages
Shri Rajmani Tripathi, Secretary, Administrative Reforms &
Shri S.P.S. Rathore, Director General of Police, Haryana
Training
Shri S.Y. Qureshi, Commissioner, Irrigation
Shri Deepak Sanan, Secretary, Power/Finance Commission
Smt. Deepa Jain Singh, Commissioner, Prohibition, Excise
Shri Ajay Mittal, Secretary, Excise & Taxation
& Taxation
Shri Kamleshwar Sharma, Secretary, Law
Shri Naseem Ahmad, Commissioner, Agricutlure
Shri K.J.B.V. Subramaniyam, Director, Rural Development
Shri S.C. Chaudhary, Commissioner Town & Country
Shri V.P. Gupta, Director, Urban Development
Planning
Shri Manoj Kumar, Commissioner, Municipal Corporation,
Shri Pius Panderwani, Commissioner & Special Secretary,
Shimla
Finance
Shri O.P. Sharma, Managing Director, Himachal Pradesh
Smt. Anita Chaudhary, Commissioner and Special Secretary,
State Finance Corporation
Finance
Shri Sanjay Kothari, Commissioner, Coordination Shri R.K. Sharma, Engineer-in-Chief (PWD)
Shri P.K. Chaudhary, Commissioner, Industries Shri S.K. Malhotra, Superintending Engineer, Irrigation &
Shri Krishan Mohan, Registrar, Co-operative Societies Public Health
Shri Sanjeev Kaushal, Director, Public Relations & Additional Shri Harinder Thakur, Member (Tech.) Himachal Pradesh
Principal Secretary to C.M State Electricity Board (HPSEB)
Shri Avay Shukla, Member (Finance) HPSEB
Himachal Pradesh Shri K.L. Haunda, Engineer-in-Chief, Irrigation & Public
Shri P.K. Dhumal, Chief Minister Health
Shri Kishori Lal Vaidya, Industries Minister Shri Anil Khachi, Excise and Taxation Commissioner
Shri Mohinder Singh, Public Works Department Minister Shri S.K. Pandey, Principal Chief Conservator of Forest
Shri J.P.Nadda, Health Minister Shri T.R. Mahajan, Director General of Police
Shri Kishan Kapoor, Transport Minister Shri B.S. Thakur, Director General, Home Guards
Shri Ramesh Chand, Irrigation and Public Health Minister Shri R.K. Jain, Director Industries
Shri Roop Singh Thakur, Forest Minister Shri T.G. Negi, Managing Director, HPMC
Shri Vidya Sagar, Agriculture Minister Shri P.C. Kapoor, Managing Director, Himachal Pradesh
Shri Prakash Chaudhary, Minister of State Tourism Development Corporation
Shri Karan Singh, Minister of State Shri B.S. Chauhan, Managing Director, Himachal Pradesh
Shri Narinder Bragta, Minister of State Road Transport Corporation
Shri R.D.Kashyap, Minister of State Shri B.K. Sharma, Deputy Secretary, Revenue
Shri Rikhi Ram Kaundal, Minister of State Shri S.L. Sharma, Assistant Commissioner, Tribal
Shri Rajan Sushant, Minister of State Development
Shri Ravinder Singh Ravi, Minister of State Shri O.P. Kant, Under Secretary, Finance Commission
Shri Hari Narain Singh, Minister of State
Shri Ram Lal Markanda, Minister of State Jammu & Kashmir
Shri A.K.Goswami, Chief Secretary Dr. Farooq Abdullah, Chief Minister
Shri Harsh Gupta, Additional Chief Secretary Shri Gulam Mohi-ud-Din Shah, Minister for Housing & Urban
Shri Arvind Kaul, Financial Commissioner, Transport Development
Shri Shamsher Singh, Financial Commissioner, Welfare/ Shri P.L. Handoo, Minister for Law
Coop Shri Mohammad Shafi, Minister for Education
Ms. Sarita Prashad, Financial Commissioner (IPH) Shri Abdul Rahim Rather, Minister for Finance
Shri Dev Swarup, Financial Commissioner, Agriculture/ Shri Abdul Qayoom, Minister for Revenue
 139
Mian Altaf Ahmad, Minister for Health & Medical Education Smt. Achala Moulik, Additional Chief Secretary
Shri Ajay K. Sadhotra, Minister for Food & Supplies Shri C. Gopala Reddy, Principal Secretary, Finance
Shri Ashok Jaitley, Chief Secretary Department
Shri B.R. Singh, Principal Secretary to Hon’ble Chief Minister Shri Philipose Mathai, Principal Secretary, Urban
Shri J.A. Khan, Principal Secretary, Planning & Development Development Department
Ms. S. Choudhary, Principal Secretary, Education Shri M.B. Prakash, Principal Secretary, Home & Transport
Shri Ajit Kumar, Principal Secretary, Finance Department Smt. Renuka Vishwanathan, Principal Secretary, Planning
Shri K.B. Pillai, Principal Secretary, Power Department
Shri C. Phunsog, Principal Secretary, Home Shri N.Vishwanathan, Principal Secretary, Commerce &
Shri B.R. Kundal, Principal Secretary, Works Department Industries Department
Dr. Mehraj-ud-Din, Director, Sher-I-Kashmir Institution of Shri A. Sen Gupta, Principal Secretary, Health & Family
Medical Sciences Welfare Department
Shri P.L. Raina, Commissioner-cum-Secretary, Health & Shri L.A. Basavaraju, Secretary, Irrigation Department
Medical Sciences Shri Arvind Jadav, Secretary, Energy Department
Shri I.S. Malhi, Financial Commissioner, Agriculture & Rural Shri Ramesh Kumar, Secretary, Minor Irrigation Department
Development Shri P. Ravikumar, Inspector General of Stamps &
Shri Khursheed Ahmad, Commissioner-cum-Secretary, Law Registration
Shri S.L. Sailova, Principal Secretary, Housing & Urban Shri R.K. Bhatia, Director, Karnataka State Bureau of Public
Development Department Enterprises (KSBPE)
Ms. Naseem Lankar, Director Finance (Reserves), Finance Shri S.C. Khuntia, Secretary (Expenditure), Finance
Department Department
Shri M.L. Lala, Director, Accounts & Treasuries, Finance Shri Vivek Kulkarni, Secretary (Resources), Finance
Department Department
Shri V.K. Soi, Director (Budget), Finance Department Smt.Tara Ajay Singh, Secretary, Transport Department
Shri Ajaz A. Kakroo, Deputy Commissioner, Sales Tax Shri B.K. Lokare, Secretary, Revenue Department
(Administration), Kashmir Shri Sanjay Kaul, Secretary-II, Education Department
Dr. Tara Singh, Principal, Government Dental College, Shri M.R. Shrinivasamurthy, Secretary, Rural Development
Srinagar
and Panchayati Raj Department
Shri G.M. Bhat, Drugs Controller
Shri B.V. Changappa, Secretary-II, Forest, Ecology &
Shri G.H. Tantray, Additional Secretary, Law
Environment Department
Shri G.A. Wani, Accounts Officer (Budget) Finance
Shri K. Eswarappa, Secretary, Cooperation Department
Department
Dr. M. Govinda Rao, Director, Institute of Social and
Shri G.M. Khan, Assistant Accounts Officer (Reserves),
Economic Change (ISEC)
Finance Department
Shri V. Madhu, Commissioner for Commercial Taxes
Shri Hakim Bashir Ahmed, Joint Director, Planning, Health
Shri D. Thangaraj, Commissioner for Excise
Department
Shri B. Parthasarathy, Commissioner for Transport
Shri Bashir Ahmed, Special Assistant to Finance Minister
Shri V. Umesh, Additional Secretary, Forest Department
Shri G.N. Sufi, Additional Secretary, Housing Department
Shri A.R. Parray, Commissioner-cum-Secretary, Revenue Shri K.P. Krishnan, Additional Secretary, Finance
Department Department
Shri B.L. Khuchroo, Public Relation Officer to Hon’ble Shri G. Gurucharan, Financial Adviser, Karnataka Electricity
Finance Minister Board
Shri Wajahat Mehmood, Computor Programmer, Finance Shri Aravind Shrivastav, Deputy Secretary (B&R), Finance
Department Department
Shri Syed Shamim Hamid, Computor Operator, Finance Shri M. Lokaraj, Deputy Secretary (Coordination), Finance
Department Department
Dr. Syed Thanvir Ahmed, Deputy Secretary, Finance
Karnataka Department (FC)
Shri J.H.Patel, Chief Minister
Shri Siddaramaiah, Deputy Chief Minister & Minister for Kerala
Finance & Planning Shri E.K. Nayanar, Chief Minister
Shri Bachhegowda, Minister for Transport Shri E. Chandrasekharan Nair, Minister for Food, Tourism &
Shri K.N. Nagegowda, Minister for Major & Medium Irrigation Law
Shri B.L. Shankar, Minister for Large & Medium Scale Shri P.J. Joseph, Minister for Education & Works
Industries Dr. A. Neelalohithadasan Nadar, Minister for Forests,
Shri C.M. Udasi, Minister for Textiles Transport & Devaaswom
Shri Sharanabasappa Darshanapur, Minister of State for Shri Paloly Muhammed Kutty, Minister for Local
Power Administration
Shri Mirajuddin Patel, Minister of State for Municipal Shri V.P. Ramakrishna Pillai, Minister for Irrigation & Labour
Administration Shri A.C. Chanmukha Das, Minister for Health & Sports
Shri B.K. Bhattacharya, Chief Secretary Shri T. Sivadasa Menon, Minister for Finance & Excise
Smt. Suseela Gopalan, Minister for Industries & Social
 140
Welfare Shri Digvijay Singh, Chief Minister
Shri M. Mohankumar, Chief Secretary Shri Ajay Narayan Mushran, Minister for Finance, Planning,
Dr. D. Babu Paul, Additional Chief Secretary Economic & Statistics and 20 Point Programme
Shri P.K. Sivanandan, Agricultural Production Commissioner Implementation
Shri Sajan Peter, Secretary, Animal Husbandry Department Shri Ajay Singh, Minister for Panchayat & Rural Development
Shri Elias George, Secretary, Irrigation, Coastal Shipping & Department
Inland Navigation Department Shri S.S. Verma, Minister for Urban Development
Shri Kuruvila John, Secretary, Cooperative Department Smt. Urmila Singh, Minister of Tribal Development
Shri N.V. Madhavan, Principal Secretary, Cultural Affairs Shri Ratesh Soloman, Minister of Forests
Department Shri K.K. Gupta, Minister for Mineral Resources Department
Shri Vinod Rai, Principal Secretary, Finance Shri K.S. Sharma, Chief Secretary
Dr. K.M. Abraham, Secretary, Finance Resources Shri Gopal Sharan Shukla, Additional Chief Secretary
Shri K.K. Vijaykumar, Secretary, General Administration Shri Ravindra Sharma, Additional Chief Secretary, Narmada
Department Valley Developmental Department
Shri Amitab Kant, Secretary, Tourism Shri P.K. Mehrotra, Additional Chief Secretary, Higher
Shri P.K. Mohanthy, Secretary, Public Relations Education
Shri K. Jayakumar, Secretary, General Education Shri A.K. Agarwal, Principal Secretary, Finance Department
Department Shri V.N. Kaul, Principal Secretary, Home Department
Shri V. Vijayachandran, Principal Secretary, Health & Family Shri C.S. Chaddha, Principal Secretary, Forest Department
Welfare Department Shri Sudeep Banerjee, Principal Secretary, School
Shri N. Chandrasekharan Nair, Principal Secretary, Higher Education Department
Education Department Shri Badal K. Das, Principal Secretary, Panchayat & Rural
Shri Thomas C.George, Principal Secretary, Higher Development Department
Education Department Shri V.K. Choudhary, Principal Secretary, Department of
Shri V. Krishna Murthy, Principal Secretary, Home & Vigilance Public Enterprises
Smt. Anita Das, Principal Secretary, Department of Rural
Department
Industry
Shri K. Mohandas, Principal Secretary, Industries
Department Shri R.S. Sirohi, Secretary, Department of Planning,
Economic and Statistics
Shri L. Radhakrishnan, Special Secretary, Industries
Shri Sunil Kumar, Secretary, Department of Panchayat, Rural
Department
Development and Social Welfare
Smt. Aruna Sundararajan, Secretary, Information Technology
Dr. Rajan Katoch, Secretary, Finance Department
Department
Shri G.P. Singhal, Secretary, Finance Department
Shri C.V. Anandabose, Secretary, Labour & Rehabilitation
Shri R. Gopalakrishnan, Secretary to Chief Minister & Co-
Department
ordinator, Technology Missions
Shri Elias George, Secretary, Irrigation Department
Shri M.C. Singhi, Economic Adviser, Finance Department
Shri S.M. Vijayanand, Secretary, Local Administration
Shri Seva Ram, Additional Secretary (Budget), Finance
Departemnt
Department
Shri C.Ramachandran, Principal Secretary, Non-Resident
Shri Vinod Kumar, Dy. Secretary, Finance Department
Keralites Affairs Department (Norka) Dr. M. Vasania, Under Secretary, Finance Department
Shri L. Natarajan, Special Officer & Ex-Officio Secretary Smt. Amita Sharma, Mission Director, Rajiv Gandhi Primary
(Official Language) Education Mission
Shri K.N. Kurup, Secretary, Planning & Economic Affairs Shri Mukesh Kakkar, Secretary, Education
Department Shri Ajay Tirkey, Collector, Hoshangabad
Shri Sukumar K.Oommen, Principal Secretary, Power Shri Mul Chand Bajaj, Superintendent of Police,
Department Hoshangabad
Shri Babu Jacob, Principal Secretary, PWD & Housing
Department Maharashtra
Shri V.S. Senthil, Special Secretary, Revenue Department Shri Vilasrao Deshmukh, Chief Minister
Smt.J. Lalithambika, Principal Secretary, Social Welfare Shri Chhagan Bhujbal, Deputy Chief Minister
Department Shri Jayant Patel, Minister for Finance
Shri T.G. Rajendran, Secretary, Social Welfare Department Dr. Padamsinh Bajirao Patil, Irrigation & Power Minister
Smt. Nalini Netto, Secretary, Transport Department Shri R.R. Patil, Minister, Rural Development
Shri K. Gopalakrishnan Unnithan, Secretary, Legislature Shri Ghanpatrao Deshmukh, Minister, Employees
Shri B.S. Sasthri, Director General of Police Guarantee Scheme & Textiles
Shri John Mathai, Commissioner, Commercial Taxes Shri Vijaysinh Mohite Patil, Minister, Public Works
Dr. Sathyanarana Dash, Commissioner, Excise Department
Shri K. Mohana Chandran, Chairman, Kerala State Electricity Shri Vilasa Patil, Minister, Dairy
Board (KSEB) Shri Ajit Pawar, Minister, Krishna Valley Development
Shri S. Subbiah, Secretary (SC/ST Posts) Corporation
Madhya Pradesh Dr. Ratnakar Mahajan, Minister & Executive Chairman, State
 141
Planning Board Shri S. Singsit, I/C Principal Chief Conservator of Forest
Smt. Vasudha Deshmukh, Minister of State, Finance Dr. H. Hemchandra Singh, Director of Health
Shri Sunil Dattaray Tatkare, Minister of State, Urban Shri Y. Surchandra Singh, Director, Planning
Development Shri Dhruva Mishra, Inspector General (Prisons)
Shri Arun Bongirwar, Chief Secretary Shri Th. Manihar Singh, Project Director, Loktak
Shri Narayan Valluri, Additional Chief Secretary, General Development Authority
Administration Department Shri P. Achouba Singh, Director, Art & Culture
Shri V. Ranganathan, Additional Chief Secretary Shri P. Kipgen, Chief Engineer, Public Works Department
Shri Ravi B. Budhiraja, Principal Secretary, Finance Shri L. Lakher, Director (YAS)
Shri Vidyadhar Kanade, Secretary, Expenditure Shri K. Moses Chalai, Director, Education-U
Shri J.S. Sahani, Secretary, Accounts & Treasury Shri H. Deleep Singh, Deputy Secretary, Finance
Shri Vinay Bansal, Secretary, Planning Shri S. Bheigya Singh, Superintendent of Archeology
Shri S.Y. Shukla, Secretary, Irrigation Shri Vumlunmang Vaulnam, Joint Secretary, Finance
Shri A.B. Mahenderkar, Secretary, Irrigation
Shri M.V. Patil, Secretary, Public Works Department Meghalaya
Shri S.S. Gaikwad, Joint Secretary, Finance Shri B.B. Lyngdoh, Chief Minister
Shri Y.K. Chowdhari, Deputy Secretary, Finance Shri D.D. Lapang, Deputy Chief Minister
Shri A.H. Scott, Lyngdoh Minister, Finance
Manipur Shri M. Suchiang, Minister, Agriculture etc
Shri W. Nipamacha Singh, Chief Minister Shri C.B. Marak, Minister, Soil Conservation
Dr. L. Chandramani Singh, Dy. Chief Minister Shri H.B. Dan, Minister, District Council Affairs
Dr. Y. Jiten Singh, Minister, Commerce & Industries Shri J.D. Rymbai, Minister, Public Works Department
Shri N. Mangi Singh, Minister, Agriculture Dr. Donkupar Roy, Minister, Health & Family Welfare
Shri N. Songchinkhup, Minister, Transport Smt. R.Warjri, Minister, Urban Affairs
Shri H. Lokhon Singh, Minister, Finance Shri D.N. Joshi Minister, Labour and Parliamentary Affairs
Shri E. Kunjeshwor Singh, Minister, Revenue & Planning Shri F.W. Momin Minister, Education
Shri M. Nilachandra, Minister (IFCD) Shri H.W. T. Syiem, Chief Secretary
Shri V. Hangkhanlian, Minister, Minor Irrigation, Tourism, Shri J.P. Singh, Chairman Meghalaya State Electricity Board
Science & Technology Shri J. Tayeng, Principal Secretary, Health & Family Welfare
Shri K. Govindas, Minister, Power Shri P.J. Bazeley, Principal Secretary, Forest
Prof. Gangumei Kamei, Minister, Forest, Environment & Law Shri S.K. Tiwari, Principal Secretary, Arts & Culture
Shri N. Biren Singh, Minister, Fisheries, Labour and Shri I.T. Longkumer, Director General of Police
Employment Shri S. Chatterjee, Commissioner & Secretary, Transport
Shri M. Kumar Singh, Minister, Higher Education Shri J.M. Mauskar, Commissioner & Secretary, Finance
Shri C. Doungel, MLA Shri W.M.S. Pariat, Commissioner & Secretary, Planning
Shri H. Jelshyam, Chief Secretary Shri G.P. Wahlang, Commissioner & Secretary, Home (P)
Shri P.L. Thanga, Additional Chief Secretary Shri H. Chinkethang, Commissioner & Secretary, Printing
Shri V. Ramnath, Principal Secretary, Forest & Environment and Stationery
Shri L. Jugeshwor Singh, Director General of Police Shri A.K. Shrivastava, Commissioner & Secretary, Public
Shri A.N. Jha, Commissioner, Finance Health Engineering
Shri P.B.O. Warjiri, Commissioner (MAHUD) Shri Y. Tsering, Commissioner & Secretary, Education
Shri L. Gangte, Commissioner (T.D. & Hills) Shri H.K. Mazahari, Commissioner & Secretary, Agriculture
Shri L.P. Gonmei, Commissioner, Horticulture Shri P. Naik, Secretary, Finance
Shri Ch. Birendra Singh, Commissioner, Revenue & Shri K.V. Eapan, Secretary, General Administration
Horticulture & S.C Department
Shri S.K. Singh, Commissioner, Home Shri P.W. Ingty, Secretary, Forest
Shri P.C. Lawmkunga, Commissioner, Industries Shri A.K. Roy, Secretary, Sports
Shri Henry K. Heni, Secretary, Education-S Shri P. Kharkongor, Secretary, Home (P)
Shri A.R. Khan, Secretary, Minor Irrigation, Tourism & Smt A. Malngiang, Secretary, Secretariat Administration
Science & Technology Department
Shri R. Muivah, Secretary, Vet./ A.H Shri R. Sarmah, Secretary, Public Works Department
Shri P. Bharat Singh, Secretary, DP & SS/Cabinet Shri P.C. Chakravarty, Secretary, Co-operation
Shri Kh. Mohendro, Secretary, Art & Culture & SW Shri B. Singh, Principal Chief Conservator of Forest
Shri H. Devasekhar Sharma, Secretary, Rural Development Shri C.D. Kynjing, Member Secretary, Meghalaya State
& Panchayati Raj Electricity Board
Shri W.L. Hangshing, Secretary, Higher Education & Shri P.S. Thangkhiew, Managing Director, MECOFED
Cooperation Smt R. Suchiang, Secretary, Personnel
Shri Ng. Luikham, Secretary, General Administration Smt W. Lyngdoh, Director, Statistics
Department Shri H. Marwein, Managing Director, M C C L
Shri A. Shamungou Singh, Director, Education-S Shri A. Som, Director, Information & Public Relations
Shri A. Sukumar Singh, Joint Secretary, Law Smt L. Kharkongor, Commissioner of Taxes
 142
Smt J. Lyngdoh, Commissioner of Excise Shri P. Chakraborty, Secretary, Law & Judicial & DCA
Shri O. Basaiawmoit, Director of Mineral Resources Shri S.S. Patnaik, Principal Chief Conservator of Forest &
Shri H.L. Pyrtuh, Commissioner of Transport Secretary, Environment & Forest
Shri R. Chyne, Secretary, Transport Shri L.R. Laskar, Secretary, General Administration
Shri H. Nongsteng, Joint Secretary, Finance Department
(EconomicAffairs) Department Shri Lalngheta Sailo, Commissioner/Secretary, Health/FCS
Shri H.B. Dkhar, Joint Secretary, Planning Department Shri C. Rokhama, Commissioner/Secretary, Revenue/Relief
Smt P. Nongdhar, Deputy Secretary, Finance (E A) & Rehabilitation
Department Shri Lalhupzauva, Joint Secretary, Finance Department
Shri C. Lalchhuma, Finance Commissioner
Mizoram Shri Denghnuna, Commissioner, General Administration
Shri Zoramthanga, Chief Minister Department
Shri Lalhmingthanga, Dy. Chief Minister, I/C Power Shri Vanhela Pachuau, Commissioner, Rural Development,
Shri Tawnluai, Minister, Home Agriculture & Transport
Shri F. Malsawma, Minister, School Education Shri K. Lalchhunga, Inspector General of Police
Dr. R. Lalthangliana, Minister, Rural Development Shri J.H. Ramfangzauva, Secretary, Cooperative
Shri J. Lalthangliana, Minister, Tourism Shri R. Bhattacharjee, Additional Secretary, General
Shri R. Tlanghmingthanga, Minister, Public Works Administration Department
Department Shri Lalthangliana Varte, Assistant Commissioner of Taxes
Shri Lalrinchhana, Minister, Land Revenue
Shri Aichhinga, Minister, Food & Civil Supplies Nagaland
Shri K.L. Lianchia, Minister, Health Shri S.C. Jamir, Chief Minister
Shri Lalrinzuala, Minister, Transport Shri Neiphiu Rio, Minister of Home
Shri B. Lalthlengliana, Minister, Higher & Technical Education Shri K. Therie, Minister of Power
Shri K. Thangzuala, Deputy Chairman, State Planning Board Shri B. Phongshak, Minister of State (Excise)
Shri H. V. Lalringa, Chief Secretary Shri T. Tali, Minister of Transport
Shri M. Dawngliana, Chief Engineer, Public Health Shri K.V. Pusa, Minister of Veterinary & Animal Husbandry
Engineering Shri Nyamnyei, Minister of Agriculture
Shri B. Lalringliana, Chief Engineer, Power & Electricity Shri T.R. Zeliang, Minister of Forest
Ms. Lalengruali Sailo, Director, Trade & Commerce Shri Nillo Rengma, Minister of Law
Shri U.K. Worah, Registrar of Cooperative Societies Shri Sethricho, Minister of State (Cooperation & Jails)
Shri Lawmthanga, Deputy Director, Trade & Commerce Shri W. Wangyuh, Minister of Youth Resources & Sports
Shri Lalremthhanga, Assistant Manager, MAMCO Shri T. Sentichuba, Minister of Information & Public Relations
Shri H. Vanlalhluta, Managing Director, ZIDCO Prof. T. Chuba, Minister of Higher & Technical Education
Shri Ringluia, Director, Industries Department Shri John Lotha, Minister of Arts & Culture
Shri G. Malsawmdawngliana, Project Manager (Handloom Shri Tokheho, Minister of Public Health Engineering
& Handicraft) Indust.Deptt Shri I. Imkong, Minister of Roads & Bridges
Shri Lalzarliana Rentlei, Managing Director, MIFCO Shri P. Enyei, Minister of Civil Supply
Shri C. Thanchhuma, Inspector General (Prison) Shri S.K. Sangtam, Minister of Social Security & Welfare
Shri O.M. Lukose, Superintendent of Food & Civil Supplies Shri Zachilhu, Minister of Rural Development
Shri P. Lungliana, Director, Local Administration Department Shri Rokonicha, Minister of State (Local Self Government &
Shri F. Lallura, Director, School Education Wastelands)
Shri R. Thansanga, Director, Agriculture Shri Seyiekuolie, Minister of State (CAWD and Economics
Shri Lalthansanga, Deputy Secretary (B), Finance & Statistics)
Department Shri Kakheto, Minister of State (Fishery & Home Guards)
Shri K. Lalthansanga, Director, Account & Treasuries Shri A.M. Gokhale, Chief Secretary
Shri Lalbiakthuama, Advisor, Planning Shri Lalthara, Additional Chief Secretary & Financial
Shri C. Ropianga, Deputy Commissioner, Aizawl District Commissioner
Shri Rolianthanga, Deputy Director, Land Revenue & Shri P. Talitemjen, Additional Chief Secretary &
Settlement Commissioner
Shri R. Selthuama, Director, Land Revenue & Settlement Shri Lukhei Sema, Director General of Police
Dr. Thanzuala, For D.H.S Shri Anil Kumar, Commissioner & Secretary, Power
Shri H.P. Sahu, Director, Relief & Rehabilitation Shri A. Jamir, Special Secretary to C.M
Dr. Lalrinmawia, Director, Higher & Technical Education Shri Toshi Aier, Commissioner & Secretary, Rural
Shri R.Vanchhawng, Managing Director, ZOHANCO Development
Shri P.C. Sangkhuma, General Manager, ZENICS Shri H.K. Khulu, Commissioner & Secretary, Industries &
Lt. Col. Z.S. Zuala (Rtd.), Director, Sainik Welfare & Commerce
Resettlement Smt. Banuo Jamir, Commissioner & Secretary, Education
Shri Lalbiakthanga, Officer on Special Duty, Finance Shri S.C.Deorani, Commissioner & Secretary, Horticulture
Department & Science and Technology
Shri Ramhlun Khiangte, Secretary, Public Works Department Shri T.N.Mannen, Development Commissioner
 143
Shri R. Kevichusa, Secretary, Agriculture Shri R.O. Ovung, Commissioner of Taxes
Shri V. Sakhrie, Secretary, Health & Family Welfare Shri Juba Ao, Joint Director, Arts & Culture
Smt. L.H. Thangi Mannen, Secretary, Tourism Dr. D. Kapfo, Deputy Director, Health Services
Shri A.K. Jain, Home Commissioner Shri E. Picho Ngullie, Joint Labour Commissioner
Shri A. Dogra, Secretary, Geology & Mining Shri K.T. Sukhalu, Director of Food & Civil Supplies
Shri R.C. Acharjee, Officer on Special Duty, Budget Shri T. Alem Pongener, Director of Tourism
Shri Zangulie, Secretary, Nagaland Legislative Assembly Shri Y. Chuba Ao, Ex-Chief Engineer (PWD)
Shri Zelre, Secretary, Law Dr. K. Tali, Additional Director, Medical
Shri I. Temsu Jamir, Secretary, Vigilance Dr. L.A. Kikon, Director, Medical
Shri L. Temsuwati, Secretary, NPSC Shri K. Angami, Chief Engineer (R&B) PWD
Shri Tali Longkumer, Secretary, SSW & P&AR Shri I. Lozhevi Sema, Additional Director, School Education
Shri R. Ezong, Additional Secretary, Vety. & Animal Shri R.Saleh, Chief Engineer, Public Health Engineering
Husbandry Department
Shri B. Shilu Ao, Additional Secretary, Irrigation & Flood Dr. K. Chuba Ao, Director of Horticulture
Control Shri Khutubi Sema, Director of Wasteland Development
Shri H. Kent, Additional Secretary, Fisheries Shri Temsu Longchar, Director of Sericulture
Shri C.M. Chang, Additional Secretary, Youth Resources Shri Vikho Yhoshu, Officer on Special Duty (Geology &
Shri M. Zhasa, Additional Secretary, Food & Civil Supplies Mining) & M.D. (NSMDC)
Shri C. Chakhesang, Additional Secretary, Arts & Culture Dr. S.A. Ahmed, Joint Director, Geology & Mining
Shri Edward Zhimomi, Additional Secretary, Information and Shri K.N.Peseyie, Deputy Commissioner of Excise
Public Relations Shri T. Kakheto, Director, Rural Development
Smt. Tovili Sema, Additional Secretary, Labour & Shri A.Rongsenwati, Additional Chief Conservator of Forest
Employment Shri M. Heso Mao, Additional Director General of Police
Dr. O.P. Agrawal, Additional Secretary, Geology & Mining Shri S. Changsang, Director, Information & Public Relations
Smt. K. Atoli, Additional Secretary, Excise Shri G.W.Lee, Director of Treasuries & Accounts
Shri L. Meyilemba Ao, Joint Secretary, Transport Shri S. Longkumer, Officer on Special Duty (Revenue &
Shri W.G. Kenye, Joint Secretary, Soil & Water Conservation Taxes) Finance
Shri Neihu Sangtam, Joint Secretary, Wasteland Shri K. Phesao, Director of Veterinary & Animal Husbandry
Development Shri Mehozu Mekro, Joint Director, Sericulture
Shri Y.L. Jami, Deputy Secretary, Excise Shri R. Dievilie, Research Officer, Sericulture
Shri Kamal Sinha, Deputy Secretary, Budget Shri S.Yehoto Ayemi, Director, Agriculture
Shri N.R. Dutta, Officer on Special Duty, FRC Shri H. Sema, Chief Engineer, Power
Shri M.R. Dohare, Consultant, Finance Smt. M. Imtila, Additional Registrar of Co-operative Societies
Shri N. Asholi, Under Secretary, Finance Shri Mezhakrol, Superintendent Engineer, Irrigation & Flood
Shri D.K. Dev, Deputy Director (T&A) Control
Shri Kekhwezo Kepfo, Research Officer, FRC Shri Zaku Angami, Deputy Inspector General of Police (Fire)
Shri Selichum Thongtsar, Research Officer, FRC Shri V. Angami, Director, Soil & Water Conservation
Shri R. Mingmayang, Under Secretary, Co-operation Shri Deo Nukhu, Director, State Institute of Rural
Shri E. Ezung, Joint Secretary, Forest Development
Shri Nochet Aier, Director, Social Security & Welfare
Shri S.W. Yaden, DIG (Wireless) Orissa
Shri W. Kithan, Additional Chief Engineer (NST) Meeting with the Governor of Orissa
Shri O. Longchar, Additional Chief Engineer (Police Engg. Dr. C. Rangarajan, Governor of Orissa
Project) Shri N.C. Vasudevan, Principal Secretary to the Governor
Shri I. Toshitsungba, S. P., Kohima Meeting with the Government of Orissa
Shri Vipralhou Kesiezie, Additional Director (SCERT) Shri J.B. Patnaik, Chief Minister
Shri K. Linyu, Additional Director, Land Records & Survey Shri B.K. Biswal, Deputy Chief Minister
Shri D.A. Shishak, Superintendent Engineer, Power Shri Ulaka Rama Chandra, Minister, Welfare
Shri I. Meren Longchar, Director, Industries Shri Kishore Chandra Patel, Minister, Forest and Public
Shri Zhaleo Rio, Director, Youth Resources & Sports Enterprises
Shri I. Mpanme, Additional Commissioner of Taxes Shri Niranjan Patnaik, Minister, Industries and Textiles &
Shri S.H. Walling, Director, Geology & Mining Handlooms
Shri A.K.Nath, Chief Engineer (PWD) Housing Shri Prasanna Kumar Dash, Minister, Environment, Science
Shri T.C. Longchar, Additional Chief Engineer, Mechanical & Technology
Shri M. Yaden, Deputy Commandant General, Home Guards Shri Bhagabat Prasad Mohanty, Minister, Higher Education
Shri Malin Das, Senior Accounts Officer (PHQ) and Public Grievance & Pension Administration
Shri A.K. Sengupta, Senior Accounts Officer, Power Shri Bhupinder Singh, Minsiter, Information and Public
Shri P.M. Jami, Senior Accounts Officer, Agriculture Relations
Shri V. Kehie, Registrar of Co-operative Societies Shri Matlub Ali, Minister, Rural Development
Shri A.M. Toshi, Joint Director, Higher & Technical Education Shri Raghunath Patnaik, Minister, Law
Shri T. Meren Paul, Additional Transport Commissioner Shri Jagannath Patnaik, Minister, Revenue
 144
Shri Amarnath Pradhan, Minister of State, Health and Family Shri P.K. Jena, Director of Agriculture
Welfare (Independent Charge) Shri M. Pattnaik, Chief Engineer, Buildings
Shri Jagannath Rout, Minister of State, Urban Development Shri A.K. Patnaik, Director General, Water
(Independent Charge) Shri L. Sarangi, Additional Secretary, P&C
Shri Jayadev Jena, Minister of State, School and Mass Shri Sanjeeb Chopra, Director, Industries
Education (Independent Charge) Chairman, Orissa State Handloom Weavers Co-operative
Shri Prakash Chandra Debta, Minister of State, Fisheries Society Ltd
and Animal Resources Development (Independent Charge) Shri G.P. Mohanty, Registrar, Co-operative Societies
Shri Rabindra Kumar Sethi, Minister of State, Co-operation Shri Majoj Ahuja, Director, Textiles
Shri Ramakant Mishra, Minister of State, Agriculture Shri S.M. Tripathy, Managing Director, Orissa State Co-
Shri Mohan Nag, Minister of State, Food Supplies and operative Bank
Consumer Welfare (Independent Charge.) Dr. (Ms.) M. Sharma, Managing Director, Orissa State Co-
Shri Kishor Ch. Patel, Minister, Public Enterprises operative Marketing Federation
Shri Niranjan Pattnaik, Minister, Industries Shri Aditya Padhi, Managing Director, Industrial Corporation
Shri Rabindra Kumar Sethi, Minister, Co-operation Promotion and Investment Ltd
Shri K.C. Lenka, Minister, Transport Shri B.C. Jena, Chairman and Managing Director, Grid
Shri S.B. Mishra, Chief Secretary Corporation of Orissa (GRIDCO)
Shri S.M. Pattnaik, Development Commissioner Shri S.P. Swain, Director (F), Orissa Power General
Shri K.B. Verma, Principal Secretary, Finance Department Corporation (OPGC)
Shri Kalyan Ray, Principal Secretary, Public Enterprises Shri H. Sahni, Managing Director, Orissa Hydro Power
Shri M.K. Purkait, Principal Secretary, Rural Development Corporation (OHPC)
Shri S. Rath, Principal Secretary, Forests and Environment Shri Tarun Kanti Mishra, Secretary, Energy
Shri S.C. Hota, Principal Secretary, Home Shri B.S. Murthy, Engineer-in-Chief, Electricity
Shri S. Nautiyal, Principal Secretary, Industries Shri Jaidev Mishra, Adviser, Power
Ms. Meena Gupta, Commissioner-cum-Secretary, Health & Shri Promod K. Mishra, Additional Secretary, Energy
Family Welfare Shri P.K. Mishra, Additional Chief Secretary
Shri A.K. Samantaray, Commissioner-cum-Secretary, Higher Smt. Rajalakshmi, Commissioner-cum-Secretary, Transport
Education Department
Shri B.K. Pattnaik, Commissioner-cum-Secretary, Agriculture Shri P.C. Mishra, Chairman-cum-Managing Director, Orissa
Shri J.K. Dev, Commissioner-cum-Secretary, Food Supply State Road Transport Corporation
and Consumer Welfare Shri S. Pradhan, Special Secretary, Public Enterprises
Shri H.S. Chahar, Commissioner-cum-Secretary, Housing Department
and Urban Development Shri K.C. Badu, Additional Secretary, Finance Department
Shri R.N. Senapati, Commissioner-cum-Secretary, Water Shri Ajit Kumar Pattanayak, Chief Executive, Chilika
Resources Development Authority
Shri C. Basu, Commissioner-cum-Secretary, Panchayati Raj Shri P.K. Mohapatra, Collector and District Magistrate, Puri
Dr. K.S. Ganesan, Commissioner-cum-Secretary, Co-
operation Punjab
Shri J.K. Mohapatra, Commissioner-cum-Secretary, Shri Prakash Singh Badal, Chief Minister
Revenue & Excise Capt. Kanwaljit Singh, Finance Minister
Shri G.C. Mohanty, Secretary, Law Department Shri R.S. Mann, Chief Secretary
Shri A.K. Panda, Engineer-in-Chief-cum-Secretary, Works Shri K.R. Lakhanpal, Principal Secretary, Finance
Department Shri S.K. Sandhu, Secretary, School Eductation
Shri Sahadeva Sahoo, Member, Board of Revenue Shri Mohinder Singh, Secretary, Public Works Department
Dr. B.B. Panda, Director General of Police (Buildings &Roads)
Shri B.C. Mohapatra, Principal Chief Conservator of Forests Shri K. Sidhu, Secretary, Planning
(General) Shri J.R. Kundal, Secretary, Public Health
Shri S.K. Pattnaik, Chief Conservator of Forests (Wildlife) Shri S. Mittal, Excise and Taxation Commissioner
Shri R.K. Panda, Special Relief Commissioner Shri B.R. Bajaj, Principal Secretary, Information System &
Shri G.C. Pati, Commissioner of Commercial Taxes Administrative Reforms
Shri Livinus Kindo, Transport Commissioner Smt. Satwant Reddy, Principal Secretary, Welfare (SC/BC)
Shri J. Mishra, Adviser, Power Shri N.S. Rattan, Principal Secretary, Technical Education
Dr. B.P. Das, Adviser, Water Resources & Industrial Training
Shri D.N. Padhi, Secretary, Tourism, Culture, Sports & Youth Shri Bikramjit Singh, Principal Secretary, Irrigation & Power
Services Shri J.S. Kesar, Financial Commissioner Forest
Shri B.C. Swain, Director, Information and Public Relations Shri H.R. Megh, Special Secretary, Finance
Shri S. Mantry, Director, Municipal Administration Shri N.K. Arora, Principal Secretary, Local Government
Shri G.B. Dhar, Managing Director, Orissa Lift Irrigation Shri J.S. Gill, Financial Commissioner Rural Development
Corporation (OLIC) & Panchayats
Shri B.C. Mishra, Additional Secretary, Welfare Department Shri Y.S. Ratra, Financial Commissioner Development
Smt. Shyama Mann, Principal Commissioner Revenue
 145
Shri R.I. Singh, Principal Secretary to Chief Minister Shri Lalit K. Panwar, Secretary, Tourism & Public Relations
Shri S.K. Tuteja, Chairman, Punjab State Electricity Board Shri Mahendra Surana, Director, Public Relations
Shri G.P.S. Sahi, Principal Secretary, Higher Education Shri Pradeep K. Deb, Revenue Secretary
Shri S.S. Gill, Director Transport Shri C.K. Mathew, Secretary (I) to Chief Minister
Shri Kulbir Singh, State Transport Commissioner Shri V.S. Singh, Secretary, Command Area Development
Shri B. Vikram, Managing Director, Punjab Road Transport Shri D.S. Meena, Principal Secretary, Cooperation
Corporation Shri D. Upreti, Managing Director, Rajasthan State Road
Transport Corporation
Rajasthan Shri G.S. Sandhu, Commissioner, Commercial Taxes
Shri Ashok Gehlot, Chief Minister Shri Ravi Mathur, Secretary, Science & Technology
Shri Chandanmal Baid, Finance Minister Shri Govind Sharma, Special Secretary, Finance (R)
Smt. Indira Mayaram, State Minister for Finance Shri V. Srinivas, Deputy Secretary (Taxation Division)
Shri Pardhuman Singh, Home Minister Shri M.P. Jain, Deputy Director (S), Commercial Taxes
Shri Chandra Bhan, Energy Minister Department
Shri Shanti Dhariwal, Minister, UDH & LSG Ms. Shreya Guha, Deputy Secretary (E&R)
Shri C.P. Joshi, Panchati Raj and Rural Development Minister Shri Vipin C. Sharma, Special Secretary, Rural Development
Shri C.R. Bakolia, Transport Minister & Relief
Shri B.D. Kalla, Education Minister Shri K.L. Meena, Secretary, Public Health Engineering
Shri Ram Singh Vishnoi, Public Health Engineering Department
Department Minister Shri G.S. Chaudhury, Chief Engineer, Irrigation
Shri Rajendra Chaudhary, State Minister for Medical & Shri S.S. Pamecha, Technical Assistant to Chief Engineer,
Health Rural Public Health Department
Ms. Kamla, Irrigation Minister Shri S.M. Dharendra, Director, Finance
Shri Gulab Singh Shaktawat, Relief Minister Shri Vinod Pandya, Deputy Secretary, Finance
Shri Arun Kumar, Chief Secretary
Shri P.N. Bhandari, Additional Chief Secretary Sikkim
Dr. Adarsh Kishore, Principal Secretary to the Chief Minister Shri Pawan Chamling, Chief Minister
Shri T. Srinivasan, Finance Secretary Shri Ram Lepcha, Finance Minister
Shri Sudhir Varma, Principal Secretary, Training Shri D.P. Kharel, Health Minister
Shri Ram Narayan Meena, Secretary, Rural Development Shri D.B. Thapa, Transport Minister
& Relief Shri T.T. Bhutia, Public Health Engineering Minister
Shri Gurdial Singh Sandhu, Secretary, UDH & LSG Shri G.M. Gurung, Tourism Minister
Ms. Alka Kala, Secretary, Food & Civil Supplies Smt. Rinzing Ongmu, Cultural Minister
Shri Rajiv Sharma, Secretary, Mines Shri K.B. Chamling, Parliamentary Affairs Minister
Smt. Asha Singh, Commissioner, Departmental Enquiry Shri Sonam Wangdi, Chief Secretary
Shri V.C. Sacheti, Principal Chief Conservator of Forest Shri S.W. Tenzing, Additional Chief Secretary
Shri A.K. Gupta, Chairman, Indira Gandhi Nahar Project Shri T. Tobden, Secretary, Finance
(IGNP) Shri A.K. Pradhan, Secretary, Women and Child Welfare
Smt. Krishna Bhatnagar, Principal Secretary, Agriculture Shri T.R. Sharma, Secretary, Forest
Shri M.D. Kaurani, Chairman, Rajasthan State Electricity Shri B.N. Pradhan, Secretary, Mines & Geology
Board (RSEB) Shri L. Bhutia, Secretary, Motor Vehicle
Shri C.S. Rajan, Secretary, Energy Shri T.T. Dorjee, Secretary, Education
Shri Arvind Mayaram, Secretary, Industries Shri D.K. Gazmer, Secretary, Welfare
Shri Ashok Sampatram, Secretary, Planning Shri H.R. Pradhan, Secretary, Horticulture
Shri V.N. Bahadur, Chairman, Rajasthan State Road Shri G.K. Gurung, Secretary, Agriculture
Transport Corporation Shri R.S. Basnet, Secretary, Department of Personnel,
Shri N.K. Berwa, Principal Secretary, Home Administrative Reforms & Training
Shri Sunil Kumar Garg, Law Secretary Shri Sonam Gyamptso, Secretary, Sports and Youth Affairs
Shri Parmesh Chandra, Secretary, Education Smt. J. Pradhan, Secretary, Food & Civil Supplies
Shri Gurdev Singh, Secretary, Animal Husbandry Shri B.K. Rasily, Secretary, Sikkim Housing & Development
Shri R.K. Meena, Secretary, Transport Board
Shri Rakesh Verma, Secretary, Public Works Department Ms. C. Cintury, Secretary, Industries
Shri Sudhir Bhargava, Secretary, Irrigation Shri T. Dorjee, Secretary, Economic Affairs
Shri Surendra Kumar, Principal Secretary & Chief Executive Shri T.D. Rinzing, Secretary, Law & Parliamentary Affairs
Officer Shri G.K. Subba, Secretary, Animal Husbandry & Veterinary
Shri N.R. Bhasin, Principal Secretary, Higher Education Sciences
Shri Harish Nayyar, Principal Secretary, AR & C, RPG Shri K.P. Adhikari, Special Secretary Finance
Shri A.K. Pande, Secretary, Women & Child Development Shri K.N. Sharma, Additional Secretary, Land Revenue
Shri Ashish Bahuguna, Secretary, Panchayati Raj Shri P.T. Gyamtso, Secretary to Chief Minister & Excise
Shri B.L. Meharda, Secretary, Labour and Employment Department
Shri A.K. Jain, Additional Secretary, Home
 146
Shri D.R. Kheral, Additional Secretary, Urban Development Shri Hans Raj Verma, Inspector General of Registration
Shri B.K. Kheral, Additional Secretary, Income Tax & Sales Tax Shri Debendranath Sarangi, Secretary, Revenue
Smt. Nalini G. Pradhan, Additional Secretary, Social Welfare Department
Shri M.K. Pradhan, Additional Secretary, Sikkim Nationalised Shri P.S. Pandyan, Principal Commissioner and
Transport Commissioner of Revenue Administration
Shri K.N. Bhutia, Additional Secretary, Tourism Smt. Shantha Sheela Nair, Secretary, Home Department
Shri L.C. Amarnathan, Director General of Police Shri M.B.Pranesh, Special Commissioner and
Shri T.N. Tenzing, Inspector General of Police Commissioner of Transport
Shri C.P. Dewan, Joint Secretary, Income Tax & Sales Tax Shri K.Ramalingam, Commissioner of Prohibition and Excise
Shri M.G. Kiran, Director, Industries Shri Lal Rawna Sailo, Secretary, Energy Department
Shri K.P. Bhutia, Director, Fisheries Shri Kulasekaran, Chief Electrical Inspector to Government
Shri N.T. Lepcha, Jiont Director (Accounts) Rural Shri A. Nagarajan, Secretary, Transport Department
Development Department Shri R. Poornalingam, Chairman, Tamil Nadu Electricity
Shri S. Chand, Divisional Engineer, (Planning) Public Works Board
Department Shri N.P. Gupta, Secretary, Public Works Department
Shri Tej G. Urung, Additional C.E Irrigation Shri R. Murugaiyan, Chief Engineer, Water Resources
Shri C. Zawgpo, Divisional Engineer, (Planning) Public Works Organisation
Department Shri N. Thangavelu, Chief Engineer, Buildings
Shri Kiran Rasally, Additional Chief Engineer, Education Shri P. Balakrishnan, Chief Engineer, Highways
Department Shri M. Abul Hassan, Secretary, Highways Department
Shri Alok Rawat, Resident Commissioner, Sikkim House Shri L. Krishnan, Secretary, Finance Department
Shri A.K. Ganeriwala, Joint Resident Commissioner, Sikkim Shri Shripathy, Secretary, Forest Department
House Shri V.R. Chitrapu, Principal Conservater of Forest
Shri M.T. Sherpa, Income Tax Officer, (Income Tax & Sales
Tax) Tripura
Shri Partap Pradhan, Assistant Commissioner (Income Tax Shri Manik Sarkar, Chief Minister
&Sales Tax) Shri Anil Sarkar, Education Minister
Shri M. Sharma, Commissioner Excise
Shri Badal Chowdhury, Finance Minister
Shri G. Goperma, Director, Bureau of Economics & Statistics
Shri Keshab Mazumdar, Minister-Health & Family Welfare
(B.E.S.)
and Revenue
Smt. Jotsna Subba, Deputy Director, Bureau of Economics
Shri Aghore Debbarma, T.W.Minister
& Statistics
Shri Narayan Rupini, Forest Minister
Shri Dhan Subba, Additional Chief Engineer, Public Health
Shri Subodh Das, Panchayat Minister
Engineering Department
Shri Pabitra Kar, Industry Minister
Shri N.K. Gurung, Chief Engineer, Rural Development
Department Shri Sukumar Barman, Fishery & Transport Minister
Shri D.D. Pradhan, Chief Engineer, Power Department Shri Sudhir Das, Urban Development Minister
Shri O.P. Singhi, Chief Engineer, Power Department Shri V. Thulasi Das, Chief Secretary
Shri H.T. Basi, Jiont Director, Sports and Youth Affairs Shri Sudhir Sharma, Principal Secretary, Revenue & Health
Shri Gopal Basnet, Chief Accounts Officer, Sikkim Shri Shashi Prakash, Principal Secretary, Finance
Nationalised Transport Shri C.S. Chuttopadhyaya, Principal Secretary, Urban
Shri Hem Chhetri, Programmer, Finance Development
Shri P.D. Rai, Managing Director, Sikkim Computer (P) Shri N.C. Sinha, Additional Secretary, Panchayat & Rural
Limited Development Department
Shri B.D. Alley Managing Director, Sikkim Jewel Limited Shri R.K. De Chowdhury, Director Panchayats
Shri S. Tiu, Managing Director, SMC Shri M. Nagaraju, Chief Executive Officer, Tripura Tribal Area
Shri Taga Khumpa, Managing Director, SITCO Autonomous District Council (TTAADC)
Shri Manish Kumar, Secretary to Chief Minister
Tamil Nadu Shri N.C. Sen, Joint Secretary, Finance
Prof. K. Anbazhagan, Minister for Education Shri R.C.M. Reddy, Additional Secretary, Home Department
Shri Arcot N. Veerasamy, Minister for Health & Electricity Shri A.B. Pal, Secretary, L.R & Law Department
Shri Duraimurugan, Minister for Public Works Shri S. Nag, Secretary, PWD Department
Dr. K. Ponmudy, Minister for Transport Shri Ranjit Lodh, Chief Engineer (Electrical)
Shri Ko. Si. Mani, Minister for Rural Development & Local Shri A.K. Gupta, Chief Engineer (Power Project)
Administration Shri S.K. Roy, Secretary, Education Department
Shri A.P. Muthusamy, Chief Secretary Ms. S. Banerjee, Secretary, I.C.A.T. Department
Shri T.R. Ramasamy, Secretary to Chief Minister Shri Manoj Kumar, D.M & Collector, West Tripura
Shri P.V. Rajaraman, Secretary, Finance Department Shri B.K. Sharma, Secretary, SW & SE and Science &
Shri Sukavaneshvar, OSD and Ex-officio Secretary Technology Department
Shri K.A. Mathew, Secretary, Commercial Taxes Department Shri B.K. Debbarma, A.I.G. of Police
Smt.Yasmin Ahmed, Special Commissioner and Shri B.K. Chakraborty, Secretary, Food Department
Commissioner of Commercial Taxes Shri D. Chakraborty, Secretary, Transport & ARD Department
 147
Shri A.K. Deb, Secretary, Youth Affairs & Sports Shri K.N. Prasad, Special Secretary, Forests
Shri B.P. Singh, Director General of Police Shri Narinder Kumar, Special Secretary, Public Enterprises
Shri Banamali Sinha, Secretary, S.T. Welfare Department Shri B.K. Bhotia, Chief Engineer, Public Works
Shri S.C. Das, Secretary, S.C. Welfare Department Shri M.B. Aggarwal, Chief Engineer, Irrigation
Shri Rakesh Ranjan, Director, Planning Department Shri Atul Chaturvedi, Chairman, Uttar Pradesh State
Shri Tajinder Singh, Joint Secretary, Finance Department Electricity Board
Shri Amar Das, Joint Director, Horticulture Department Shri Desh Deepak Verma, Managing Director, Uttar Pradesh
Shri S.K. Debbarma, Director, Agriculture Department State Road Transport Corporation
Shri Mahesh Gupta, Director, Information Department
Uttar Pradesh Shri Rakesh Garg, Commissioner, Trade Tax
Shri Ram Prakash Gupta, Chief Minister Shri B.M. Mishra, Inspector General, Registration
Shri Harish Chandra Srivastava, Finance Minister Shri R.S. Shukla, Chief Conservator of Forests
Shri Hukum Singh, Minister for Parliamentary Affairs & Shri J.P. Vishwakarma, Director, Local Bodies
Stamp Registration Shri Shayam Lal Kesarwani, Director, Panchayati Raj
Shri Babu Ram M. Kam, Minister for Institutional Finance Shri Dinesh Singh, Secretary, Uttrakhand Vikas Vibhag
and Trade Tax Dr. B.M. Joshi, Special Secretary, Finance Department
Shri Naresh Aggarwal, Minister for Energy
Shri Suresh Khanna, Minister of State for Planning West Bengal
Shri Shiv Partap Shukla, Minister for Law Shri Jyoti Basu, Chief Minister
Shri Yogendra Narain, Chief Secretary Dr. Asim Dasgupta, Finance Minister
Shri A.P. Verma, Agriculture Production Commissioner and Dr. Surya Kanta Mishra, Minister for Land Reforms,
Additional Chief Secretary Panchayat and Rural Development
Shri Sushil Chandra Tripathi, Principal Secretary, Finance Shri Naren De, Minister for Agriculture
Shri M. Haleem Khan, Secretary, Finance
Shri A. Bhattacharaya, Minister for Municipal Affairs & Urban
Shri Vijay Kumar Sharma, Secretary, Finance
Development
Shri Ajay Vikram Singh, Principal Secretary, Industrial
Dr. Sankar Sen, Minister for Power
Development
Shri Partha De, Minister for Health
Shri V.K. Dewan, Principal Secretary, Medical & Health
Shri Kshoti Goswami, Minister for Public Works
Shri S.P. Gowd, Secretary, Secretary, Excise
Shri Debabrata Bandhopadhyay, Minister for Irrigation and
Shri S.P. Arya, Principal Secretary, Transport
Waterways
Shri Dhananjay Prasad, Principal Secretary, Irrigation
Shri Kanti Biswas, Minister for School Education
Shri Harish Chandra Gupta, Principal Secretary, Forests
Shri Kiranmoy Nanda, Minister for Fisheries
Shri T. George Joseph, Principal Secretary, Institutional
Shri Subash Chakraborty, Minister for Transport
Finance
Shri Manish Gupta, Chief Secretary
Shri R. Ramani, Principal Secretary, Basic & Adult Education
Shri Asok Gupta, Principal Secretary, Finance
Shri Naresh Dayal, Principal Secretary (Chief Minister,
Shri S. Chaudhury, Secretary, Sports
Protocol and Information)
Shri A. Bhattacharaya, Principal Secretary, Transport
Shri N.C. Bajpai, Principal Secretary, Planning
Shri N. Chaturvedi, Principal Secretary, Fisheries
Shri Nripsingh Naypalchal, Secretary, Polytechnic Education
Shri Pritam Singh, Secretary, Public Enterprises Dr. U.K. Ray, Principal Secretary, Public Works Department
Shri Atul Chaturvedi, Secretary, Energy Shri A.K. Sarkar, Secretary, Irrigation and Waterways
Shri P.C. Sharma, Principal Secretary, Jails Shri S.B. Barma, Secretary, Development Planning
Shri S.N. Shukal, Principal Secretary, Revenue Shri S.N. Ghosh, Principal Secretary, Panchayat & Rural
Shri V.K. Mitta, Principal Secretary, Home & Police Development
Shri Lakshmi Chandra, Principal Secretary, Public Works Shri D.M. Kanwar, Principal Secretary, Agriculture
Shri Madhukar Gupta, Principal Secretary, Uttranchal Shri A.M. Chakraborty, Secretary, Municipal Affairs
Shri N.K. Mehrotra, Principal Secretary, Law Shri R. Bandhopadhayay, Secretary, Power
Shri Jai Shankar Mishra, Secretary, Urban Development Shri N.K.S. Jhala, Principal Secretary, Health & Family
Shri R. Chandra, Secretary, Secondary Education Welfare
Dr. Om Parkash, Secretary, Panchayati Raj Shri P.S. Ingty, Principal Secretary, Relief
Shri Rajendra Bhonwal, Secretary, Rural Development Shri R.N. De, Principal Secretary, Land Reforms
Shri Sriram Arun, Director General of Police Shri Alok Ghosh, Chief Engineer, Irrigation and Waterways
Shri Vijay Shanker, Additional Director General of Police Department
(Headquarters) Shri N. Trivedi, Director, Agriculture
Shri Indu Kumar Pandey, Internal Financial Advisor Shri Samar Ghosh, Special Secretary, Finance
Shri R.M. Srivastava, Internal Financial Advisor Shri D. Mukhopadhayay, Special Secretary, Finance
Shri Manjeet Singh, Internal Financial Advisor Shri M.N. Roy, Commissioner, Commercial Tax
Shri Pankaj Aggarwal, Secretary, Planning Shri S. Gupta, Excise Commissioner
 148
Annexure I.9C
(Para 1.12)

List of Political Parties/Economists and Associations

who met the Commission during visits

Andhra Pradesh Prof. M. Narasimhulu, Department of Economics, Osmania

University, Hyderabad
Political parties Shri K. Ramakrishna, Chairman, All India Manufacturers
Organisation (AIMO), A P State Board, Hyderabad
Congress (I)
Shri K. Roshaiah, (Former M.P) Arunachal Pradesh
Shri D.L. Ravindra Reddy, M.L.A
Arunachal University
CPI (M) Shri K.K. Dewedi, Vice Chancellor
Shri Paturi Ramaiah, MLA, Floor Leader
R.K. Mission Hospital
NTR TDP (LP) Swami Vishwatmananda, Assistant Secretary
Smt. N. Lakshmi Parvathi, MLA, Floor Leader, NTR TDP Swami Vishashananda
(LP)
Assam
Chambers of Commerce
Shri V.K Srinivasan, IAS (Retd), Hon. Director, Indian Political Parties
Institution of Economics
Shri N. Prabhakar, Past President, Federation A P Chambers
Congress (I)
of Commerce
Dr. B.C. Lahkar
and Industry
Shri Prithibi Majhi, MLA, General Secretary
Shri K. Narayana Rao, Secretary, Federation A P Chambers
of Commerce
Janata Dal
and Industry, Hyderabad
Shri Ramani Barman
Shri K. Harish, Dy. Director, Confederation of Indian Industry
Shri Harendra Dev Goswami
Shri Veerandra Gupta, Executive Officers, Confederation of
Indian Industry
Chambers of Commerce & Industry
Shri K. S Madhavan, Vice Chairman, Confederation of Indian
Industry Shri Dilip Phukan, President, All Assam SSI Association
Shri Dipak Dowerah, Secretary, NETA/CCPA
Economists/ Experts Shri Jayant Kumar, Singhania Chairman, NETA/CCPA
Shri T.L.Sankar, Principal, Administrative Staff College of Shri D. Chakravorty, Secretary, ITA
India, Bellavista, Somajiguda, Shri Tapash Das Jt. Secretary, ITA
Hyderabad – 500 049 Shri P.K. Bhattacharjee, Secretary, ABITA
Shri M. Gopala Krishna, Director, Institute of Public Shri Robin Borthakur, Additional Secretary, ABITA
Enterprises, Osmania University Campus, Hyderabad Shri Avijit Barooah, Vice President, FINER
Prof. G. Nancharaiah, Head, Department of Economics, Shri H.P. Agarwal, FINER
University of Hyderabad Shri P. Das Gupta, North East Chamber of Commerce and
Gachi Bowli, Hyderabad Industry
Prof. Suguna, Head, Department of Economics, Osmania Shri Diwas Phukan, North East Chamber of Commerce and
University, Hyderabad Industry
Prof. R.K.Mishra, Dean, Institute of Public Enterprises and
Prof. of Finance Vice Chancellor of Guwahati University
Osmania University, Hyderabad Dr. H.L. Duorah, Vice-Chancellor
Prof. B. Brahmaiah, Institute of Public Enterprises, Shri B.K. Barkakti, Finance Officer
Hyderabad
Shri C. K. Mehrotra, Managing Director, State Bank of Employees’ Associations
Hyderabad, Hyderabad Sadou Asom Karmachari Parishad
Shri A. Krishna Murthy, General Manager, Andhra Bank, Shri Charan Deka, General Secretary
Hyderabad Shri Abdul Mannan, President
Shri P. Dinakar Rao, General Manger, State Bank of Shri Bashab Ch.Kalita, Joint Secretary
Hyderabad, Hyderabad Shri Mrinal Kalita, Executive Member
Shri K. Chakradhara Rao, Prof. and Chairman, Bureau of Shri Nagen Das, Executive Member
Statistics, Department of Economics, Osmania University, Shri Hemen Sarmah, Executive Member
Hyderabad Shri Ramendra Nath Pathak, Executive Member
 149
Assam State Workers & Employees Sanmilan Janata Dal
Shri Gopal Goswami, Working President Shri Lakshmi Sahu
Shri Jatindra Nath Borah, General Secretary Shri Bijendra Prasad Yadav
Shri Prabhat Ch. Medhi, Vice President
Shri Md. Babul Ahmed, Office Secretary Bharatiya Janata Party
Shri Sushil Kumar Modi
Sadou Asom Mahila Karmachari Santha Shri Sarju Rai
Smt Kusum Bora Mahanta, President
Smt. Kamalawati Saikia, Vice President Samata Party
Smt. Syeda Nurjahan, General Secretary Shri P.K. Sinha

All Assam Assistant Engineers’ Association Chambers of Commerce & Industry

Shri Kumud Goswami, General Secretary Shri K.P. Jhunjhunwala, President, Bihar Industries
Shri Preetam Kr. Pathak, Asstt. General Secretary Association
Shri Bimal Kalita Finance, Secretary Shri B.N. Choubey, Vice President, Bihar Industries
Shri M. Bhuyan, General Secretary Association
Shri S.P. Sinha, Chairman, CII, Patna
All Assam Heads of the Deptt. Ministerial Officers Shri H.K. Modi, Member, CII, Patna
Association Shri D.P. Lohia, President, Bihar Chamber of Commerce
Shri Suren Bora, President Shri S. Pandey, Bihar Chamber of Commerce
Shri J.N. Gayan, General Secretary Shri Nisheeth Gaiswal, Secretary General, Bihar Chamber
of Commerce
Assam Sectt. & Heads of Deptt. Govt. Grade IV Shri G.K. Saraff, Vice President, Bihar Chamber of
Employee Association, Dispur Commerce
Shri Mahibur Rahman, General Secretary Shri R.K.P.N. Singh, Bihar Industries Association
Shri D. Goswami, President Shri R.N. Prasad, Confederation of Indian Industry
Shri P.K. Prasad, Secretary, Bihar Chamber of Commerce
Assam Civil Service Officers Association Shri S.K. Patwari, Treasurer, BIA
Shri R.R.Mahanta, General Secretary Shri D.K. Churiwal, Confederation of Indian Industry
Shri S.K. Nath
Distinguished Economists/Institutions
Devcrop Employees’ Association Assam Plantation Council for Research & Development of Bihar
Crops Dev.Corpn. Ltd Shri Kamta Prasad
Shri A.K. Sarma, President A.N. Sinha Institute, Patna
Shri Dasarath Baishya, General Secretary Shri D.D. Guru
Shri Gobinda Rajbangshi

Assam State Employees’ Federation H.Q. Guwahati Asian Development Research Institute (ADRI)
Shri S.N. Handique, Chairman Shri P.P. Ghosh,
Shri Hari Nath, General Secretary Shri Muchkund Dubey
Shri Arvind N. Das
All Assam Small Scale Industries Association Shri Shaibal Gupta
Dr. Dilip Phukan, President Shri Ajit Kumar Sinha, B.R. Ambedkar Bihar University,
Muzaffarpur
Sadou Asom Zila Prasashan Karmachari Santha Shri Atmadev Singh, Actional Research Institute for
Shri Rabin Kr. Mahanta, President Developmental Studies, Patna
Shri Atul Das, General Secretary
Goa
Co-ordination Committee (of 28 Officers Associations)
Shri K.G.Deb, Krori Advisor Political Parties
Shri H.C. Bhuyan, Convenor
CPI (Marxist)
Bihar Dr. (Smt.) Luisa Pereira, State Committee Member
Political Parties
CPI
Congress (I) Shri Narayan Palekar, General Secretary
Shri Radhanandan Jha Shri Christopher Fonseca, Org. Secretary

Rashtriya Janata Dal BJP

Shri Shakil Ahmed Khan Shri Manohar G.Prabhu Parrikar, M.L.A
Shri Pitamber Paswan
Shri Ram Kirpal Yadav MGP
Shri Nihora Prasad Yadav Shri Surendra V.Sirsat, M.L.A. & President
 150
Chambers of Commerce and Industries and other Shri Raghu Raj, MLA
industrial associations Shri Virender Gautam, MLA
Shri Anil Kher, Vice President, Goa Small Industries Shri Harshwardhan Chauhan, MLA
Association Dr. Ram Singh, MLA
Shri Surendra Salgaonkar, Hon. Secretary, Goa Small Shri G.S. Bali, MLA
Industries Association (GSIA) Shri Kuldeep Kumar, MLA
Shri S.Shridhar, Secretary, Goa Mining Ore Exporters Shri Kashmir Singh, MLA
Association Shri Tek Chand, MLA
Shri Sunil Gharse, President, Goa Mining Association Smt. Asha Kumari, MLA
Shri D.V.Salgaonkar, President, Goa Chamber of Commerce Shri Viplove Thakur, MLA
Shri O.L.Da Lapa Soarse, Secretary, Goa Chamber of Shri Gangu Ram Musafir, MLA
Commerce Shri Kaul Singh, MLA
Shri Rangila Ram Rao, MLA
Gujarat Shri Thakur Ramlal, MLA (Ex-Chief Minister)

Political Parties Dr. Y.S. Parmar University of Horticulture & Forestry,

Solan
Congress (I) Shri R.P. Awasthy, Vice Chancellor
Shri Amarsinh Chaudhary, Leader of Opposition Shri S.D. Jain, Comptroller

Rashtriya Janta Party (RJP) Confederation of Indian Industry

Shri Madhusudhan Mistry, General Secretary Shri A.R. Singh, Chairman, HP Council
Shri Dilip Bhai Parekh, Ex-Chief Minister Shri Sachit Jain, Executive Director, Vardhaman
Shri Alok Sharma, Vice Chairman, HP Council
Gujarat Chamber of Commerce & Industry Shri Sunil Sinha, Deputy Director, (Economic Affairs)
Shri Utkarsh B. Shah, President Shri Raj Machhan, Executive Officer

Confederation of Indian Industry (Western Region- Fruit Growers’ Association

Gujarat Office) Shri Mohinder Singh
Shri Rajpal Chauhan
Shri Sunil R. Parekh, Director Shri Chet Ram Negi
Shri Naishadh Parikh, Director, Arvind Mills Ltd Shri Chander Sen Thakur
Shri K.C. Chauhan, Advisor
Haryana
PHDCCI
Chambers of Commerce and Industry Shri Sunil Sebal, Additional Secretary
Shri Devinder Singh Choudhary, PHD Chamber of Shri A.N. Sharma, Regional Director
Commerce and Industry Shri B.N. Kataria, Regional Director
Shri Ganesh Iyer, PHD Chamber of Commerce and Industry Shri Satish Bagrodia, Chairman, HP Committee
Shri Sunil Sehgal, PHD Chamber of Commerce and Industry Shri Devinder Singh, Past President, (Punjab, Haryana,
Shri Vivek Joshi, Director Industries Delhi Chamber of Commerce Chamba
Shri P.K. Gupta, Managing Director, Haryana Financial Shri Dhianchand, Himachal Chamber of Industrial &
Corporation Marketing Association, Co-Chairman, HP Committee
Shri P.K. Chowdhary, Secretary, Industries Shri Yoginder Diwan, President, Himachal Hotels
Association
Himachal Pradesh
NGOs
Political Parties Shri Ganga Singh Thakur, President
Shri P.S. Bharmoria, Secretary General
CPI (M) Shri Kaish Pathania, Chief Advisor
Shri Mohar Singh, Secretary, State Committee Shri Sita Ram Dhiman, Office Secretary
Shri Dharam Prakash Gupta, State Committee Shri C.H. Bramta, Finance Secretary
Shri Tikender Singh, State Committee Shri P.C. Verma, President, District-Hamirpur
Shri Jagat Ram, District Committee, Shimla Shri Govind Ram Sharma, General Secretary, District –
Shimla
Congress (I) Shri Ramesh Chauhan, President, HP-PWD
Shri Virbhadra Singh, Leader of CLP (Ex-Chief Minister)
Shri Jai Bihari Lal Khatti, MLA Jammu & Kashmir
Shri Kush Parmar, MLA
Shri Harsh Mahajan, MLA Federation of Chambers of Industries, Kashmir
Shri Sardar Rattan Singh, MLA Shri Jan Mohamad Kakroo, President
 151
Shri G.M. Tramboo, Senior Vice-President Shri T. Ramappa, Federation of Karnataka Chamber of
Shri T.A. Vaida, General Secretary Commerce & Industry
Shri M. Yasin Durani, Secretary Shri D.R. Srikantaiah, President, Federation of Karnataka
Shri Afaq Ahmed Qadri, Chief Co-ordinator Chamber of Commerce & Industry
Shri Janaid A. Bhat, Treasurer Dr. G. Thimmaiah, Institute of Social and Economic Change
(ISEC)
Kashmir Traders’ & Manufacturers’ Federation, Kashmir Dr. M. Govinda Rao, Director, Institute of Social and
Shri Ghulam Nabi Shah, President Economic Change
Shri Shafiq Ahmed Salati, General Secretary Shri T.R. Satish Chandran, Former Chief Secretary,
Shri Farooq Ahmed Shah, Advisor Government of Karnataka

Chambers of Commerce and Industry, Jammu Kerala

Shri Om Parkash Gupta, Senior Vice-President
Shri Rajinder Motial, Secretary General Political parties
Shri Jugal Mengi, Executive Member
Kerala Congress (Jacob)
Prof. Damman Mathew, Vice Chairman
Chambers of Commerce and Industry, Kashmir
Shri T.M. Jacob, MLA
Shri G.H. Dug, President
Shri G.R. Khan, Ex-President
Congress (I)
Shri Nazir A. Bakshi, Ex-President
Shri Kadavoor Sivadhasan
Shri Rauf A. Punjabi, Senior Vice-President
Shri Tennala Balakrishna Pillai
Shri Muzaffar A. Khan, Secretary General Shri G.Karthikeyan, MLA
Shri Thiruvanchor Radhakrishnan, MLA
Jammu & Kashmir Civil Secretariat Non-Gazetted
Employees Union Revolutionary Socialist Party(RSP)
Shri N.A. Mir, Convenor & President, Employee Joint Action Prof.T.J.Chandrachoodan
Committee
Shri Nassar Ullah, Member, Employee Joint Action Nationalist Congress Party (NCP)
Committee Shri Karakulam Krishna Pillai, Secretary
Shri N.A. Mirza, Member, Employee Joint Action Committee
Shri M.S. Khan, General Secretary, Employee Joint Action CPI (M)
Committee Shri M.A.Baby, Secretariat Member
Shri Chnndji Bhat, Secretary, Employee Joint Action
Committee Muslim League
Shri M.H. Reshi, Member, Employee Joint Action Committee Shri Kutty Ahamed Kutty
Shri M.H. Khan, Treasurer, Employee Joint Action Committee
Chambers of Commerce/Business Organisations and
Karnataka Economists/Experts
Shri S.Pathivelu, Secretary, Chamber of Commerce,
Political Parties Thiruvanthapuram
Shri V.Azhakiyanambi, Secretary, All Kerala Sugar Merchant
CPM Association
Shri Ram Reddy, MLA Prof.Joy Job Kulavelil, State President, All Kerala Private
College Teachers Association, Aluva
Congress (I) Prof. K.K.George, Director, School of Management, Cochin
Shri H.K.Patil, Leader of Opposition, L.C University, Cochin
Prof.P.K.Ramachandran Nair, Centre for Development
BJP Studies, Thiruvanthapuram Shri S.A.Mansoor, Secretary,
Shri M.R.Thunga, MLC Ernakulam Chamber of Commerce
Shri K.S.Eswaruppa, MLA Dr.M.Kunhaman, Member University Grants Commission,
Deptt. of Economics, University of Kerala
Lok Shakthi Dr.K.P.Kannan, Fellow, Centre for Development Studies,
Shri N.Thippanna, MLC Thiruvanthapuram
Dr.S.Uma Devi, Professor & Head, Deptt. of Economics,
Economists/Experts and Representatives of Commerce University of Kerala
and Business Associations
Shri M.K. Ramachandra, President, Greater Mysore Madhya Pradesh
Chamber of Industry (GMCI)
Shri S. Krishna Swamy, Greater Mysore Chamber of Industry Political Parties
(GMCI)
Shri R.Vishwanathan, Greater Mysore Chamber of Industry Bahujan Samaj Party (BSP)
(GMCI) Shri Jaynarayan Chokse
 152
Communist Party of India (CPI) United Voluntary Youth Council
Shri Bal Kishan Gupta Shri N. Ibochouba Singh, President
Shri Maharabi Singh, Secretary
BJP Dr. L. Robin Singh, Secretary (Finance)
Dr. Gauri Shankar Shejwar, Leader of Opposition Party
Shri Babu Lal Gaur, State Vice President Council for Social Awareness and Development,
Heibongpokpi
Devi Ahilya Vishwavidyalaya (DAVV), Indore Shri S.H. Khuman, General Secretary
Prof. V.D. Nagar, Chairman, Memorandum Drafting Shri Th. Imocha Singh, Member,
Committee of DAVV
Dr. B.C. Chhaparwal, Vice Chanceller, DAVV, Indore Joint Administrative Council (JAC) of All Manipur Trade
Shri J.L. Rathore, Journalist & Member, Memorandum Union Council And All Manipur Government Employees
Drafting Committee of DAVV Organisation
Shri H. Achou Singh, President
Chambers of Commerce & Industry
Shri S. Kesho Singh, Secretary General
Shri Pritam Lal Dua, President, Malwa Chamber of
Shri S. Ibopishak Singh, Secretary (Publicity)
Commerce & Industries, Indore
Shri Kh. Hitler, Treasurer
Shri Mohan Lal Khandelwal, Secertary, Malwa Chamber of
Shri S. Mani Singh, General Secretary
Commerce & Industries, Indore
Shri Th. Itobi Singh, Vice President
Prof. Uday Jain, Consultant, Malwa Chamber of Commerce
Shri Muhindro Singh, Vice President
& Industries, Indore
Shri Th. Inaocha Singh, Secretary (Organisation)
Manipur Shri L. Tombi Singh, Vice President
Shri M. Babu Singh Member
Political Parties
Maharashtra
Federal Party of Manipur
Shri N. Joykumar, General Secretary Economists
Shri Y. Mani Singh, Treasurer Dr. M. Godbole
Shri Amar Yumnam, Economic Adviser Shri Kirit Parikh, Director, Indira Gandhi Institute of
Ms. L. Sorojini Devi, President, Women Front Development Research
Dr. Khashim, Member Prof. D.M. Nachene, Department of Economics, University
of Mumbai
Manipur People’s Party Prof. Ajhit Karnik, Department of Economics, University of
Shri O. Joy Singh, President Mumbai
Shri R.K. Ranbir Singh, M.L.A. (Ex-Chief Minister) Shri C.S. Deshpande, Executive Director, Maharashtra
Shri Y. Surenyaima, Ex-Vice President Economic Development Council
Shri Biramani Singh, Vice President Shri Vikas Chitre, Director, Gokhale Institute of Political &
Shri L. Jatra Singh, M.L.A Economics, Pune

C.P.I. (M) Maharashtra Chambers of Commerce and Industry

Shri M. Shamu, Secretary Prof. Jyoti Parikh, Indira Gandhi Institute of Development
Shri N. Modhusodon, Secretariat Member Research
Shri Chinglen Maisnam, State Committee Member Shri Pradeep B. Chinai, President, Indian Merchants’
Chamber
Manipur University
Shri Anil Kumar S. Ruia, Vice President, Indian Merchants’
Shri H. Tombi Singh, Vice Chancellor
Chamber
Prof. N. Tombi Singh, Syndicate Member
Shri K.L. Poddar, President, Maharashtra Chamber of
Shri Th. Joychandra Singh, Registrar
Prof. P.C. Thoudam, Dean, School Of Humanities Commerce & Industry
Prof. L. Tombi Singh, Dean, School Of Social Science Shri S.P. Raje, Secretary General, Maharashtra Chamber
Shri L. Manao Singh, Finance Officer of Commerce & Industry
Shri A.R. Anandpara, Vice President, Maharashtra Chamber
All Manipur College Teachers’ Association of Commerce & Industry
Dr. L. Manihar Singh, President Shri R.N. Mohanty, Chairman, Industries Committee,
Shri P. Laingam, General Secretary Maharashtra Chamber of Commerce & Industry
Dr. T. Meinya Singh, Member Ms. Tarjani Vakil, Member, Managing Committee of Indian
Dr. G. Ranjit Sharma, Member Merchants’ Chamber & Co-Chairman, Finance & Budget
Dr. Kh. Menjor Singh, Member Committee
Shri P.N. Mogre, Secretary General, Indian Merchants’
Manipur Shifting Cultivators Development Association Chamber
Shri Genkap, Vice President Shri S.S. Bhandare, Chairman, Economics and Industry
Shri H.L. Vaiphei, General Secretary Committee, Bombay Chamber of Commerce & Industry
 153
Shri Siddhartha Ray, Co-chairman, Economics & Industry Federation of Mizoram Government Employees &
Committee Workers (FMGEW)
Shri Nihal Kothari, Chairman, Indirect Tax Committee, Shri T. Sangkunga, President
Bombay Chamber of Commerce Shri Vanchungnunga, Secretary-General

Meghalaya Nagaland

Political Parties Kohima Chamber of Commerce

Shri H.S. Lyngdoh Opposition Member Shri Theyievio Solo, President
Shri T.H. Rangad Opposition Member Shri Khriehuzo Lohe, Vice President
Shri Ketu Putsure, General Secretary
Members of NEHU Shri P. Suokhrie, Treasurer
Prof. K. Lyngdoh, Pro Vice Chancellor, NEHU Shri Neisatuo Keditsu, Joint Secretary
Dr. A. Patton Registrar, NEHU
Prof. A.L. Verma Orissa
Prof. S.K. Mishra
Prof. S.S. Khare
Political Parties
Prof. T.B. Subba
Congress Party
Chamber of Commerce
Dr. Debendra Nath Mansingh, Government Chief Whip
Shri S. Don Wahlang, President
Shri Ganeswar Behera, M.L.A
Shri K. Singh Wann, Secretary General
Shri Bhakta Charan Das, General Secretary
Shri K. A. Pariat I/C, Tourism
Shri Frank Khanguir, Office Secretary Shri S.K. Misra, MLA, Secretary CLP

Bhartiya Janata Party

Employees Federation
Shri Biswabhusan Harichandan, Leader, BJP Legislative
Shri E. Kharkongor, President, MSGEF
Shri C.M. Syiem, Vice President, MSGEF Party
Dr. E. Bareh,Vice President, MSGEF Shri Ananta Narayan Singh Deo, M.L.A
Shri J.E. Massar, Vice President, MSGEF Shri Pradipta Kumar Naik MLA
Shri J.D. Suchiang, Secretary General, MSGEF Shri Arabinda Dhali, MLA
Shri W.S. Lyngdoh, Joint Secretary, MSGEF Shri Samir Dey, MLA, Secretary BJP Legislative Party
Shri R.M. Rai, Joint Secretary, MSGEF Shri Kanak Vardhan Singhdeo, MLA
Shri Raghunath Hamrum
Mizoram Shri Ram Krishna Patnaik

Political Parties Biju Janata Dal

Shri Ramakrushna Pattnaik, MLA
MLAs Shri Trilochan Kanungo, Ex-Chairman
Shri Sanghmingthanga Pautu Shri Bijay Mohapatra, MLA
Shri Zakhu Hlychho Shri Sachidananda Dalal, MLA & Leader of Opposition
Shri K. Sangthuama Shri Jangyeswar Babu, Ex-MLA
Shri Nirupam Chakma Shri Bhagaban Majhi, MP
Shri Nihar Kanti Shri Panchanan Kanungo, MLA
Shri Debi Prasad Mishra, MLA
Mizoram Pradesh Congress Committee Shri Ainthu Sahu
Shri Lalkhama, IAS (Retd.), Ex-MLA Shri Balakrushna Rath, Chairman, Bolangir Zilla Parisad
Shri R.Thangliana Ex-Minister & General Secretary (MPCC) Shri Raghunath Hembram MLA

Mizoram People’s Conference Janata Dal

Shri Thantluanga Zadeng, Treasurer Shri I. Naik
Wing Cdr. Lalnghinglova, General Secretary Shri Majula Kisan MLA
Shri Nalinikant Mohanti MLA
Tangrual Pawl Shri Praafulla Chander Shadai MLA
Shri S.R. Vala, IAS (Retd.), Ex-Chairman, MPSC Shri Durgadhan Mazhi
Shri F.L.R. Siama, IPS (Retd.), Ex-MLA Shri Prafulla Chander Ghadai MLA
Shri Lalsawta, Ex-MLA Shri Narasinha Mishra
Shri S. Mishra
Consultant Engineer (Rtd. Secretary) PWD/P&E)/PHE
Department. President, Mizoram Science Society & Public Accounts Committee
Chairman Institution of Public Health Engineers, Aizawl Shri Bijauya Mahapatra, MLA and Chairman, Public
Er. Dunglena. Accounts Committee
 154
Shri Bishnu Das, MLA Shri T.C. Jain, Advisor, RCCI
Shri P. Tripathy, MLA Shri J.C. Sharma, Secretary, RCCI
Shri A.P. Satpathy, MLA
Distinguished Economists and Institutions
Chambers of Commerce and Industries Shri N.L. Nathuramka, Retd. Reader in Economics,
Utkal Chamber of Commerce and Industry Rajasthan University
Shri M.M. Nawaz, President Shri Surjit Singh, Professor, Institute of Development Studies,
Shri Kedar Pattnaik, General Secretary Jaipur
Shri Jagadish Lal, Past President Shri Narain Sinha, Department of Economics, University of
Shri S.S. Singh Deo, Past President Rajasthan
Shri S. Srinivasan, Vice President Shri Om Prakash, Former Vice-Chancellor, Retd. Professor,
University of Rajashan, Ex- Editor, Indian Journal of
Economists Economics
Shri Trilochan Kanungo Shri B.L. Panagariya

Punjab Sikkim

Political Parties Political Parties

Congress Party Sikkim Sangram Parishad

Capt. S. Amrinder Singh, President, Punjab Pradesh Shri Nar Bahadur Bhandari
Congress Committee Shri N.K. Pradhan
Shri Uttam Lepcha
CPI (M) Shri P.R. Subba
Shri Balwant Singh, Secretary, Punjab State Committee Shri S. Dorjee
Comrade Balwinder Singh Chopra Shri N. Lepcha
Shri Harcharan Singh Shri S.G. Lepcha
Shri Om Prakash Kharbanda Shri S. Bhutia
Shri S. Toherin
B.J.P
Shri Lajpat Rai, M.P. (Rajya Sabha) Sikkim Democratic Front
Shri Anil Sarin, Advocate, Secretary Shri Mohan Dungmali
Shri B.S. Pant
Chambers of Commerce & Industry Shri S.K. Pradhan
Shri Ramesh Inder Singh
Choudhary Devinder Singh CPI (M)
Sardar Beant Singh Shri Anjan Upadhaya
Shri K.L. Khurana Shri Krishna Kharel
Shri Yadav Nepal
Rajasthan
Congress (I)
Political Parties Shri S.M. Limbo
Major T. Gyatro
CPI (M)
Shri Hari Ram Chouhan, Secretary Sikkim Chamber of Commerce
Shri Ravindra Shukla, Member, State Secretariat Shri R.K. Periwal, Secretary
Shri S.K. Sarda, Secretary
Congress (I) Shri D.D. Thirani, President
Dr. Raghu Sharma, General Secretary
Shri L.D. Sharma, C.A. to PCC Tamil Nadu

Chambers of Commerce and Industry Political parties

Shri K.L. Jain, Hon. Secretary General, Rajasthan Chamber
of Commerce & Industry CPI
Shri M. Sayeed Khan, Hon. Secretary, FASSI, Rajasthan & Shri S.S. Thiagarajan, State Deputy Secretary
RCCI
Shri B.L. Gupta, Vice President, Rajasthan Chamber of CPI (M)
Commerce & Industry (RCCI) Shri G. Ramakrishnan
Shri Ramendra K. Bhargava, Vice President, RCCI
Shri Sugan Chand Jain, Vice President, RCCI Congress (I)
Prof. R.S. Pareek, Advisor, RCCI Shri Kevate R. Thiagarajan
 155
Shri Kathipara J. Gharu Tripura University
Shri T. Armstrong Mani Prof. Arun Uday Saha, Dean,
Subhas Basu Professor of Economics
DMK
Shri S. Vidudhalai Virumbi, Organising Secretary Chamber of Commerce
Shri Anup Raj, Executive Member, TCCI
MDMK Shri Promod Ranjan Dutt, President, TCCI
Shri K. Radhakrishnan, Spokesperson Shri M.L. Debnath, TCCI

AIADMK Government Pensioners Association

Shri K. Malaisamy Shri S.K. Chowdhury
Shri V.R. Neduncheliyan, Chairman Shri Mihir Kumar Gupta
Shri P.H. Pandian Shri Sunil Chowdhury

BJP T.G.E.A.
Shri L. Ganesan Shri Subodh Deb Roy
Shri Harala Chakraborty
Chambers of Commerce/Economists Shri Dhabal Krishna Debbarma
Shri K. Subramanian, Public Expenditure Round Table Shri Madhu Sengupta
(PERT) Trustee
Shri K. Venkataraman, Chairman, PERT T.E.C.C. (H.B.Road)
Shri T.V. Antony, Member, State Planning Commission Shri Shibesh Ranjan Biswas
Shri K.V. Palamdurai Shri Dilip Dam
Dr. Vedagiri Shanmusundaram, Member, State Planning Shri Satyabrata Bhattacharjee
Shri Kausik Deb
Commission
Dr. Lalitha Kameshwaran, Member, T.N. State Planning
Uttar Pradesh
Commission
Shri Paul P. Appasamy, Director, Madras Institute of
Political Parties
Development Studies, Chennai
Kisan Mazdoor Bahujan Party
Tripura
Ch. Narinder Singh, Adhyaksh,
Political Parties
Shikshak Dal
Shri Om Parkash, MLC
Representatives of Left Front
Shri Panchanan Rai, MLC
Shri Sudarshan Bhattacharji, State Secretary, R.S.P
Shri Dinesh Saha, Asstt. Secretary, C.P.I., Tripura State
Chambers of Commerce and Industry
Committee Shri Arvind Mohan, Confederation of Indian Industry
Shri Braja Gopal Roy, General Secretary, All India Forward Shri Sailesh Diwedi, Confederation of Indian Industry
Block, Tripura State Committee Shri Sudhakar Tiwari, Confederation of Indian Industry
Shri Tapan Chatterji, State Secretariat Member, C.P.I. (M) Ms. Kavita Nair, Confederation of Indian Industry
Shri Gautam Rastogi, PHD Chamber of Commerce and
BJP Industry
Shri Pranesh Kumar Chaudhuri, Member, State Committee Ms. Punita Priyadarshini, PHD Chamber of Commerce and
Shri Rakhal Chakraborty Industry
Shri Brajesh Shri V.K. Saxena, Associated Chambers of Commerce and
Industry of UP
Tripura Upajati Juba Samity Shri S.N. Kukreja, Associated Chambers of Commerce and
Shri S.C. Tripura, Industry of UP
Shri Rati Mohan Famatia Shri G.C. Chaturvedi, Indian Industries Association
Shri Rabindra Debbarma Shri V.K. Aggarwal, Indian Industries Association
Shri Amiya Kr. Debbarma Shri Sanjay Kaul, Indian Industries Association
Shri Nagendra Jamatia Shri Rajeev Kapil, Indian Industries Association
Shri Jagadish Debbarma Shri Murli Manohar, Indian Industries Association

Leaders of the Opposition Distinguished Economists

Shri Samir Ranjan Barman Dr. A.K. Singh, Giri Institute of Development Studies
Shri Bir Ballav Saha Dr. A.K. Sengupta, Lucknow University
Shri Birjit Sinha, M.L.A Dr. M. Muzammil, Lucknow University
Shri Prakash Das, M.L.A Dr. R.K. Sinha, Bareilley University
 156
Prof. P.K. Sinha, Dr. Ram Manohar Lohia Avadhi University, Prof. Nripen Bandyopadhyay
Faizabad Shri Himangshu Das
Prof. Shri Ram Aggarwal, Bundelkhand University, Jhansi
Prof. Kala Shridhar, Indian Institute of Management, Lucknow RSP
Dr. S.N. Chaturvedi, Deen Dayal Upadhaya Gorakhpur Shri Sunil Sengupta
University, Gorakhpur Shri Abinash Dasgupta
Dr. Ashok Kumar Srivastava, Deen Dayal Upadhaya Shri Manoj Bhattacharya
Gorakhpur University, Gorakhpur
SUCI
Shri A.P. Tiwari, Institute of Development Studies, Lucknow
Shri Debaprasad Sarkar
University
Shri Kalika Mukherjee
West Bengal BJP
Shri Debabrata Chowdhury, State Secretary
Political Parties Shri Dhanpat Ram Aggarwal, Convenor – Economic Cell

Congress (I) Chambers of Commerce and Industry

Shri Atish Ch. Sinha, M.L.A., Leader of Opposition, West Shri J.L. Mowla, Bengal Chambers of Commerce and
Bengal Legislative Assembly Industry
Shri Abdul Mannon, M.L.A., Chief Whip Opposition, West Shri S.R. Bal, Bengal Chambers of Commerce and Industry
Bengal Legislative Assembly Shri D.P. Nag, Bengal National Chambers of Commerce and
Prof. Saugata Roy, M.L.A Industry
Dr. Manas Bhunia Shri N. Guha, Bengal National Chamber of Commerce and
Industry
CPI (M) Shri N. Kumar, Bengal National Chamber of Commerce and
Shri Mainul Hassan, M.P Industry
Shri Dipen Ghosh, Member, Secretariat Shri Dipankar Chatterji, Confederation of Indian Industry
Shri Panja Budhia, Confederation of Indian Industry
Trinamul Congress
Shri Sudip Bandyopadhyay, M.P Economists
Shri Prabuddha Nath Roy, State Planning Board
Forward Bloc Shri Debkumar Bose, Hony. Prof. Indian Statistical Institute
Shri Jayanta Roy Shri Amiya Kumar Bagchi, State Planning Board and Centre
Dr. Barun Mukherjee for Studies in Social Sciences, Calcutta

CPI
Andhra Pradesh
 157
Annexure I.9D
(Para 1.12)
List of Participants who attended the discussions with Rural & Urban Local Bodies
during the State visits of the Finance Commission
District
From State Government Shri Y.V.B. Rajendra Prasad, Sarpanch, Vuyuru, Krishna
Shri P. Ashok Gajapathi Raju, Minister for Finance district
Dr. Kodela Sivaprasada Rao, Minister for Panchayati Raj Shri J Babjee, Sarpanch, Narasannapeta, Srikakulam district
Shri S.K. Arora, Principal Finance Secretary Shri V. Vishnuvardhana Raju, Sarpanch, Kankipadu, Krishna
Shri M Sahoo, Finance Secretary district
Shri Pradeep Chandra, Finance Secretary
Shri A.K. Parida, Planing Secretary Arunachal Pradesh
Dr. G. R. Reddy, Special Secretary, Finance and Planning
(FW) Dept Goa
Shri M Venkatramaiah, Member Secretary, Second State
Finance Commission From State Government
Shri K. Pichayya, Member Secretary, State Finance Shri John Manuel Vaz, Hon. Minister for Urban Development
Commission Shri Kewal Sharma, Secretary, Urban Development
Shri D. L. Narayana, Chairman, Second State Finance
Shri K.N.S. Nair, Director of Municipal Administration
Commission
Shri Luis Alex Cardoz, Hon. Minister for Panchayats
Shri Lingaraju Panigrahi, Secretary Municipal Administration
Shri Kewal Sharma, Secretary, Urban Development
and Urban Development
Shri Rakesh Mehta, Development Commissioner
Shri P.K. Mohanty, Commissioner, Municipal Corporation of
Shri G.G.Kambli, Director of Panchayats
Hyderabad
Shri C.V.Kavlekar, Deputy Director of Panchayats
Shri A. Vidya Sagar, Commissioner, Municipal Corporation
of Vishakhapatnam
Shri Ajoyendra Payal, Commissioner and Director of Participants
Municipal Admn., Hyderabad Shri R.Silimkhan, Chairperson, Panaji Municipal Council
Shri J. R. Anand, Administrator, Quli Qutub Shah Smt.Monica Dias, Chairperson, Margao Municipal Council
Development Authority, Hyderabad Smt.Radhika Naik, Chairman Ponda Municipal Council
Shri G.S.R.C.V. Prasada Rao, Secretary, Panchayati Raj Shri Anil Hoble, Sarpanch Merces Village Panchayat
Department Shri Ramchandra Mule, Sarpanch Durbhat Village
Shri P. Ramakanth Reddy, Principal Secretary, Panchayati Panchayat
Raj & Rural Development Department Smt.Suhasini Govekar, Sarpanch Anjuna Village Panchayat
Shri M. Venkateswarlu, Engineer-in-chief (PR) Shri Sadashiv Marathe, Sarpanch Dharbandora, Village
Shri N.R. Narasimha Rao, Commissioner, Andhra Pradesh Panchayat
Authority of Rural Development Shri Dinesh Sahastrabudhye, Sarpanch Velguem Village
Shri P.V.R.K. Prasad, Director General, Dr. MCR Institute of Panchayat
A.P., Jubilee Hills Smt.Fausta Fernandes, Sarpanch, Cansaulim Village
Dr. S. Chellappa, Commissioner, Panchayati Raj Panchayat
Shri Godfrey Rodrigues, Sarpanch, Raia, Village Panchayat
Participants
Shri Y. Sudhakar, Chairperson, Janagam, Warangal (District) Gujarat
Shri C. A Rasool, Chairperson, Kadiri, Anantapoor (District)
Shri G. Muzeeb Hussain, Chairperson, Madanapally, Chittor From State Government
(District) Shri Ashok Narayan, Additional Chief Secretary, Panchayat
Shri A. Vivekananda Reddy, President, A.P. Chambers, Shri M.S. Dagur, Joint Secretary, Panchayat
Hyderabad Shri V.C. Patel, Development Commissioner
Shri K. Devender Rao, Muncipal Chairman, Karimnagar Shri K.B. Valava, Under Secretary, Panchayat Raj/Rural
Smt. B. Usha Rani, Chairperson, Palakollu, West Godavari Development Department
(District)
Shri H.N. Chhubber, District Development Officer, Distt.
Smt. A. Vijaya Lakhsmi Kumari, Chairperson, Tenali, Guntur
Kheda
(District)
Shri K. Sudhakar, Chairperson, Municipal Corporation Shri V. Thriuppugash, District Development Officer, Distt.
Rajamundry, East Godavari (District) Sabarkantha
Shri D. Praveen Kumar, Mandal President, Thimmajipet (M), Shri M.S. Pathan, Additional Development Commissioner,
Mahaboobnagar district Shri J.M. Vyas, Deputy Secretary, Urban Development
Shri Y. Raghava Reddy, Mandal President, Prathipadu, Department
Guntur district Dr. Munjula Subramaniam, Additional Chief Secretary, Urban
Shri P. Ramesh, Mandal President, Pedanandipadu, Guntur Development and Urban Housing Department
district Shri Vinay Vyasa, Director of Municipalities
Shri K. Raghava Rao, Zilla Parishad, Gannavaram, Krishna Shri M.M. Mehta, Chief Executive Officer, Gujarat Municipal
 158
Finance Board Shri Bal Ram Sharan, Sarpanch, Dhankaur Block, Ambala
Shri Indraj, Sarpanch, Village Bhanora, Bhunna Distt. Sirsa
Participants Shri Lajpat Rai Virman, Financial Controller, Municipal
Shri Dhansukhbahi Bhanderi, Chairman, Standing Committee, Faridabad
Committee, Rajkot Municipal Corporation Shri B.S. Ronolia, Superintending Engineer, Municipal
Shri N.V. Patel, Chairman, Standing Committee, Baroda Committee, Faridabad
Municipal Corporation Smt. Kanti Devi, President, Zila Parishad, Sirsa
Smt. Smitaben Soni, President, Godhara Municipalities Shri Kehar Singh, Executive Councilor, Municipal Committee,
Shri Parveen Vadher, Ex-President and member Bhuj Thaaneshar
Municipality Smt. Mohini Nanda, President, Municipal Committee, Kalka
Shri Ram Sankhla, Ex-President and Member, Himmat Shri Nirmal Kumar Vij, President, Municipal Council, Ambala
Nagar Municipality City
Shri Mehendra Choksi, Member, Bharuch Municipality Smt. Sudarshan Dua, President, Municipal Council, Ambala
Dr. Mahendra Shah, Vice-President, Vyara Municipality Sadar
Shri Chander Kant C. Seth, Member, Himmat Nagar Shri Subhash Chand, President, Municipal Council,
Municipality Thanesar
Shri Ajay Kumar Choksi, Chairman, Standing Surat Shri Krishan Kumar, President, Municipal Council, Hissar
Municipal Corporation Smt. Sukhwinder Kaur, President, Municipal Council, Sirsa
Shri Shanker Vrajlal, Member, Standing Committee, Surat Smt. Harsh Malik, President, Municipal Council, Rohtak
Municipal Corporation
Shri Manilal P. Dabhi, President, Taluka Panchayat, Himachal Pradesh
Mahemadbad, Distt. Kheda
Shri Bhupanbhai G. Parmar, President, Taluka Panchyat, Participants
Distt. Sabarkantha Shri Shanti Sharma, Chairperson, Panchayat Samiti, Teh.
Shri Rameshwar S. Patel, Ex-chairman, Education Theog
Committee, Kheda, Distt. Panchyat Shri Ramesh Sharma, Pradhan, Gram Parishad, Teh. Theog
Shri Mukesh S. Shukla, President, Kheda Distt. Panchayat Shri S.D. Verma, Chairman, Panchayat Samiti, Jhaurutta
Shri Jayendrasinh M. Rathode, President, Distt. Panchayat, Ms. Nirmala Devi, Chairperson, Zila Parishad, Solan
Sabarkantha Shri D.D. Thakur, Chairman, Zila Parishad, Mandi
Shri Takkarbhai V. Vanjara, President Taluka Meghraj, Distt. Shri Gurnam Singh, Member, Zila Parishad, Mandi
Sabarkantha Shri Manbhari Devi, Chairperson, Zila Parishad, Kangra
Ms. Sarojben K. Vaskar, President, Social Justice Shri D.R. Dhiman, Chairman, Zilla Parishad, Rajya
Committee, Distt. Kheda Panchayat
Shri Rajpal Chauhan, Member, Zila Parishad, Shimla
Haryana
Karnataka
From State Government:
Shri Dhir Paul Singh, Town & Country Planning Minister From State Government
Shri R.S. Chaudhry, Deputy Chairman, Planning Board Shri M.C. Murgoli, Minister of State, Rural Development &
Shri M.K. Miglani, Financial Commissioner, Local Panchayati Raj
Government Shri S. Krishna Moorthy, Superintending Engineer, Public
Smt. Asha Sharma, Financial Commissioner Development Health Engineering, Bangalore
& Panchayats Shri K. Basavaraj, Accounts Superintendent, Rural
Shri S.C. Chaudhary, Commissioner Town & Country Development & Panchayati Raj Department
Planning Shri G.M. Vijaya Kumar, Engineer-in-Chief, Public Health
Shri Sanjay Kothari, Commissioner (Coordination) Engineering, Karnataka, Bangalore
Shri R.R. Jowel, Director, Panchayats Shri C. Gopala Reddy, Principal Secretary, Finance
Smt. Surina Rajab, Director, Local Bodies Department
Shri Phillipose Mathai, Principal Secretary, Urban
Participants Development Department
Shri K.K. Jain, Executive Officer, Municipal Committee, Shri J.P. Sharma, Chairman, Bangalore Water Supply and
Yamuna Nagar Sewerage Department
Shri Naresh Sharma, President, Municipal Committee, Shri H. Baskar, Director, Municipal Administration
Yamuna Nagar Shri G.V. Ramachandra, Additional Secretary, Urban
Shri Subedar Suman, Mayor, Faridabad Development Department
Shri Krishan Kumar, Municipal Committee, Faridabad, Shri K. Amaranarayan, Deputy Secretary, Urban
Commercial Development Department
Shri Krishan, Ladwa Thesil & District Hissar Shri K.S. Umapathy, Joint Director of Municipal
Shri Mahinder Singh, Sarpanch, Village Ladwa, Distt. Hissar Administration
Shri Balwant Singh Sihag, Sarpanch, Bhanibadshahpur Shri V.G. Takeraj, Assistant Director, Municipal Administration
Block, Barala, Hissar Shri T.D. Abhayakar, Project Leader, Decentralised Training
 159
for Urban Development Project (DTUDP), Mysore Shri S.R. Ravi Nair, Secretary, Nemon Panchayat
Shri K.P. Pandey, Commissioner, Bangalore City Corporation Shri M.K. Anil Kumar, Chairman, Standing Committee
Shri Shantha Kumar L, Secretary Urban Development Shri Pappanamcode Unni, Member
(Municipalities & UDBs) Shri G. Jayachandran Nair, Member
Shri Subhash Chandra Khuntia, Secretary (Expenditure), Shri R. Ravindran Nair, Member
Finance Department Shri J. Kamaluddin, Member
Shri M.R. Sreenivasa Murthy, Secretary, Rural Development Shri V. Mohanan Nair, Member
& Panchayati Raj Department Shri Gopakumar, Member
Shri L.K. Atheeq, Chief Executive Officer, Zilla Panchayat, Shri R. Rajendran, Member
Karwar Shri K. Pankajakshan Nair, Member
Ms. V. Manjula, Director Area Development Programmes, Smt. Mabel Glory C., Member
Rural Development & Panchayati Raj Department Smt. Thulasi Bai, C.R. Member
Ms. Renuka Viswanathan, Principal Secretary, Planning Smt. Vasantha V, Member
Department Smt. Reena V, Member
Shri B.V. Shrikant, Internal Financial Advisor, Rural
Development & Panchayati Raj Department Participants (Meeting on 25.10.1999)
Shri C.M. Shire, Additional Director, Rural Development & Shri Susan Kody, President, Karunagappally Grama
Panchayati Raj Department Panchayath
Shri Prakashan M., President, Ranni Block Panchayat and
Participants General Secretary, Kerala Blocks Panchayat Association
Shri R.C. Manjunath, President, Grama Panchayat, Kelodi, Shri U.Kalanathan, President, Vallikunnu Grama Panchayat,
Sagar Tq., Shimoga Distt Malappuram Distt
Shri Krishna Kanna Naik, President, Grama Panchayat, Shri V.Gangadharan Nadar, President, District Panchayat,
Kavanchur, Siddapur Taluk, N.K. Distt Thiruvananthapuram
Shri Remedia D.Souza, President, Z.P., Udupi Shri C.V.Joseph, President District Panchayat, Ernakulam
Shri M.H.Moksharamaiah, Melekote Grama Panchayat Shri K.R.Chandramohan, President, Kollam District
Dodhothapau TQ. Bangalore Distt Panchayat
Shri Neelkant Rao Deshmukh, Presidnet ZP Gulbarga Adv.K.P.Mariyuma, District Panchayat, Malapuram
Shri Subramanya G.Hegde, Addexaru Grama Panchayat, Shri N.Ali, Municipal Chairman
Nailgone, Honavar, Uttar Kannada Distt Smt. P.S.Zuharabi, President Tanur Block Panchayat,
Shri C.T.Rajanna, Grama Panchayat President, Hunsur Malappuram
Taluq, Mysore Distt Prof. P.K.Santha Kumari, Municipal Chairman, Guruvayoor
Ms.V. Vidyavathi, CEO, Bangalore Zila Panchayat Municipality
Shri Ajay Seth, CEO, Zila Panchayat, Bellary Shri S.J.Prasad, Municipal Chairman, Kasaragodu
Dr. M. Govinda Raju, President, CMC, Kolar
Smt. Hilda Alva, Mayor, Mangalore City Corporation Madhya Pradesh
Shri D.N. Mylarappa, Vice President, CMC Chitradurga
Shri Iqbal M. Javali, Mayor, Hubli Dharwar Municipal District Planning Committee, Vidisha
Corporation, Hubli
Chairman, Bangalore Water Supply & Sewage Department Participants
Dr. Mehtab Singh Yadav, President, Zilla Panchayat, Vidisha
Kerala Shri V.R. Naidu, Collector & Secretary, DPC, Vidisha
Shri R.P. Singh, MLA, Shamshabad
From State Government Shri Pratap Singh Raghuvanshi, Vice-President, Zilla
Shri S.M. Vijayanand, Secretary (Rural), LSG Panchayat, Vidisha
Dr. K.M. Abraham, Secretary (Finance & Resources) Shri B.P. Sharma, Member, DPC & ZP, Nateri
Shri Paloly Muhammedukutty, Minister for Local Shri Prem Narayan Tiwari, Member, DPC & ZP, Kurnai
Administration Shri Sita Ram Shivhare, Member, DPC & ZP, Vidisha
Shri K.N. Kurup, Secretary, Planning & Economic Affairs Shri Har Govind Singh, Member, DPC, Vidisha
Shri T. Balakrishnan, Secretary (UD), LSG Shri Kailash Yadav, Member, DPC, Vidisha,
Shri T.M. Thomas Isaac, Member State Planning Board Smt. Gita Devi Sharma, Member, DPC & ZP, Gyaraspur
Shri P. Kamalkutty, Director of Panchayats & Municipalities Smt. Kamla Devi Sharma, Member, DPC & ZP, Gyaraspur
Shri K. Sunder, Administrative Assistant, DMA office Shri Lekhraj Singh, Advocate Siroj & Representative of MP
Shri J. Sadanandam, Assistant Director of Panchayats, Shri S. Baghel, C.M.O., Vidisha
Thiruvananthapuram Shri K.K. Dhare, Member LDB, Vidisha
Shri A. Shahul Hameed, Administrative Assistant, Directorate Shri R.N. Patre, Jailer, Sub-Jail, Vidisha
of Panchayats Shri Deepak Gaur, D.R., Vidisha
Shri Niranjan Srivastava, Vidisha
Participants Shri S.V. Sant, Field Officer, Sericulture, Vidisha
Visit to Panchayat at Nemon Shri S.S. Agarwal, Vidisha
Smt. B. Prabhavarthy, President Shri M.P. Rajoria, SDO, PHED
Shri V. Krishnan Nair, Vice President
 160
Shri S.K. Vadavat, Dy. Dir., A.H., Vidisha Ms. Radhamani Devi, Councillor
Shri B.S. Thakur, Employment Officer, Vidisha Ms L. Rameshwori Devi, Councillor
Shri R.S. Kushal, A.D. (Hort), Vidisha
Shri R.K. Sharma, P.A. to Minister, Vidisha Manipur State Panchayat Parishad
Shri L.L. Mehar, Vidisha Shri H. Manisana Singh, Adhyaksha, Bishnupur Zilla
Shri R.K.Bigaya, Labour Officer, Vidisha Parishad
Shri S.G. Shekh, District Statistical Officer, Vidisha Shri K. Tombi Singh, General Secretary
Shri D.K. Indulis, A.R.C.S., Vidisha Shri L. Birenyaima Singh, President
Shri Ajay Jasu, Vidisha
Shri Raghvendra Upadyay, Vidisha Nagaland
Shri R.R. Kushvaha, Vidisha
Shri A.K. Jain, EE (Com) MP EB From State Government
Shri M.C. Yadav, EE (ST) MP EB Shri Toshi Aier, Commissioner & Secretary, RD
Dr. S. Kushvaha, Deputy Director (Agriculture), Vidisha Shri Lalthara, Additional Chief Secretary & Financial
Shri S.B. Gupta, Divisional Forest officer, Vidisha Commissioner
Dr. A.K. Churvadi, Chief Medical Officer (Health), Vidisha Shri A. K. Jain, Home Commissioner
Shri R.K. Drawkanath, EE, PHED, Vidisha Shri T.N. Mannen, Development Commissioner
Shri M.L. Harihar, Representative of Education Department
Shri P.K. Mishra, ZP Office, Vidisha Participants
Shri Y. Mhonchumo Lotha, Secretary, VDB, Wokha
Maharashtra Shri R. Etsorhomo, Chairman, VC, Wokha
Shri Latongwati, Secretary, VDB, Mokokchung
From State Government Shri I. Tajen Changkija, Chairman, VC, Mokokchung
Shri R.R. Patil, Minister for Rural Development Shri Vui Belho, Secretary, VDB, Kohima
Smt. Chandra Aiyangar, Secretary, Rural Development Shri Ato Rutsa, Chairman, VC, Phek
Shri Rama Nand Tiwari, Principal Secretary (Urban Shri Timikha Koza, Secretary, VDB, Phek
Development) Shri Kughato Teptho, Chairman,VC, Zunheboto
Shri K. Navinakshan, Commissioner, Bombay Municipal Shri W. Wangshok, Secretary, VDB, Mon
Corporation Shri L. Toiho Achumi, Secretary, VDB, Dimapur
Shri Ratnakar Gaikwad, Commissioner, Pune Shri R. Litsase, Secretary, VDB,Tuensang
Shri T. Chandrashekar, Commissioner, Thane Shri Ivukhu, Secretary, VDB, Zunheboto
Shri Baldeosingh, Commissioner, Aurangabad Shri Lutozu Katy, Chairman, VC, Dimapur
Smt. Sujata Sohnik, Commissioner, Nashik Shri K. Asokhyong, Chairman, VC, Tuensang
Shri C. Shaoba Konyak, Chairman, VC, Mon
Participants Shri Medo Selhou, Member, VC, Kohima
Shri Harshwardhan V. Sakeel, Zila Parishad Buldana Shri Vimedo, Chairman, VC, Kohima
Dr. (Smt.) Shoba D. Backhar, Mayor of Nasik Shri T. Tingyei Konyak, Chairman, Mon Town Committee
Shri Hareshwar Laxman Patil, Mayor of Mulail Shri Sali Khesoh, Chairman, Phek Town Committee
Smt. Rita Raghunath Khadse, President of Akola Shri S.K. James, Chairman, Kiphire Town Committee
Shri Suresh Namdeo Rao, President of Anjanyoon Surji, Shri N. Khokiye, Chairman, Zunheboto Town Committee
Distt. Amravati Shri Vatsu Meru, Chairman, Kohima Town Committee
Shri Madhav Dattaray Patil Bhadave, President, Zila Shri E. Yanpothung Lotha, Chairman, Wokha Town
Parishad, Dhule Committee
Shri Narayanrao Krishnaji Pawar, President of Zila Parishad, Shri Jongshi Lemba, Vice Chairman, Mokokchung Town
Satara Committee
Shri Mohite Patil Madavsinh S., Sholapur Zila Parishad Ms. Abelu, Vice Chairperson, Kohima Town Committee
Shri Babanrao Patil, President, Zila Parishad, Thane Shri Sawathang Kez, Member, Kohima Town Committee
Dr. Kalpana Pandey, Mayor, Nagpur Municipal Corporation Ms. T. Sanuo Linyu, Women VDB, Kohima
Ms. K. Kire, Women VDB, Kohima
Manipur
Orissa
All Manipur Municipal Council and Nagar Panchayats
Joint Action Committee From State Government
Shri N. Gitchandra, President Shri Habibulla Khan, Minster, Panchayati Raj
Shri Ksh. Chaoba, Secretary Shri S.B. Mishra, Chief Secretary
Shri Th. Chandramani, Chairperson Shri S.M. Pattanaik, Development Commissioner
Shri M. Shyamchandra, Councillor Shri K.B. Verma, Principal Secretary, Finance
Shri L. Nungshithoi Singh, Councillor Shri P.K. Mishra, Additional Chief Secretary
Shri Md. Rasid Ali, Councillor Shri C. Basu, Commissioner-cum-Secretary, Panchayati Raj
Ms. O. Rojani Devi, Councillor Shri S. Baya, Director and Additional Secretary, Panchayati Raj
Ms. Taruni Devi, Councillor Shri K.C. Badu, Additional Secretary, Finance Department
 161
Shri G.V.V. Sarma, Director, Special Projects, P.R. Participants
Department Shri Jagdish Loomba, Mayor, Municipal Corporation,
Shri P.C. Satpathy, F.A.-cum- Joint Secretary, PR (GP) Ludhiana
Department Shri S. Tejwant Singh, President, Municipal Committee,
Shri D.P. Dhal, Deputy Secretary, P.R. Department Amloh
Shri Nabaghana Tripathy, Under Secretary, P.R. Department Shri Satish, President, Municipal Committee, Pathankot
Shri Jagannath Raut, Minister of State, Urban Development Shri Rakesh Jyoti, President, Municipal Committee,
Shri H.S. Chahar, Commissioner-cum-Secretary, Housing Gurdaspur
& Urban Development Shri Rattan Singh Dhir, Chairman, Zila Parishad., Roop
Shri S.C. Mantry, Director, Municipal Administration Nagar
Shri A. Rath, Agriculture Production Commissioner Shri Harbhag Singh, Chairman, Block Samiti, Kharar
Shri Inderjit Singh, Sarpanch, Village Bhuller
Participants Dr. Kuldeep Singh Gill, President, Municipal Committee,
Dr. Jagannath Mohapatra, Chairperson, Bhubaneshwar Moga
Municipal Corporation
Shri Ananda Jena, Chairperson, Sambalpur Municipality Rajasthan
Shri Prabir Mohantty, Chairperson, Kendrapara Municipality
Ms. Jagat Mohini Rath, Chairperson, Jeypore Municipality From State Government
Shri Sridhar Sahoo, Chairperson, Dhenkanal Municipality Shri Shanti Dhariwal, Minister for UDH & LSG
Shri Pradeep Kumar Sahu, Chairperson, Bolangir Shri C.P. Joshi, Minister, Panchayati Raj & Rural
Municipality Development
Shri Nanda Kishore Agarawala, Chairperson, Rajgangpur Shri P.N. Bhandari, ACS & DC
Municipality Shri G.S. Sandhu, Secretary, UDH & LSG
Shri Jyotindra Nath Mitra, Chairperson, Khurda N.A.C Shri Ashish Bahuguna, Secretary, Panchayati Raj
Shri Rama Chandra Sahu, Chairperson, Anandpur, N.A.C Shri C.R. Chaudhary, Director, Local Bodies
Smt. Kamala Tiria, President, Zilla Parishad, Mayurbhanja Shri P.B. Punia, CEO, Jaipur Nagar Nigam
District Shri K.S. Chouhan, CAO, JMC
Shri Laxman Mallick, President, ZP, Jagatsinghpur District Shri M.L. Gupta, Commissioner, M.C., Alwar
Shri Rudra Madhav Ray, President, ZP, Nayagarh District Shri M.N. Kaushik, E.O., M.B. Kotputli
Shri Gopinath Pradhani, President, ZP, Nawarangpur District Shri Suresh Chand, AAO, M.C. Bharatpur
Shri Hitesh Bagarthi, President, ZP, Nawapara District Shri H.N. Rathi, SE, JMC, Jaipur
Shri Brundaban Majhi, President, ZP, Sambalpur District Shri Ashok Yadav, Commissioner, Udaipur M.C
Shri Bhupal Chandra Mohapatra, President, ZP, Balasore Shri Ratan Lahoti, Commissioner, Corporation Jodhpur
District Shri R.K. Sharma, Chief Town Planner, Raj
Shri Digambar Kar, Vice President, ZP, Jajpur District Shri Ravi Dutta Sharma, Municipal Commissioner, Bhilwara
Smt. Satyabhama Behera, Vice President, ZP, Dhenkanal Shri Mangat Ram Jat, Executive Officer, M.B. Kishangarh
District Shri S.K. Aswal, CAO, DLB
Shri Narayan Patra, ZP Member, Tentulikhunti, nawarangpur Shri S.C. Soni, S.E., DLB
District Shri K.R. Kamlesh, CEO, Nagar Nigam, Kota
Shri Laxman Mehera, ZP Member, Deogaon, Bolangir Shri J.P. Saini, Commissioner, Municipal Council, Beawar
District
Smt. Umarani Patra, Chairman, Panchayat Samiti, Bhogarai, Participants
Balasore District Shri P.C. Saini, Chairman, Municipal Board, Kotputli
Shri Nilamani Pradhan, Chairman, Panchayat Samiti, Gop, Ms. Nirmala Verma, Mayor, Jaipur, Nagar Nigam
Puri District Shri Hari Prakash Varma, Ayuktha, Nagar Palika, Ajmer
Shri Tripati Guru, Chairman, Panchayat Samiti, Kundra, Shri Ishwar Lal Sahu, Mayor, Nagar Nigam, Kota
Koraput District Shri Pramod Sankhla, Sabapathy, Nagar Parishad, Beawar
Shri Vir Kumar, Sabhapaty, Nagar Parishad, Ajmer
Shri R. Narahari Reddy, Sarapanch, Narendrapur Gramya
Smt. Madhu Jajoo, Adhyaksa, Bhilwara Nagar Parishad
Panchayat, Chhatrapur Panchayat Samiti, Ganjam District
Shri Mohamed Ajmal, Sabapathy, Nagar Parishad, Tonk
Ms. Fajina Tafsun, Sarpanj, Asana, Gramya Panchayat,
Shri Tribuvanpathi, Ayiktha, Nagar Parishad, Bharatpur
Kundra Panchayat Samiti, Koraput District
Shri Ramcharan Bohra, Pramukh, Jaipur Zila Parishad
Shri Hanuman Shay Yogi, Member, Zila Parishad, Jaipur
Punjab Shri Subhash Chandra Sharma, Member Secretary, Zila
Parishad, Jaipur
From State Government Smt. Anita Chaudhary, Pramukh, Panchayat Samiti, Amer
Shri Balramji Das Tandon, Minister, Urban Local Bodies Shri Jagdish Narayan Meena, Pramukh, Panchayat Samiti,
Shri S. Nirmal Singh Kahlon, Minister, Rural Development Jamuya Ramgarh
Shri N.K. Arora, Principal Secretary, Local Government Shri Lakshman Haritwal, Pradhan Sarpanch, Panchayat
Shri J.S. Gill, Financial Commissioner, Rural Development Samiti Sanganer
& Panchayats Shri Vikram Singh Tomar, Pradhan, Kotputli
 162
Dr. Banwari Lal Meena, Pradhan, Bassi Tripura
Shri Sanghat Singh, Pradhan, Jhotwara, District Jaipur
Smt. Sheela Raj, Pradhan, Phagi, Japur Participants
Shri Pokarmal Gujjar, Pradhan, Viratnagar Shri A.K. Saha, Chairperson, Agartala Municipal Council
Shri Ram Singh Yadav, Sarpanch, Gram Panchayat, Shri Ashim Chakraborty
Khatipura Shri Gourchand Ray
Shri Madan Lal Sharma, Sarpanch, Gram Panchayat, Shri Hemanta Khifamatia
Kacholiya Shri Ratan Bhammik, Sabhadipati, Dakshin Tripura Zilla
Smt. Geetha Chaudhary, Sarpanch, Sanganer, Vatika Parishad
Smt. Madhu Bharadwaj, Sarpanch, Palawala, Bassi Shri Bhannot S.G., Sabhadipati, Tripura Zilla Parishad
Shri Ram Pradad Chaudhury, Sarpanch, Vatika
Shri Satya Narayan Sharma, Sarpanch, Gram Panchayat Uttar Pradesh
Jalsur, P.S. Amer
From State Government
Shri Lokendra Singh Vatika, Up-Sarpanch, Vatika
Shri Laljee Tandon, Minister of Urban Development
Shri Jai Shankar Mishra, Secretary, Urban Development
Tamil Nadu
Shri Bhola Nath Tiwari, Chairman, Jal Nigam
Ms. Anita Bhatnagar Jain, Special Secretary, Urban
From State Government
Development
Shri Ko.Si.Mani, Minister for Local Administration
Shri J.P. Vishwakarma, Director, Local Bodies
Shri A.P.Muthuswamy, Chief Secretary Shri R.K. Singh, Special Secretary, Urban Development
Shri P.V.Rajaraman, Secretary, Finance Department Shri R.S. Tripathi, Joint Secretary, Urban Development
Shri Sukavaneshvar, OSD and Ex-Officio Secretary, Finance Shri Chandra Prakash Singh, Chief Executive Officer,
Department Lucknow
Ms. S.Malathi, Secretary, Municipal Administration and Water Shri R.P. Morya, Chief Executive Officer, Ghaziabad
Supply Department Shri O.P. Singh, Chef Executive Officer, Agra
Shri R.C.Panda, Secretary, Rural Development Department Shri Chander Prakash Tripathi, Joint Director, Local Bodies
Shri K.Ganesan, Commissioner of Municipal Administration Shri P.K. Singh, Assistant Director (Accounts), Local Bodies
Shri K.Shanmugam, Director of Rural Development Shri A.P. Verma, Additional Chief Secretary and Agricultural
Dr.T.Prabhakara Rao, Director of Town & Country Planning Production Commissioner
Shri C.P.Singh, Managing Director, Metro Water Shri Sushil Chandra Tripathi, Principal Secretary, Finance
Shri S.Jayaraman, Additional Director of Municipal Shri M. Haleem Khan, Secretary, Finance
Administration Shri Om Parkash, Secretary, Panchayati Raj
Shri P.Kolappan, Commissioner, Corporation of Chennai Shri Indu Kumar Pandey, Internal Financial Advisor
Shri M.Govindan, Secretary, Housing Department Shri S.L. Kesarwani, Director, Panchayati Raj Institutions
Shri D.Chandrasekaran, Director of Town Panchayat,
Kuralagam, Participants
Shri A.M.Kasiviswanathan, Managing Director, TWAD Board Shri Rajesh Garg, Adhyaksh, Nagar Palika Parishad,
Shri S.A.Subramani, Vice Chairman, Chennai Metropolitan Roorkee
Development Authority Ms. Sandhya Rani Srivastava, Adhyaksha, Nagar Palika,
Shri C.Muthukumaraswamy, Joint Secretary, Rural Jaunpur
Ms. Snehalata Pal, Adhyaksha, Nagar Palika, Basti
Development Department
Ms. Nirmala Singh, Adhyaksha, Nagar Palika Parishad,
Shri K.Gopal, Additional Director of Rural Development
Faizabad
(General)
Ms. Saroj Gupta, Adhyaksha, Nagar Palika Parishad,
Shri T.R.Vedhanayagam, Additional Director of Rural
Shahajanpur
Development
Ms. Babyrani Maurya, Nagar Pramukh, Agra
Shri R.B.S.Monie, Director, Local Fund Audit Shri Rajinder Gupta, Nagar Pramukh, Gorakhpur
Shri Raghvendra Singh, Adhyaksh, Nagar Palika Parishad,
Participants Raibareilly
Shri M.K. Stalin, Mayor, Chennai Corporation Shri Dinesh Garg, Mayor, Ghaziabad
Shri R.S. Bharati, Alandur Municipality, Chennai Shri Satish Chander, Mayor, Lucknow
Shri K. Subbaraja, Chairman, Rajapalayam Municipality Shri Sham Prasad, Adhyaksh, Nagar Panchayat, Dayalbagh, Agra
Shri V.A. Chinnappan, Chairman, Veerappan Chatram Town Shri Prakash Gupta, Adhyaksh, Nagar Palika, Shahajanpur
Panchayat Shri Jot Singh, Adhyaksh, Nagar Palika Parishad, Musoorie
Shri R. Illango, President, Kuthabakkam Panchayat Shri Prakash Chander Joshi, Adhyaksh, Nagar Palika
Shri K. Sunder, Uthiramerur Town Panchayat, Kanchipuram Parishad, Almora
District Shri Sukhsagar Mishra, Adhyaksh, Nagar Palika Parishad,
Smt. Geetha Jeevan, Chairman, District Panchayat, Hardoi
Thoothukudi Shri Haripratap Singh, Adhyaksh, Nagar Palika Parishad,
Shri Ra. Ramaraju, Chairman, District Panchayat, Trichy Pratapgarh
 163
Dr. Ghannu Lal Gautam, Adhyaksh, Nagar Palika Parishad, Shri Bijendra Singh, Pradhan, Gram Panchayat, Khaspariya
Jhansi Shri Ramjanam Yadav, Pradhan, Zila Panchayat, Aajamgarh
Shri Arun Kumar Dubey, Adhyaksh, Nagar Palika Parishad,
Mirzapur West Bengal
Shri Dinesh Kumar, Adhyaksh, Nagar Panchayat, Ghazipur
Shri Babu Lal Giri, Pradhan, Gram Panchayat, Sarai Usna From State Government
Shri Ram Naresh Yadav, Pradhan, Gram Panchayat, Pedari, Dr. Surya Kanta Mishra, Minister for Land Reforms,
Etawaha Panchayats and Rural Development
Shri Mohd. Yusuf, Pradhan, Gram Panchayat, Okaari Shri A. Bhattacharya, Minister for Municipal Affairs and Urban
Shri Shiv Shanker, Pradhan, Gram Panchayat, Sheikhpur Development
Ms. Bina Kushwaha, Pradhan, Gram Panchayat, Hussain Shri S.N. Ghosh, Principal Secretary, Panchayat and Rural
Nagar Development
Shri Ram Pal, Pradhan, Gram Panchayat, Khujoti Shri A.M. Chakrabarty, Secretary, Municipal Affairs
Shri Virendra Singh, Pradhan, Gram Panchayat, Dostinagar Shri N. Basak, Principal Secretary, Urban Development
Shri Prem Chander Mishra, Pradhan, Gram Panchayat, Shri R. Kar, Director, Panchayats
Banderkheda Shri S.B. Barma, Secretary, Development and Planning
Shri Rakesh Singh, Pradhan, Gram Panchayat, Babupur Shri Asim Barman, Commissioner, Calcutta Municipal
Ms. Naajneen Kidwai, Pradhan, Gram Panchayat, Badagaon Corporation
Shri Vanshidhar Raj, Pradhan, Zila Panchayat, Rakiri Shri P.K. Pradhan, Chief Executive Officer, Calcutta
Smt. Vidya Singh, Pradhan Gram Panchayat, Badera Metropolitan Development Authority
 164
Annexure I.9E
(Para 1.12)
List of participants who attended the discussions with Autonomous Councils
during the visits of the Finance Commission

Assam Shri H.B. Ban, Minister, DCA

Shri P. J. Bazeley, Principal Secretary, DCA
Autonomous Councils Shri P.W. Ingty, Secretary, DCA
Shri P.P. Verma, Commissioner & Secretary, WPT & Shri W.D. Lyungwi, Chief Executive Member, KHADC
B.C. Department Shri E. Norgket, Secretary, KHADC

Rabha Hasong Autonomous Council Also present:

Shri Sarat Ch. Rabha, Chief Executive Member Shri J.M. Mauskar, Commissioner &
Shri Md. Mizanur Rahman, I/C Principal Secretary Secretary Finance Department
Shri Karma Bhusan Rabha
Dr. Sarat Rabha North Eastern Council (NEC)
Shri Dhaneswar Rabha, Executive Member Shri J. S. Syiem, Planning Advisor
Shri Prabin Rabha Shri Gautam Sen, Finance Advisor
Shri M.R. Rabha Shri L. Chuaungo, Deputy Secretary
Dr. B. K. Borgohain, Advisor (Health)
N.C.Hills Autonomous Council Shri P. Kant Advisor (Forest)
Shri Prakanta Warisa, Chief Executive Member Shri L.K. Ganju, Advisor (T & C)
Shri J. Bey, Chief Executive Member Shri W. Synrem, Director (Manpower Development)
Shri P. Johari, Principal Secretary (N) Dr. A. K. Verma, Director (Science & Technology)
Shri Aftab Ahmed, Principal Secretary Shri F. R. Kingty, Advisor (Banking & Industry)
Shri Mahendra Ch. Nunisa, Executive Member Dr. G. C. Medhi, Advisor (Horticulture)
Shri R. Tokbi, Executive Member Shri D. K. Singh, Advisor (IFC&WSM)
Shri D.N. Sing, F & A.O Dr. B. P. Bhattacharya, Advisor (Minerals)
Shri P. S. Agrawal, Advisor (Power)
Lalung Tiwa Autonomous Council
Shri C. Dewri, Chief Executive Member
Manipur
Shri M. Das, Principal Secretary
Shri Paban Manta, Executive Member
Autonomous District Council
Shri Devajit Bordoloi, Executive Member
Shri B.D. Behring, ex-M.P./MLA
Shri Bakul Dewri, Executive Member
Shri Nadi Ram Dewri, Executive Member
Mizoram
Bodoland Autonomous Council
Autonomous District Council
Shri K. Narjaree, Chief of BAC
Shri L. Rynjah, Principal Secretary
Shri J. Chakraborty, Joint Secretary Lai Autonomous District Council
Shri D.N. Brahma, Deputy Secretary Shri P.B. Chakma, Chief Executive Member
Shri K. Pathak, Executive Member
Mara Autonomous District Council
Mishing Autonomous Council Shri S. Khipo, Chief Executive Member
Shri Mahesh Doley, Chief Executive Member
Shri K.K. Bora, Principal Secretary Chakma Autonomous District Council
Shri J.D. Ahmed, Financial Adviser Shri F. Rohnuna, Chief Executive Member

Karbi Anglong Autonomous Council Tripura

Shri S. Theiek, Secretary
Shri Jofsou Bey, Chief Executive Member Tripura Tribal Areas Autonomous District Council
Shri Ransing Tokbi, Executive Member (TTAADC)
Shri Radha Charan, Debbarma,
Meghalaya Shri Ranjit Debbarma, Chief Executive Member
Shri Rajendra Reaney, Executive Member
District Autonomous Council Shri M. Nagaraja, Chief Executive Officer
Shri N.S. Chisisn, Secretary (E A) Shri Ramkrishna Debbarma, Deputy Executive Officer
Shri M. Passal, Secretary (E C) (Finance)
 165
Annexure I.10
(Para 1.13)

List of Secretaries to the Government of India and other Senior Officials who met the Commission

Sl. No. Name & Designation Date(s) of Meeting Sl. No. Name & Designation Date(s) of Meeting
1. Shri Ajit Kumar, Secretary 15. Shri P.V. Vasudevan
Ministry of Defence August 13, 1998 Financial Commissioner,
Railway Board, Ministry
2. Shri Prabir Sengupta,
of Railways November 26, 1999
Secretary, Department of
Defence Production and 16. Admiral Sushil Kumar
Supply Ministry of Defence November 24, 1998 Chief of the Naval Staff,
Naval Headquarters
3. Dr. N.C. Saxena
Secretary, Department of Ministry of Defence December 9, 1999
Rural Development, 17. Shri Shyamal Dutta
Ministry of Rural Areas Director, Intelligence Bureau December 16, 1999
and Employment December 7, 1998

4. Dr. Vijay Kelkar 18. Dr. N.C. Saxena

Secretary, Ministry of Finance December 9, 1998 Secretary, Planning Commission December 22, 1999

5. Dr. E.A.S. Sarma 19. Shri P.G. Mankad

Secretary, Department December 9, 1998, Secretary, Ministry of Finance January 8, 2000
of Expenditure June 3, 1999 &
Ministry of Finance January 8, 2000 20. Shri C.M. Vasudev
Secretary, Department of
6. Dr. Shankar N. Acharya Expenditure, Ministry of Finance - do -
Chief Economic Adviser, December 9, 1998
Ministry of Finance & January 8, 2000 21. Shri S.D. Mohile
7. Shri J.S. Mathur Chairman, Central Board
Addl. Secy.(Budget), of Excise and Customs - do -
Deptt. of Economic Affairs,
Ministry of Finance - do - 22. Shri Ravi Kant
Chairman, Central Board
8. Shri V. Govindarajan of Direct Taxes - do -
Addl. Secretary (FB),
Deptt. of Economic Affairs, 23. Shri T.R. Rustagi
Ministry of Finance December 9, 1998 Joint Secretary (TRU),
Department of Revenue,
9. Shri A.K. Pradhan
Ministry of Finance - do -
Joint Secretary (PF-I),
Deptt. of Expenditure,
24. Shri S.C. Pandey
Ministry of Finance - do -
Director (Budget), Deptt.
10. Ms. (Prof.) A.S. Desai of Economic Affairs,
Chairperson, University Ministry of Finance - do -
Grants Commission April 20, 1999
25. Shri S.S. Boparai
11. Shri Vishwanath Anand
Secretary, Ministry of Coal February 7, 2000
Secretary, Ministry of
Environment & Forests September 8, 1999
26. Shri A.V. Gokak
12. Shri R.S. Mathur Secretary, Department
Secretary, Department of of Fertilizers
Statistics and Ex-officio DG, Ministry of Chemicals
Central Statistical Organisation September 14,1999 and Fertilizers March 9, 2000

13. Shri Bhaskar Barua 27. Shri Probir Sen Gupta

Secretary, Ministry of
Secretary, Ministry of
Agriculture. September 29,1999
Petroleum and Natural Gas March 9, 2000
14. Shri V.K. Agarwal
Chairman, Railway Board, 28. Shri V.K. Pandit
Ministry of Railways November 26, 1999 Secretary, Ministry of Power March 10, 2000
 166
29. Shri M.D. Asthana 37. Shri Rajendra Prasad
Secretary, Law Secretary-cum-LR,
Department of Public Government of Bihar - do -
Distribution, Ministry
of Food and 38. Shri Pradip Kumar Biswas
Consumer Affairs March 10, 2000 Judiciary Secretary,
Government of West Bengal - do -
30. Shri M.K. Kaw
Secretary, Department 39. Shri K.D. Phukan
of Education, Ministry Joint LR &
of Human Resources Joint Secretary,
Development March 14, 2000 Judicial Deptt.
Government of Assam - do -
31. Shri B.K. Chaturvedi
Special Secretary, 40. Shri P.D. Gujarathi
Insurance Division Secretary/KLA,
Department of Economic Legal Deptt.,
Affairs, Ministry of Finance March 15, 2000
Government of Gujarat - do -
32. Shri A.R. Nanda
41. Shri G. Bhavani Prasad
Secretary, Department
Secretary, Law,
of Family Welfare
Government of
Ministry of Health and
Andhra Pradesh - do -
Family Welfare March 15, 2000

33. Shri Ashok Pahwa 42. Shri T.V. Masilamani

Secretary, Ministry of Registrar, High Court,
Urban Development April 3, 2000 Chennai - do -

34. Shri Surendra Nath 43. Shri Rajaram Verma

Addl. Secretary, Joint LR-cum-Addl.
Department of Justice, Director of Litigation,
Government of India April 4, 2000 Government of Rajasthan - do -

35. Shri N.K. Mehrotra 44. Shri Kamal Pande

Principal Secretary, Secretary, Ministry of
Judicial/LR, Government Home Affairs April 19, 2000
of Uttar Pradesh - do -
45. Shri Arun Bhatnagar
36. Shri Chandresh Bhusan Secretary, Department
Principal Secretary, of Rural Development
Judicial/LR, Government of Ministry of Rural Areas
Madhya Pradesh - do - and Employment April 27, 2000
 167
Annexure I.11 Annexure I.12
(Para 1.14) (Para 1.15)

Meeting with the Ministry of Railways Meeting with the Director, Intelligence Bureau and
State Directors General of Police

1. Shri V.K. Aggarwal,

Chairman, Railway Board 1. Shri Shyamal Dutta,
and Ex-officio Principal Secretary, Director,
Ministry of Railways. Intelligence Bureau,
New Delhi
2. Shri P.V. Vasudevan,
Financial Commissioner (Railways) 2. Shri F.C. Sharma,
and Ex-officio Secretary, Director General of Police,
Ministry of Railways. Tamil Nadu

3. Ms. Deepali Khanna, 3. Shri K.T.D. Singh,

Executive Director, Finance (Budget), Director General of Police,
Railway Board. Tripura

4. Shri P.C. Nautiyal, 4. Shri K.A. Jacob,

Joint Director (Expenditure), Director General of Police,
Railway Board. Bihar

5. Shri Amitabh Gupta,

Director General of Police,
Rajasthan

6. Shri Ajai Raj Sharma,

Commissioner of Police,
Delhi

7. Shri B.B. Nanda,

Director General,
Bureau of Police Research
and Development,
New Delhi

8. Shri Rakesh Jaruhar,

Director,
Bureau of Police Research
and Development,
New Delhi
 168
Annexure I.13
(Para 1.16)
Note on
Terms of Reference
of
Eleventh Finance Commission
(The Terms include Union Territories)

The Secretariat of the Eleventh Finance Commission has interpreted the Terms of Reference of the Eleventh
Finance Commission issued by the President in his Order dated 3rd July, 1998, as covering only the States excluding
Union Territories. In view of this, memoranda and data have been called with reference to these terms of reference only
from the States other than the Union Territories. In the meetings of the State Finance Ministers held by the Commission,
only States other than the Union Territories were invited to participate. This interpretation of the Secretariat of the Eleventh
Finance Commission is inconsistent with the Constitutional provisions and the Terms of Reference issued by the President.

2. STATES
(i) Article 1 of the Constitution deals with the name and territory of the Union. The relevant extract of this
Article is reproduced below:
“ Name and territory of the Union.—(1) India, that is Bharat, shall be a Union of States.
(2) The States and the territories shall be as specified in the First Schedule.”

The First Schedule of the Constitution of India relating to the States includes both “States” as well as “Union
Territories”.
(ii) This Article was amended by the Constitution (Seventh Amendment) Act, 1956., which came into force
with effect from 1.11.1956. Prior to this amendment, the States which formed the Union of India were
classified into four categories and enumerated in Part A, B, C and D of the First Schedule. After this
amendment, there are only two categories of States, viz., ‘States’ and the ‘Union Territories’. These are
specified in the First Schedule to the Constitution.
(iii) Section 3(58) of the General Clauses Act, 1897, defines “State” as follows:
“58 “State”
“(a) as respect any period before the commencement of the Constitution (Seventh Amendment) Act, 1958,
shall mean a Part A State, a Part B State or a Part C State, and (b) as respect any period after such
commencement, shall mean a State specified in the First Schedule to the Constitution and shall
include a Union Territory”.
(iv) That the term “State” includes “Union Territories” under the Constitution of India has been confirmed in the
various judgements of the High Courts and the Supreme Court. Some of these judgements are cited below:
1. AIR 1958 Mad 450 (451: 1958 Mad WN400)
2. AIR 1965 Cal 282 (289, 290)
3. Union of India Vs. Prem, A. 1992, SC 165 (Para 10A)
4. AIR 1970 SC 1126
5. AIR 1976 SC 1856
In view of this, when the word “State” occurs in Article 280 of the Constitution of India under which a Finance
Commission is set up and its terms of reference prescribed, it includes not only States but Union Territories also.

3. ADMINISTRATION OF UNION TERRITORIES:

Union Territories are not part of the Central Government. These are separate entities. Part VIII of the Constitution
relating to the Union Territories deals with administration of the Union Territories. Article 239(A), 239(AA), 239(AB),
239(B), 240 and 241 deals with the various aspects of administration, legislation and judiciary of the Union Territories.
Under these provisions, the President is charged with the duty of administering the Union Territories. In this capacity, he
does not function as Head of the Central Government but, instead, functions as the Head of the Union Territory under
powers specially vested in him under 239. The Supreme Court has held in Satyadev Vrs. Padhamdev – a 1954 SC 586
that though the Union Territories are centrally administered under the provisions of the Article 239, they do not become
merged with the Central Government.
 169

4. THE PANCHAYATS
Part IX of the Constitution of India deals with Panchayats. Under Article 243-L of the Constitution, the provisions
of Part IX relating to the Panchayats have been made applicable to the Union Territories and it has been specified in this
Article that references to the Governors of the States are to be treated as references to the Administrators of the Union
Territories appointed under Article 239 and references to the Legislatures etc. are to be treated in the case of Union
Territories having Legislative Assemblies to that Legislative Assembly.

5. THE MUNICIPALITIES
Part IXA of the Constitution deals with Municipalities. Under Article 243-ZB , the provisions of this Part have been
made applicable to the Union Territories in the same manner as in the case of Panchayats.
6. ANALYSIS OF TERMS OF REFERENCE:
(i) It is clear from the above analysis that term 3(a) of the Terms of Reference of the Eleventh Finance Commission
relating to the distribution between the Union and the States of the net proceeds of taxes covers both the
States and the Union Territories. Various Finance Commissions have in the past indicated the share of the
Union Territories in the taxes but their distribution inter se between different Union Territories has been left
to the discretion of the Central Government. There is nothing in this term of reference to prevent the
Finance Commission to even indicate the inter se share of the Union Territories in the overall share earmarked
for Union Territories. This aspect can be further examined if considered necessary in the context of the
Article dealing with it, in consultation with Shri N.C. Jain, the Law expert and full implications of devolution of
taxes to the States and the Union Territories worked out.
(ii) Similarly, the term 3(b) which governs the grants-in-aid of the revenues under Article 275, it is permissible
for the Finance Commission to give specific or general grants to the Union Territories. This aspect can also
be further examined in consultation with Shri N.C. Jain, the legal expert in the Commission.
(iii) As regards the term 3 (c) which relates to the measures needed to augment the Consolidated Fund of a
State to supplement the resources of the Panchayats in the State on the basis of the recommendations
made by the State Finance Commission, the Finance Commission is duty-bound to deal with Panchayats
in the Union Territories in view of the specific provisions contained in Article 243-L of the Constitution. It is
understood that a separate Finance Commission was appointed for the Union Territories and this Commission
has also submitted its report. The Eleventh Finance Commission is duty-bound to consider the
recommendations of the Finance Commission of the State relating to the Union Territories and make
appropriate recommendations in respect of Panchayats in the Union Territories.
(iv) Similarly, in the term 3(d), the Finance Commission is required to make recommendations regarding measures
needed to augment the Consolidated Fund of a State to supplement the resources of the Municipalities in
the State on the basis of the recommendations made by the Finance Commission of the State. In view of
the specific provisions contained in Article 243-ZB of the Constitution, the Eleventh Finance Commission is
duty-bound to deal with the report of the State Finance Commission relating to the Union Territories and to
make suitable recommendations in respect of the Municipalities in various Union Territories.
(v) The term of reference contained in para 4 relating to the review of the state of the finances of the Union and
the States also covers the finances of the ‘Union Territories’. The word “State” used in this term has to be
interpreted in the manner in which the word “State” is incorporated in the Constitution of India. The Eleventh
Finance Commission cannot take a unilateral decision and exclude “Union Territories” ignoring the definition
of the “State” in the Constitution of India and the General Clauses Act referred to in the earlier part of this
note.

Conclusion
The Secretariat of the Eleventh Finance Commission in not calling for information from the Union Territories in
respect of their finances, local bodies, the functions and revenues allocated to the local bodies after the 73rd and 74th
Constitutional Amendments has been neglecting an important part of the terms of reference issued by the President
under Article 280 of the Constitution. It is, therefore, suggested that this should be rectified and the information in respect
of the finances, Panchayats and Municipalities of the Union Territories also called for and studied in the Commission.

Sd/-
(J.C. Jetli)
Member
06.05.99
Member Secretary
 170
Annexure I.14
(Para 1.16)

T.N. SRIVASTAVA FINANCE COMMISSION

Member Secretary 9TH & 10TH FLOOR,
Tel: 3358457 BANK OF BARODA BLDG.
NEW DELHI – 110 001

MOST IMMEDIATE

D.O.No.El.FC/Coord/UT/2/39/98-99 July 9, 1999

Dear Dr. Kelkar,

Subject: Clarification as to whether the word ‘State’ used in Chapter I of Part XII of the Constitution and Article 280(3) of
the Constitution includes ‘Union Territories’ – regarding.

I am writing this letter to request you to obtain a clarification on the interpretation of the word ‘State’ used in the
Constitution and whether it includes the word ‘Union Territories’. As you may be aware the Presidential Notification dated
3 July, 1998 requires the Finance Commission to make recommendations, inter alia, on the distribution between the
Union and the States of the net proceeds of the taxes which are to be or may be divided between them under Chapter I of
Part XII of the Constitution and the allocation between the States of the respective shares of such proceeds. The Commission
is also required to make recommendations regarding the principles which should govern the grants-in-aid of the revenues
of the States out of the Consolidated Fund of India and the sums to be paid to the States which are in need of assistance
by way of grants-in-aid of their revenues under Article 275 of the Constitution.

2. Some Members of the Commission have put forth a view that the word ‘State’ used in Chapter I of Part XII of the
Constitution and especially in Article 280 of the Constitution includes ‘Union Territory’. A divergent view has been expressed
by some other Members stating that the word ‘State’ does not include ‘Union Territories’, and that previous Finance
Commissions have rightly given recommendations for sharing of taxes between Union and States, excluding Union
Territories, inter se distribution between the States excluding the Union Territories as also on other Terms of Reference
indicated in the Presidential Order.

3. A background note on the subject is enclosed. In view of the position stated therein, it has become necessary to
obtain the clarification from the President on the following issues:

i) Whether the word ‘State’ as used in Chapter I of Part XII of the Constitution includes ‘Union Territory’;
ii) Whether the Finance Commission in discharging its functions under Article 280(3)(a)(b)(bb)(c) & (d) is
required to make recommendations both in respect of ‘States including Union Territories’ or ‘States excluding
Union Territories’.
4. Since the Commission has to give its report by 31st December, 1999, an early action in the matter is requested.

With regards,

Yours sincerely,

- Sd -
(T.N. Srivastava)

Dr. Vijay L Kelkar,

Finance Secretary
Ministry of Finance
North Block
New Delhi.
 171
ELEVENTH FINANCE COMMISSION

NOTE ON THE INTERPRETATION OF THE WORD ‘STATE’ USED IN CHAPTER I OF PART XII OF THE
CONSTITUTION, AND ESPECIALLY IN ARTICLE 280(3) OF THE CONSTITUTION — WHETHER THE WORD
‘STATE’ INCLUDES UNION TERRITORIES

Article 280 of the Indian Constitution relates to the appointment, functioning and duties of the Finance Commission.
Article 280(3) states as follows :
“It shall be the duty of the Commission to make recommendations to the president as to –
a) the distribution between the Union and the States of the net proceeds of taxes which are to be, or may be,
divided between them under this Chapter and the allocation between the States of the respective shares of
said proceeds;
b) the principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated
Fund of India”.
2. Thus, the earlier Finance Commissions have been making recommendations to the President with regard to the
distribution between the Union and the States of the net proceeds of taxes and also the inter se distribution among the
States. In addition, the Finance Commissions have been making recommendations with regard to the grants-in-aid to the
revenues of the States as per the assessed need. So far, no Finance Commission has made any recommendations for
distribution of taxes for the Union Territories or inter se distribution between them or made any recommendations for
giving any grants-in-aid to the Union Territories under Article 275(1) of the Constitution. Further, no recommendations
were made in respect of other subjects i.e. Debt Relief, Calamity Relief, Upgradation grants etc. The Finance Commissions
have, however, been indicating the amount of income tax attributable to the Union Territories in terms of Article 270(2) of
the Constitution, as also the additional excise duties for the Union Territories. No inter se distribution among the Union
Territories has so far been recommended by any Finance Commission.
3. A question has now been posed by some Members of the Eleventh Finance Commission that the word ‘States’
figuring in Article 280(3) includes ‘Union Territories’ also, and that the Finance Commission should make recommendation
for the distribution of taxes to Union Territories along with the States as also inter se distribution between the Union
Territories. Similarly, with regard to grants, an opinion has been expressed that ‘Union Territories should also be considered
for grants under Article 275(1) of the Constitution.
4. In support of this contention, it has been stated as under :
i) Article 1 of the Constitution deals with the name and territory of the Union. The States and the Territories are
as specified in the First Schedule. The First Schedule of the Constitution of India relating to the States
includes both States as well as Union Territories.
ii) Under Article 367, the General Clauses Act, 1897, apply for interpretation of the Constitution.
iii) Section 3(58) of the General Clauses Act, 1897 defines a State as follows:
“3(58) State -
a) as respects any period before the commencement of the Constitution (Seventh Amendment) Act,
1956, shall mean a Part A State, a Part B State or a Part C State; and
b) as respects any period after such commencement, shall mean a State specified in the First Schedule
to the Constitution and shall include a Union territory;
iv) That the term ‘States’ includes ‘Union Territories’ has been confirmed in the Supreme Court Judgements
AIR 1970 SC 1126 and AIR 1976 SC 1856. The Supreme Court has held that when the President adopted
the General Clauses Act, 1897 by giving a new definition of the State. The new definition appropriate to the
purpose applied to the interpretation of the Constitution.
v) As per the S.C. decision as reported in 1254 SC 586, Union Territories are not part of the Central Government
nor do they get merged with it. They are separate entities and are governed under Part VIII of the Constitution
(Articles 239 to 241).
vi) Para IX of the Constitution of India dealing with the Panchayats and Para IX(A) of the Constitution of India
dealing with the Municipalities have been made applicable to the Union Territories distinctly under Article
243L and Article 243ZB of the Constitution.
vii) As per para 3(c) and 3(d) of the Terms of Reference, the Finance Commission is duty bound to deal with the
Panchayats and Municipalities respectively of the Union Territories also in view of the special provisions
made in Article 243 L and 243 ZB.
viii) The Terms of Reference in para 4 relating to the review of the state of finances of the Union and the States
also covers the finances of the Union Territories as there is nothing in this term to indicate that Union
Territories are excluded.
 172
ix) Under Article 270(3) at least some percentage which does not represent the Union emoluments has got to
be given to the Union Territories on the basis of the recommendations of the Finance Commission which
has to make recommendations both horizontal and vertical distribution. The only body recognised by
Constitution for such a distribution is the Finance Commission. Under Article 280, the Finance Commission
is required to indicate the allocation between the States of the respective shares of such proceeds. The
States under this Article has to be construed as including ‘Union Territories’.
x) It is true that the definition of a word will have to be determined on the fact of the context in which it appears.
Applying this principle Section 3(58) General Clauses Act would apply and the words “such States as
Parliament may determine to be in need of assistance” should take with its compass the need of the Union
Territories also as equivalent to the need of the States. For the citizens, living in these Territories, some
financial assistance may definitely be needed and the matter in the system of “Fiscal Federalism” cannot be
left to the executive of the Central Government and, therefore, should be objectively and independently
adjudged by Finance Commission.
xi) The Finance Commissions in the past have been indicating the share attributable to the Union Territories
under Article 280(3)(a) in regard to Income Tax and Additional Excise Duty. This could be done in respect of
Excise Duty as well as ‘State’ under Article 280 includes ‘Union Territory’.
xii) The principle of equality Under Article 14 of every citizen whether he is living in the territory of a ‘State’ or
‘Union Territory’ shall be applicable, in such circumstances.
xiii) There is nothing in Article 280 of the Constitution to indicate that ‘State’ as mentioned in this article does not
include ‘Union Territories’. In view of this, the Finance Commission can make recommendations regarding
distribution between the ‘States’ including ‘Union Territories’ of the net proceeds of and allocation between
States including Union Territories of the respective shares of such proceeds.
xiv) Under Article 239, Parliament is entitled to make Laws in respect to Union Territories. (Even local legislatures
therein cannot be created by Parliament under Article 240). In an area where Law is not made by the
Parliament, President administers through an administrator. For the purpose of grants Under Article 275,
authority is given to the Parliament, but until provision is made by Parliament, the President exercises that
power. However, the rider is that if Finance Commission is constituted, President shall make the order, after
considering its recommendations. Thus, Finance Commission’s note for devolution Under Article 275 in
respect to Union Territories cannot be obviated. Here Union Territories would mean ‘States” as per Section
3(58) of the General Clauses Act.

5. Some other Members of the Commission do not share this view. According to them, the Finance Commission has
to make recommendations for devolution of taxes, grants-in-aid and on other subjects stated in the Presidential Order for
the States alone and not for Union Territories. The reasons given by them are as follows:

i) Chapter I of Part XII of the Constitution lays down the scheme of distribution of revenues between the Union
and States. Under the Scheme, the States are entitled to what has been specifically provided for them, and
the rest of the revenues are retained by the Union Government. As per the Terms of Reference it is not part
of the job of Finance Commission to go into the distribution of taxes to Union Territories. The Constitution
also does not envisage that the Finance Commission should recommend any transfer of revenues to the
Union Territories or between the Union Territories inter se distribution should be done by the Finance
Commission for Union Territories as their budget is controlled and forms part of the Union budget.
ii) Constitution recognises two sets of administrative arrangements, namely, States and Union Territories.
Article 1(3) of the Constitution states : “ The territory of India shall comprise _

a) the territory of States;

b) the Union Territories specified in the First Schedule, and
c) such other territory as may be acquired.

The wording of this Article clearly shows that a distinction has been made between the States and Union Territories.
This is also borne out by the fact that provisions for the governance of the States, and Union Territories are given in
separate Chapters. Part VIII of the Constitution deals with the administration of Union Territories. Under Article 239 of the
Constitution, the UTs are administered by the President acting through an Administrator.

iii) Article 367 of the Constitution by which the General Clauses Act, 1897, has been made applicable for
interpretation starts with the word ‘Unless the Context otherwise requires’. Definition used in the General
Clauses Act, in view of this provision, may have different meanings under different context. The word ‘State’
may or may not include Union Territories as the context may require.
 173
iv) Even the General Clauses Act, Section 3(58)(b) only says ‘State’ shall mean ‘a State specified in the First
Schedule to the Constitution and shall include a Union Territory’. It is only an inclusive definition, as the First
Schedule to the Constitution also includes Union Territories. The distinction is envisaged even in this Act
where it has been already stated that the ‘State Government’, in relation to a State, would mean the Governor
and in the case of Union Territory, it would mean the Central Government (Section 3(60)(c) of the General
Clauses Act, 1867). Further, the Union Territories have been separately defined under Section 58 (62A) of
the Act. This only shows that the Union Territory have a distinct identity from the word ‘State’ used in the
Constitution in some areas.
v) The budgets of the Union Territories are included in the budget of the Central Government with a separate
budgetary head for them. The needs of the Union Territories are thus taken care of by the Union Government
by making adequate provisions for them. The revenue receipts and expenditure are defrayed through the
Consolidated Fund of India in respect of five of the seven Union Territories which do not have legislature. In
the case of other two – Delhi and Pondicherry – which have a legislature and Consolidated Fund of their
own; the provisions for deficit and grants are made in the Union budget.
vi) Article 270(2) only says that the share of income tax ‘attributable’ to Union Territories will form part of the
Consolidated Fund of India. The Finance Commissions has to make recommendations about ‘such percentage
as may be prescribed, of the net proceeds’ which “shall not form part of the Consolidated Fund of India but
shall be assigned to the State”. Here, a clear distinction has been made between the States and the Union
Territories which would be in conformity with Article 367 of the Constitution read with the General Clauses
Act, 1897.
vii) In the case of Union Excise Duties, no such provision as in Article 270(2) has been made, because the
entire proceeds of the Union Excise Duties belong to the Union Government and can be shared with the
States only if the Parliament by law so provides. Since the State per se do not have any right to it, and the
entire revenue goes to Consolidated Fund of India, there was no need to determine the share attributable to
Union Territories.
viii) In the case of additional excise duties, the entire collections have to be distributed, and the Union Government
does not retain any portion of it. Since a part of collections come from the Union Territories, it is natural that
that portion collected from them should go to them. The Finance Commissions have only been determining
the share of Union Territories in the additional excise duties.
ix) By specific provisions in Article 243 L and 243 ZB, Parts IX and IXA have been made applicable to Union
Territories. This shows that the Constitution envisages a distinction between the States and the Union
Territories.
x) So far, ten Finance Commissions have given their reports but have not made any recommendation on the
devolution to Union Territories. No representation has been made by any Union Territories that they should
be included in the Scheme of devolution. If these UTs had held the view that they are included in the term
‘State’ and should be included in the Scheme of devolution envisaged in Chapter I of Part XII, and especially
Article 280 of the Constitution they could have raised this issue long back. They have not raised this issue
because they know that they are not included in the word ‘State’ as used in Article 280 of the Constitution.
xi) The decisions of the Supreme Court cited are in different context, and cannot be interpreted to include
Union Territories in the term ‘State’ for the devolution of financial resources under Chapter XII especially
Article 280(3) of the Constitution.
6. In view of the divergent views expressed by the Members on the interpretation of the term ‘State’ as used in
Chapter I of Part XII, and especially in Article 280 of the Constitution, the following clarification is required:

i) Whether the ‘State’ as used in Chapter I of Part XII in the Constitution includes ‘Union Territory’.
ii) Whether Finance Commission in discharging its functions under Article 280(3) (a) (b) (bb) (c) & (d) is
required to make recommendations both in respect of ‘States including Union Territories’ or ‘States excluding
Union Territories’.
 174
Annexure I.15
(Para 1.16)

J.S. MATHUR Government of India

Additional Secretary Ministry of Finance
Tel: 3012804 Department of Economic Affairs
New Delhi

D.O.No.10(10)-B(S)/99 16.11.1999

Dear Shri Srivastava,

Kindly refer to your DO letter No.FC/Coord/UT/2/39/98-99, dated the 9th July 1999 addressed to former Finance
Secretary regarding clarification as to whether the world ‘State’ used in Chapter I of Part XII of the Constitution and Article
280(3) of the Constitution includes ‘Union Territories’.

2. I have had the proposal examined in consultation with Ministry of Law, Justice and Company Affairs. In this
regard, Department of Legal Affairs have furnished detailed clarification on various Constitutional provisions elaborated in
the background note enclosed with regard to interpretation of word “State’ used. It has since been clarified that the
interpretation of the ‘word’ used in Chapter I of Part XII and in Article 280(3) of the Constitution of India are not intended for
the Union Territories. In view of this, Department of Legal Affairs are of the opinion that word ‘State’ used in Part XII of
Chapter I of the Constitution does not include Union Territory.

3. I presume that the point raised by the Hon’ble Members of the Finance Commission would now stand clarified.

With regards,

Yours sincerely,

- Sd -
( J.S. Mathur)

Shri T.N. Srivastava,

Member Secretary
11th Finance Commission
Bank of Baroda Building,
NEW DELHI.
 175
Ministry of Law, Justice & C.A.
Department of Legal Affairs
………
D.No.23054/99

The referring Department has sought a clarification on the interpretation of the word ‘State’ used in Chapter I of
the Part XII and Article 280(3) of the Constitution of India and further ask us to know whether it includes ‘Union Territories’.
2. In terms of Notification dated 3.7.98, the President has pleased to constitute a Finance Commission under the
Chairmanship of Prof. A.M. Khusro to recommend on the matters specified therein. It appears that the Members of the
Commission are divided on the issue whether the word ‘State’ is inclusive of Union Territories so far as Chapter I of Part
XII of the Constitution is concerned. Let us now discuss the meaning of State and Union Territories given in the different
Chapters of the Constitution and also in The General Clauses Act.
3. Article 1(3) of the Constitution of India provides that the Territory of India shall comprise –
a) The Territories of the States
b) The Union Territories specified in the First Schedule and
c) Such other Territories as may be acquired.
Article 3 provides for creation of new States and Union Territories.

4. Article 12 defines the State as the State includes the Government and Parliament of India and the Government
and the Legislatures of each of the States and all local and other authorities within the Territory of India or under the
control of the Government of India. Part VI of the Constitution deals with States wherein in Article 152, the expression
‘State’ does not include the State of Jammu and Kashmir. Part VIII of the Constitution deals with the Union Territories.
Article 366(30) of the Constitution defines Union Territories as Union Territories means any Union Territory specified in the
first schedule and includes any other territory comprised within the territory of India but not specified in that schedule.
Section 3(58) of the General Clauses Act defines the State. State –
a) as respects any period before the commencement of the Constitution (7th Amendment) Act, 1956 shall
mean a Part A State, a Part B State of Part C State and
b) as respects any period after such commencement shall mean a State specified in the first schedule of the
Constitution and shall be include a Union Territory.

Section 3(62-A) of the General Clauses Act defines UT as Union Territory specified in the first schedule to the
Constitution and shall include any other territory comprised within the Territory of India but not specified in that schedule.
5. Now coming the word ‘State’ used in Part XII of Chapter I of the Constitution, in Articles 268, 269 and 270, the
word ‘Union Territory’ has been used apart from the word ‘State’. Moreover, there are no Consolidated Fund or Contingency
Fund for the Union Territories. None of the Finance Commissions have given any recommendations about the distribution
of net proceeds of the taxes to the Union Territories so far. In Article 280, the word ‘State’ has been used to lay stress that
it excludes Union Territories. Since all the Union Territories are administered by the President and, therefore, it is distinctly
separated from the States.
6. In order to segregate the Union Territories from the State, the Parliament has intentionally used the word ‘State’ in
Part XII of Chapter I of the Constitution so as to put only the State and the Union for sharing the taxes. The Finance
Commission has been specifically asked to make recommendations on the matter specified in Paragraph 3 wherein there
is no mention of the Union Territories. From the tenor and language used in Part XII of Chapter I of the Constitution, it is
crystal clear that the articles are not intended for the Union Territories.
In view of the above discussion, we opine that the word State used in Part XII of Chapter I of the Constitution does
not include Union Territories.
May kindly see.

- Sd -
(J. Khosla)
Additional Legal Adviser
14.10.99

- Sd –
JS & LA(Shri A. Sinha)
26.10.99

- Sd -
Addl. L.A.
Ministry of Finance/Deptt. of Economic Affairs, Budget Division.
(Department of Legal Affairs) U.O.No. 23054/99 Date 26.10.99
 176
Annexure I.16 Annexure I.17
(Para 1.18) (Para 1.18)

List of the International Organisations/Teams List of other Meetings of the Commission

which met the Commission
Date of Meeting Participating groups/
Sl No Date Name of the Organisation organisations

1 14.1.99 Delegation from Sudan. November 10, 1998 Shri K.C. Pant, Ex. Chairman,
1. Mr. Musaab Borakat. Tenth Finance Commission
2. Mr. Abbas S. Jambo.
December 21, 1998 Confederation of Indian Industry
2 18.1.99 Mr. Murphy Morobe, Chairman of (CII)
South African Fiscal and
Financial Commission (FFC), June 18, 1999 Rajiv Gandhi Foundation
August 20, 1999 Centre for Development
3 25.1.99 Technical Study Team of Federal Economics, University of Delhi
Democratic Republic of Ethopia
1. Mr. Worku Yehualashet Wubie, September 13, 1999 Shri Ravi Kohli on the
Department Head Regional memorandum submitted by him
Planning and Development, on Terms of Reference (ToR)
MEDaC.
2. Mr. Berhanu Legesse Ayane, September 27, 1999 Indian Statistical Institute (ISI),
Team Leader, Regional Calcutta
Planning and Development,
MEDaC. October 28, 1999 Associated Chambers of
3. Mr. Gulte Metaferia Endeshaw, Commerce and Industry
Senior Expert, Regional (ASSOCHAM)
Planning and Development,
MEDaC. November 5, 1999 Shri C.K. Padhmanabhan, BJP
4. Dr. Byron Tarr, UNDO State Unit President, Kerala.
Consultant.
November 22, 1999 All India Council of Mayors
4 22.6.99 IMF Staff Team
1. Mr. Christopher M. Towe, December 14, 1999 Shri Eduardo Faleiro, MP
Adviser. (Rajya Sabha)
2. Mr. Tim Callen, Economist,
Asia & Pacific Deptt. February 8 and 14, 2000 Prof. B.B. Bhattacharya,
3. Mr. Patricia A. Reynolds, Institute of Economic Growth
Economist, Asia & Pacific (IEG), Delhi
Deptt.
4. Mr. Nirmal Mohanty, February 15, 2000 Ms. Jyoti Parikh, Indira Gandhi
Economist. Institute for Development
Research (IGIDR), Mumbai

February 16, 2000 Shri R.C. Choudhry, Director

General, National Institute of
Rural Development (NIRD),
Hyderabad

February 28, 2000 Dr. M. Govinda Rao, Institute of

Social and Economic Change
(ISEC), Bangalore

March 30, 2000 Association of State Training

Institutes of Public Administration

May 29, 2000 Shri Keshubhai Patel, Chief

Minister of Gujarat
 177
Annexure II.1

Revenue and Expenditure of the Centre

(As % of GDP - Old and New Series)
(Paras 2.6, 2.14 & 2.25)
Items Average Average Average 1995-96 1996-97 1997-98 1998-99 1999-2000
(1980-81 (1985- (1990- (RE)
to 1984- 86 to 91 to
85) 1989-90) to 1994-
95)
Gross Tax Revenue 9.93 11.20 10.23 9.94 10.08 9.72 8.63 9.31
9.41 9.45 9.19 8.16 8.80
less State’s & UT’s Share 2.63 2.86 2.75 2.62 2.75 3.04 2.35 2.38
2.48 2.57 2.87 2.22 2.25
Net Tax Revenue 7.30 8.34 7.48 7.32 7.34 6.68 6.28 6.92
6.93 6.88 6.31 5.94 6.55
Non-Tax 2.13 2.77 2.57 2.52 2.55 2.67 2.69 2.90
2.39 2.39 2.52 2.54 2.75
Net Revenue Receipt 9.43 11.11 10.05 9.84 9.89 9.34 8.97 9.83
9.32 9.27 8.83 8.48 9.29
Revenue Expenditure 10.69 13.69 13.24 12.50 12.45 12.58 13.05 13.85
of which 11.83 11.67 11.90 12.34 13.10

Interest 2.20 3.38 4.37 4.47 4.66 4.58 4.67 5.01

4.23 4.37 4.33 4.42 4.73
Defence 2.57 2.62 1.83 1.68 1.64 1.83 1.79 1.96
1.59 1.54 1.73 1.69 1.86
Subsidies 1.41 1.95 1.77 1.20 1.28 1.36 1.49 1.41
1.13 1.20 1.29 1.41 1.33
Pension 0.27 0.42 0.40 0.38 0.40 0.48 0.60 0.78
0.36 0.37 0.45 0.57 0.74
Grants to States 1.96 2.45 2.44 1.90 1.81 1.56 1.49 1.61
1.80 1.70 1.47 1.41 1.52
Non-Plan 0.41 0.57 0.52 0.54 0.48 0.29 0.24 0.33
0.51 0.45 0.27 0.23 0.31
Plan 1.55 1.88 1.92 1.36 1.34 1.27 1.25 1.28
1.29 1.25 1.20 1.18 1.21

Capital Expenditure 6.13 6.78 4.61 3.43 3.29 3.61 3.72 2.78
3.25 3.09 3.41 3.51 2.62

Revenue Deficit 1.11 2.58 3.20 2.66 2.56 3.24 4.08 4.03
2.52 2.40 3.06 3.85 3.81
Fiscal deficit 6.41 8.21 6.67 5.38 5.23 6.21 6.80 5.96
5.10 4.90 5.87 6.43 5.64
Primary Deficit 4.21 4.83 2.30 0.91 0.57 1.63 2.13 0.96
0.86 0.53 1.54 2.01 0.90
Revenue Deficit as %
of Fiscal deficit 17.25 31.44 47.96 49.35 48.93 52.23 59.91 67.52
GDP at market prices
(Old Series) 1118964 1276974 1432964 1666455 1826434
GDP at market prices (New Series) 1181961 1361952 1515646 1762609 1931819

Source (Basic data): Budget Documents & Economic Survey.

Note: 1) (-) indicates surplus and (+) indicates deficit.

2) The figures in italics indicate ratios with respect to GDP at market prices (New Series).
3) The GDP (Old Series) figures for the years 1997-98 to 1999-2000 have been arrived at by applying the conversion factor 1.0577 on
the New Series for the respective years.
 178
Annexure II.2
Revenue and Expenditure of All States, consolidated
(As % of GDP - Old and New Series)
(Paras 2.6 & 2.25)
Items Average Average Average 1995-96 1996-97 1997-98 1998-99 1999-2000
(1980-81 (1985- (1990- (RE)
to 1984- 86 to 91 to
85) 1989-90) to 1994-
95)

Revenue Receipt 11.90 12.85 12.79 12.02 11.72 11.73 10.37 11.49
11.38 10.99 11.09 9.80 10.86
of which
Tax 5.18 5.67 5.64 5.52 5.37 5.46 5.16 5.70
5.23 5.04 5.17 4.87 5.38
Non-Tax 2.14 2.02 1.97 2.05 1.84 1.75 1.44 1.47
1.94 1.72 1.65 1.36 1.39

Revenue Expenditure 11.47 13.16 13.51 12.79 13.15 13.02 13.09 14.61
12.11 12.33 12.31 12.38 13.82
of which
Interest 0.99 1.42 1.83 1.89 2.01 2.10 2.13 2.40
1.79 1.88 1.98 2.01 2.27
Pension 0.29 0.47 0.62 0.70 0.77 0.81 0.97 1.10
0.67 0.73 0.77 0.92 1.04

Capital Expenditure 3.79 3.21 2.57 2.29 2.01 2.20 1.97 2.06
2.17 1.89 2.08 1.87 1.95

Revenue Deficit -0.43 0.31 0.72 0.77 1.43 1.29 2.72 3.13
0.73 1.34 1.22 2.57 2.96
Fiscal deficit 2.98 3.20 2.90 2.75 2.97 3.10 4.47 4.98
2.60 2.79 2.93 4.23 4.71
Primary Deficit 1.98 1.78 1.07 0.86 0.97 1.00 2.34 2.55
0.81 0.91 0.94 2.22 2.41
Revenue deficit as
% of Fiscal Deficit 22.14 12.02 24.54 28.06 47.91 41.56 60.90 56.86

GDP at market prices

(Old Series) 1118964 1276974 1432964 1666455 1826434
GDP at market prices
(New Series) 1181961 1361952 1515646 1762609 1931819

Figures in italics indicate ratios with respect to GDP (New Series).

Source (Basic data): Finance Accounts of State Governments.
 179
Annexure II.3
Revenue Surplus/Deficit as percentage of GDP
(Para 2.8)
Year/ Plan Revenue Surplus / Deficit Year/ Plan Revenue Surplus / Deficit
(as % of GDP) (as % of GDP)
Centre States Total Centre States Total
First Five Year Plan Sixth Five Year Plan
1951-52 1.27 0.14 1.41 1980-81 -1.50 1.25 -0.25
1952-53 0.40 0.03 0.43
1981-82 -0.24 0.81 0.57
1953-54 0.08 -0.04 0.04
1954-55 0.33 -0.11 0.22 1982-83 -0.73 0.50 -0.23
1955-56 0.41 -0.44 -0.03 1983-84 -1.22 0.07 -1.15
Second Five Year Plan 1984-85 -1.83 -0.48 -2.31
1956-57 0.76 -0.21 0.55 Seventh Five Year Plan
1957-58 0.34 0.25 0.59
1985-86 -2.25 0.22 -2.03
1958-59 -0.04 0.34 0.30
1959-60 0.29 0.27 0.56 1986-87 -2.65 -0.01 -2.66
1960-61 0.31 0.16 0.47 1987-88 -2.74 -0.38 -3.12
Third Five Year Plan 1988-89 -2.66 -0.51 -3.17
1961-62 0.73 -0.27 0.46 1989-90 -2.61 -0.83 -3.44
1962-63 0.61 0.12 0.73
Annual Plan
1963-64 0.88 0.39 1.27
1964-65 1.11 0.23 1.34 1990-91 -3.47 -0.84 -4.31
1965-66 1.22 -0.13 1.09 1991-92 -2.64 -0.81 -3.45
Three Annual Plans Eighth Five Year Plan
1966-67 0.77 -0.18 0.59 1992-93 -2.63 -0.76 -3.39
1967-68 0.30 0.00 0.30
1993-94 -3.81 -0.45 -4.26
1968-69 0.22 0.05 0.27
Fourth Five Year Plan 1994-95 -3.07 -0.70 -3.77
1969-70 0.31 -0.16 0.15 1995-96 -2.52 -0.73 -3.25
1970-71 0.38 -0.04 0.34 1996-97 -2.40 -1.34 -3.74
1971-72 -0.22 0.02 -0.20 Ninth Five Year Plan
1972-73 0.03 -0.14 -0.11
1997-98 -3.06 -1.22 -4.28
1973-74 0.38 -0.19 0.19
Fifth Five Year Plan 1998-99 -3.85 -2.57 -6.42
1974-75 1.04 -0.55 0.49 1999-2000(RE) -3.81 -2.96 -6.77
1975-76 1.13 1.21 2.34
1976-77 0.35 1.29 1.64
1977-78 0.45 1.06 1.51
1978-79 0.28 1.09 1.37
Annual Plan
1979-80 -0.61 1.35 0.75
Source (Basic data): Indian Public Finance Statistics, Finance Accounts and Budget documents of relevant years.
Note: 1) The figures in bold represent revenue deficit with respect to GDP at market prices (New Series).
2) (-) indicates deficit.
 180
Annexure II.4
Revenue Deficit and Fiscal Deficit of States
(As % of GSDP)
(Para 2.10 & 2.42)

States ITEM 1987- 1988- 1989- 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999-
88 89 90 91 92 93 94 95 96 97 98 99 2000
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual B.E.
1 2 3 4 5 6 7 8 9 10 11 12 13 14
CATEGORY: High Income States
Gujarat
1 Non-Plan Revenue Deficit
(Pre-devolution) -1.59 -1.26 -1.05 -1.66 -0.73 -0.28 -2.06 -0.83 -1.07 -1.93 -2.11 -3.12 -1.24
2 Non-Plan Revenue Deficit
(Post tax-devolution ) 0.98 0.56 0.76 0.11 1.45 1.91 0.31 0.95 0.84 0.10 -0.02 -1.30 0.56
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant)1.01 0.70 0.77 0.19 1.46 1.95 0.41 0.99 0.85 0.11 -0.01 -1.23 0.57
4 Plan Revenue Deficit -2.76 -1.24 -1.44 -1.25 -2.21 -2.69 -0.20 -0.54 -1.18 -0.89 -1.17 -1.68 -1.83
5 Revenue Deficit -1.75 -0.55 -0.67 -1.06 -0.74 -0.74 0.21 0.44 -0.34 -0.77 -1.18 -2.91 -1.26
6 Fiscal Deficit -5.84 -3.26 -3.73 -4.69 -4.70 -2.86 -1.17 -2.19 -2.64 -3.08 -3.47 -5.71 -4.06
Haryana
1 Non-Plan Revenue Deficit
(Pre-devolution) -0.25 0.15 0.19 -0.04 -0.21 -0.22 -0.18 -1.36 -1.22 -2.25 -2.60 -3.74 -1.09
2 Non-Plan Revenue Deficit
(Post tax-devolution) 1.19 1.57 1.59 1.43 1.22 1.38 1.30 -0.03 0.31 -0.90 -1.08 -2.55 0.02
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant)2.00 2.04 1.61 1.45 1.31 1.51 1.37 -0.01 0.33 -0.89 -1.07 -2.51 0.02
4 Plan Revenue Deficit -1.79 -2.06 -2.46 -1.60 -1.51 -1.52 -0.97 -1.58 -1.57 -1.22 -0.85 -1.05 -1.26
5 Revenue Deficit 0.21 -0.02 -0.85 -0.14 -0.20 -0.01 0.39 -1.60 -1.25 -2.11 -1.92 -3.57 -1.24
6 Fiscal Deficit -2.80 -2.89 -3.52 -2.83 -2.29 -2.56 -2.34 -2.18 -3.54 -3.23 -3.01 -5.19 -4.12
Maharashtra
1 Non-Plan Revenue Deficit
(Pre-devolution) -0.69 -1.28 -1.39 -1.11 -1.46 -1.72 -1.11 -0.37 -0.46 -0.80 -1.24 -2.17 -3.77
2 Non-Plan Revenue Deficit
(Post tax-devolution ) 1.13 0.38 0.42 0.53 0.32 -0.11 0.36 1.06 0.73 0.66 -0.18 -0.70 -2.49
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant)1.32 0.65 0.62 0.68 0.41 -0.04 0.45 1.14 0.79 0.67 -0.18 -0.69 -2.48
4 Plan Revenue Deficit -1.12 -1.19 -1.30 -0.76 -0.79 -0.76 -0.56 -0.92 -1.20 -1.60 -1.24 -1.21 -0.92
5 Revenue Deficit 0.20 -0.53 -0.67 -0.08 -0.38 -0.80 -0.11 0.22 -0.40 -0.93 -1.42 -1.90 -3.40
6 Fiscal Deficit -2.69 -2.83 -3.31 -2.50 -2.26 -2.84 -2.06 -2.28 -2.76 -2.89 -3.53 -3.61 -5.00
Punjab
1 Non-Plan Revenue Deficit
(Pre-devolution) -1.60 -2.37 -1.71 -3.02 -2.28 -3.33 -2.85 -2.30 -1.66 -3.70 -3.74 -5.28 -2.80
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -0.23 -1.09 -0.32 -1.46 -0.80 -1.78 -1.42 -1.02 -0.39 -2.35 -2.32 -4.10 -1.57
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan
revenue grant) -0.17 -0.51 -0.30 -1.43 -0.71 -1.47 -1.28 -0.98 -0.38 -2.30 -2.35 -4.08 -1.41
4 Plan Revenue Deficit -1.70 -1.22 -1.00 -1.45 -1.40 -0.95 -1.19 -1.11 -0.74 -0.66 -0.59 -0.57 -1.48
5 Revenue Deficit -1.87 -1.73 -1.30 -2.88 -2.11 -2.42 -2.47 -2.09 -1.12 -2.97 -2.95 -4.65 -2.88
6 Fiscal Deficit -7.90 -5.91 -5.35 -6.58 -5.04 -4.76 -4.81 -5.02 -3.39 -3.20 -4.92 -6.68 -4.42
Goa
1 Non-Plan Revenue Deficit
(Pre-devolution) -8.87 -4.75 -5.06 -6.15 -4.91 -3.95 -1.80 -1.28 -1.07 -1.62 -2.26 -4.56 -4.96
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -4.05 1.42 -0.89 0.89 1.36 1.89 3.19 3.57 2.78 2.30 0.89 -1.84 -2.37
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan
revenue grant) -4.03 1.43 -0.79 0.90 1.41 1.92 3.21 3.61 2.79 2.33 1.29 -1.83 -2.02
4 Plan Revenue Deficit 1.23 -0.19 -0.20 -0.33 -2.02 -1.46 -1.73 -1.37 -1.66 -1.61 -1.70 -1.84 -1.57
5 Revenue Deficit -2.80 1.23 -0.99 0.57 -0.61 0.46 1.48 2.25 1.13 0.71 -0.41 -3.68 -3.59
6 Fiscal Deficit -11.28 -6.52 -8.56 -7.65 -8.08 -4.82 -2.66 -1.78 -3.36 -3.36 -3.62 -7.03 -7.12

* Plan Revenue deficit = Plan Grants - Plan Revenue Expenditure

* Revenue Deficit = Revenue Receipts - Revenue Expenditure
* Fiscal deficit = Total Expenditure- [Total revenue receipts (including loans net of recovery) + Non- debt capital receipts]
Source (Basic data): Finance Accounts of State Governments and CSO (for GSDP).
Figures of GSDP for 1997-98, 1998-99 and 1999-00 for some States have been estimated by using the average annual growth
rate for the preceding three years.
(-) indicates deficit
 181

States ITEM 1987- 1988- 1989- 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999-
88 89 90 91 92 93 94 95 96 97 98 99 2000
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual B.E.
1 2 3 4 5 6 7 8 9 10 11 12 13 14

CATEGORY: Middle Income States

Andhra Prade sh
1 Non-Plan Revenue Deficit
(Pre-devolution) -1.74 -1.70 -2.76 -3.30 -3.21 -2.97 -2.68 -3.66 -4.65 -7.05 -3.73 -3.59 -4.08
2 Non-Plan Revenue Deficit
(Post tax-devolution ) 2.17 1.66 0.67 0.48 0.18 0.82 0.71 -0.40 -0.37 -2.85 0.46 -0.41 -0.25
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan
revenue grant) 2.25 1.85 0.81 0.62 0.38 0.95 0.91 -0.34 -0.34 -2.83 0.48 -0.40 -0.05
4 Plan Revenue Deficit -2.06 -1.72 -1.64 -1.08 -0.79 -1.23 -0.48 -0.82 -0.65 -0.97 -1.27 -2.30 -1.35
5 Revenue Deficit 0.19 0.13 -0.83 -0.46 -0.41 -0.28 0.43 -1.17 -0.99 -3.80 -0.80 -2.70 -1.40
6 Fiscal Deficit -2.86 -2.70 -3.40 -2.79 -2.70 -3.55 -3.41 -3.76 -3.24 -3.34 -2.75 -5.74 -3.76
Karnataka
1 Non-Plan Revenue Deficit
(Pre-devolution) -1.22 -1.10 -2.06 -1.02 -1.24 -1.42 -0.30 -0.71 0.10 -1.26 -1.40 -2.02 -2.43
2 Non-Plan Revenue Deficit
(Post tax-devolution ) 1.80 1.75 1.11 1.92 1.44 1.51 2.42 1.82 3.01 1.92 2.05 0.79 0.48
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant) 1.83 1.93 1.26 2.00 1.56 1.64 2.60 1.87 3.04 1.95 2.07 0.80 0.51
4 Plan Revenue Deficit -2.56 -2.15 -1.99 -2.34 -2.16 -2.15 -2.30 -2.52 -2.92 -2.95 -2.49 -2.44 -2.19
5 Revenue Deficit -0.72 -0.22 -0.72 -0.34 -0.59 -0.51 0.30 -0.65 0.12 -1.00 -0.42 -1.64 -1.67
6 Fiscal Deficit -3.41 -2.82 -3.13 -2.40 -3.05 -4.20 -3.28 -3.33 -2.86 -3.35 -2.46 -4.20 -3.91
Kerala
1 Non-Plan Revenue Deficit
(Pre-devolution) -4.26 -4.62 -4.69 -6.27 -5.12 -4.81 -4.42 -4.11 -3.08 -3.08 -3.23 -3.75 -4.53
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -1.11 -0.45 -0.89 -2.21 -1.30 -0.76 -0.59 -0.47 0.38 0.51 -0.02 -0.77 -1.10
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue
grant) -1.03 -0.26 -0.70 -1.95 -1.13 -0.70 -0.48 -0.43 0.40 0.52 0.68 -0.75 -1.08
4 Plan Revenue Deficit -1.00 -1.27 -1.35 -1.05 -0.94 -0.99 -1.17 -1.05 -1.66 -2.25 -3.26 -3.24 -2.66
5 Revenue Deficit -2.03 -1.54 -2.05 -2.99 -2.08 -1.69 -1.65 -1.48 -1.26 -1.73 -2.59 -3.99 -3.74
6 Fiscal Deficit -4.68 -3.86 -4.95 -5.66 -4.58 -3.67 -4.15 -4.11 -4.07 -4.15 -5.54 -5.91 -5.22
Tamil Nadu
1 Non-Plan Revenue Deficit
(Pre-devolution) -1.81 -2.64 -3.11 -3.27 -6.81 -5.38 -2.98 -2.04 -1.46 -2.43 -3.45 -4.55 -4.05
2 Non-Plan Revenue Deficit
(Post tax-devolution ) 1.40 0.53 0.51 0.08 -3.47 -1.93 0.11 0.87 1.31 0.60 -0.13 -1.89 -1.37
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant) 1.55 0.80 0.74 0.27 -3.10 -1.71 0.34 0.97 1.40 0.67 -0.07 -1.84 -1.07
4 Plan Revenue Deficit -2.92 -1.98 -2.51 -2.03 -2.05 -1.84 -1.68 -1.65 -1.86 -2.08 -1.49 -1.64 -1.29
5 Revenue Deficit -1.37 -1.18 -1.77 -1.76 -5.15 -3.55 -1.33 -0.68 -0.46 -1.41 -1.56 -3.48 -2.36
6 Fiscal Deficit -3.19 -2.82 -3.39 -3.58 -3.52 -4.07 -2.62 -2.46 -1.86 -3.13 -2.43 -4.84 -3.81
West Bengal
1 Non-Plan Revenue Deficit
(Pre-devolution) -3.76 -3.64 -3.88 -6.39 -5.22 -4.97 -5.53 -4.18 -4.11 -5.08 -5.47 -7.05 -8.34
2 Non-Plan Revenue Deficit
(Post tax-devolution ) 0.14 0.15 -0.50 -2.87 -1.66 -1.02 -1.74 -0.63 -1.10 -1.76 -1.92 -4.21 -5.36
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue
grant) 0.31 0.31 -0.42 -2.65 -1.40 -0.86 -1.54 -0.58 -1.02 -1.74 -1.91 -4.08 -5.33
4 Plan Revenue Deficit -0.77 -0.82 -1.14 -0.28 -0.20 -0.14 -0.44 -0.70 -0.78 -0.94 -0.66 -0.66 -1.15
5 Revenue Deficit -0.46 -0.51 -1.56 -2.93 -1.60 -1.01 -1.99 -1.29 -1.80 -2.69 -2.56 -4.74 -6.48
6 Fiscal Deficit -2.20 -2.13 -3.44 -4.70 -2.83 -2.34 -3.38 -3.29 -3.89 -4.28 -4.48 -6.94 -9.34
CATEGORY: Low Income States
Bihar
1 Non-Plan Revenue Deficit
(Pre-devolution) -4.95 -3.92 -6.10 -9.04 -8.38 -9.97 -9.09 -10.01 -10.86 -9.39 -9.37 -9.76 -12.25
2 Non-Plan Revenue Deficit
(Post tax-devolution ) 1.59 1.87 0.88 -2.10 -1.25 -1.58 -1.29 -2.28 -1.63 -0.15 -1.88 -2.44 -4.44
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant) 1.92 1.92 0.94 -2.08 -1.06 -1.46 -1.21 -2.26 -1.58 0.31 -0.08 -2.36 -4.34
4 Plan Revenue Deficit -2.03 -0.83 -1.79 -0.79 -0.68 -0.70 0.00 -0.78 -0.42 -1.55 -1.81 -1.33 -0.21
5 Revenue Deficit -0.11 1.09 -0.84 -2.87 -1.74 -2.16 -1.21 -3.04 -2.00 -1.24 -1.89 -3.69 -4.55
6 Fiscal Deficit -4.58 -3.37 -5.14 -6.29 -3.87 -4.12 -2.56 -3.97 -3.17 -2.71 -4.03 -5.95 -7.22
Madhya Pradesh
1 Non-Plan Revenue Deficit
(Pre-devolution) -2.09 -2.53 -1.95 -2.59 -2.73 -2.73 -3.87 -3.13 -3.04 -4.53 -4.04 -6.09 -4.57
2 Non-Plan Revenue Deficit
(Post tax-devolution ) 2.38 1.30 2.92 1.50 1.77 2.09 0.46 1.23 0.90 -0.35 0.82 -2.33 0.05
 182

States ITEM 1987- 1988- 1989- 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999-
88 89 90 91 92 93 94 95 96 97 98 99 2000
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual B.E.
1 2 3 4 5 6 7 8 9 10 11 12 13 14
CATEGORY: Low Income States
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant) 2.49 1.50 2.99 1.68 1.94 2.33 0.63 1.29 1.00 -0.33 1.33 -2.17 0.27
4 Plan Revenue Deficit -2.54 -2.14 -2.59 -2.34 -2.07 -1.55 -1.64 -1.67 -1.83 -1.89 -1.50 -1.44 -2.26
5 Revenue Deficit -0.05 -0.64 0.40 -0.66 -0.13 0.78 -1.00 -0.38 -0.83 -2.23 -0.17 -3.61 -1.99
6 Fiscal Deficit -3.94 -4.00 -2.96 -3.35 -3.02 -2.40 -2.20 -2.84 -2.85 -2.96 -2.07 -5.18 -3.41
Orissa
1 Non-Plan Revenue Deficit
(Pre-devolution) -5.81 -5.46 -5.59 -5.08 -7.44 -7.60 -7.47 -7.57 -7.56 -8.37 -8.19 -10.47 -9.92
2 Non-Plan Revenue Deficit
(Post tax-devolution ) 1.16 0.81 0.99 3.18 -0.05 0.58 0.27 -0.12 -1.06 -0.72 -2.13 -4.64 -4.22
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant) 1.29 0.94 1.31 3.36 0.15 0.78 0.47 0.12 -0.93 -0.57 -0.85 -4.57 -4.19
4 Plan Revenue Deficit -2.27 -2.06 -2.26 -3.54 -1.49 -1.68 -2.03 -2.37 -2.43 -3.01 -2.49 -3.01 -1.48
5 Revenue Deficit -0.98 -1.12 -0.96 -0.18 -1.34 -0.90 -1.56 -2.25 -3.36 -3.58 -3.34 -7.58 -5.67
6 Fiscal Deficit -6.64 -5.71 -5.20 -5.65 -6.52 -4.89 -5.15 -5.68 -5.81 -6.90 -6.65 -9.76 -9.92
Rajasthan
1 Non-Plan Revenue Deficit
(Pre-devolution) -5.29 -4.48 -4.26 -3.89 -4.67 -5.05 -5.94 -5.04 -4.50 -5.42 -5.60 -8.03 -7.40
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -1.42 -1.26 0.14 1.20 0.67 0.33 -0.38 0.12 -0.20 -1.31 -1.85 -4.46 -3.89
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan
revenue grant) -1.08 -0.69 0.34 1.28 0.80 0.47 -0.23 0.20 -0.12 -1.06 -0.86 -4.22 -3.74
4 Plan Revenue Deficit -2.18 -0.81 -0.53 -0.47 -0.58 -0.87 -0.83 -1.42 -1.70 -1.22 -0.25 -0.75 -1.17
5 Revenue Deficit -3.26 -1.50 -0.19 0.81 0.21 -0.40 -1.05 -1.22 -1.81 -2.29 -1.11 -4.97 -4.91
6 Fiscal Deficit -8.27 -5.03 -3.68 -2.63 -3.44 -4.28 -5.14 -5.06 -6.65 -5.74 -4.86 -8.55 -8.67
Uttar Pradesh
1 Non-Plan Revenue Deficit
(Pre-devolution) -3.66 -6.60 -6.08 -6.27 -6.10 -7.33 -6.47 -6.86 -7.06 -7.05 -8.19 -8.92 -7.79
2 Non-Plan Revenue Deficit
(Post tax-devolution ) 1.84 -2.15 -1.02 -1.05 -0.91 -1.42 -0.97 -1.44 -1.28 -1.52 -2.59 -4.88 -3.38
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant) 1.86 -2.00 -0.92 -0.95 -0.70 -1.26 -0.89 -1.37 -1.26 -1.50 -2.57 -4.87 -3.36
4 Plan Revenue Deficit -1.13 0.53 -1.28 -1.26 -0.43 -0.18 -0.55 -0.85 -1.04 -1.19 -0.99 -1.06 -0.82
5 Revenue Deficit 0.73 -1.47 -2.20 -2.21 -1.12 -1.44 -1.45 -2.22 -2.31 -2.69 -3.56 -5.92 -4.18
6 Fiscal Deficit -2.95 -4.38 -5.29 -5.53 -4.39 -5.25 -3.98 -5.28 -4.32 -5.05 -5.83 -7.92 -6.63
CATEGORY: Special Category States
Assam
1 Non-Plan Revenue Deficit
(Pre-devolution) -8.04 -8.32 -7.57 -6.76 -6.88 -6.94 -8.21 -8.85 -8.87 -8.17 -8.45 -8.36 -13.90
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -1.37 -1.55 -0.86 0.02 -0.69 -0.94 -1.62 -2.79 -1.94 -0.35 -0.69 -1.85 -6.71
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan
revenue grant) -0.75 -0.69 -0.45 0.21 -0.04 -0.80 -1.32 -2.60 -1.87 -0.14 0.11 -1.27 -5.57
4 Plan Revenue Deficit -0.33 -0.14 -1.03 -1.52 2.32 2.04 4.15 0.73 0.80 1.57 1.23 1.66 1.16
5 Revenue Deficit -1.08 -0.84 -1.47 -1.31 2.27 1.24 2.83 -1.87 -1.07 1.43 1.35 0.39 -4.42
6 Fiscal Deficit -6.00 -4.02 -5.78 -5.29 -2.15 -1.59 0.12 -4.30 -3.49 -0.37 -0.67 -1.45 -7.88
Arunachal Pradesh
1 Non-Plan Revenue Deficit
(Pre-devolution) -51.19 -31.22 -34.32 14.97 -22.99 -23.39 -20.80 -20.60 -19.34 -24.41-22.55 -22.47 -20.48
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -18.93 -13.70 -6.03 31.61 2.13 -1.38 6.97 -0.39 3.02 -1.60 -2.83 -4.87 -4.28
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan
revenue grant) -18.91 -12.76 -5.99 31.64 2.16 -1.36 7.93 -0.34 3.07 -1.42 -2.62 -4.71 -4.25
4 Plan Revenue Deficit 33.39 26.21 13.88 29.42 20.35 22.35 21.83 20.17 19.09 17.12 14.04 14.93 13.81
5 Revenue Deficit 14.48 13.45 7.89 61.06 22.51 20.99 29.76 19.83 22.16 15.69 11.42 10.22 9.56
6 Fiscal Deficit -11.88 -11.27 -18.14 36.28 0.56 0.25 11.33 -4.87 -1.93 -5.50 -8.19 -3.22 -11.52
Himachal Pradesh
1 Non-Plan Revenue Deficit
(Pre-devolution) -15.48 -17.71 -14.26-15.35 -12.99 -13.87 -13.40 -15.20 -16.03 -15.03-16.44 -19.46 -21.40
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -3.72 -8.32 -3.80 -4.25 -1.94 -3.64 -3.74 -5.44 -2.33 -2.57 -4.69 -9.59 -10.81
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan
revenue grant) -2.88 -6.08 -3.02 -4.25 -1.94 -3.55 -3.63 -5.35 -2.26 -2.49 -4.67 -9.56 -10.76
4 Plan Revenue Deficit 5.26 2.85 0.50 0.88 2.24 1.11 6.32 -0.96 -0.46 0.01 -2.83 -3.27 -2.36
5 Revenue Deficit 2.38 -3.24 -2.52 -3.37 0.30 -2.43 2.69 -6.32 -2.72 -2.48 -7.50 -12.83 -13.13
6 Fiscal Deficit -7.50 -11.77 -9.31 -9.90 -6.75 -8.15 -3.60 -12.72 -9.45 -9.17 -17.05 -20.85 -20.21
 183

States ITEM 1987- 1988- 1989- 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999-
88 89 90 91 92 93 94 95 96 97 98 99 2000
Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual B.E.
1 2 3 4 5 6 7 8 9 10 11 12 13 14

CATEGORY: Special Category States

Jammu & Kashmir
1 Non-Plan Revenue Deficit
(Pre-devolution) -20.92 -21.84 -23.39-25.01 -32.09 -31.39 -30.70 -34.30 -34.19 -35.71-44.26 -47.27 -36.31
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -6.40 -8.79 -13.93 -8.10 -14.05 -18.44 -15.71 -19.62 -13.66 -22.75-26.02 -30.60 -20.39
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan
revenue grant) -6.36 -8.54 -13.90 -8.10 -14.05 -18.40 -15.70 -17.55 -10.49 -19.47-22.99 -27.37 -16.68
4 Plan Revenue Deficit 3.26 5.25 9.33 17.01 15.83 23.83 16.87 27.88 19.02 20.93 29.38 22.20 18.53
5 Revenue Deficit -3.10 -3.29 -4.57 8.90 1.79 5.43 1.17 10.33 8.53 1.46 6.38 -5.16 1.85
6 Fiscal Deficit -16.19 -15.83 -18.74 -2.79 -13.60 -3.94 -10.08 -2.50 -4.52 -14.77 -7.09 -13.61 -11.40
Manipur
1 Non-Plan Revenue Deficit
(Pre-devolution) -22.19 -27.74 -27.82-28.48 -26.68 -22.33 -22.37 -21.32 -24.31 -25.06-26.26 -24.31 -23.22
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -2.17 -8.56 -6.09 -7.14 -5.53 -1.00 -4.36 -4.02 -4.22 -5.27 -7.56 -8.66 -7.11
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan
revenue grant) -1.55 -8.13 -5.76 -7.11 -5.49 -0.93 -3.31 -3.86 -4.12 -4.74 -7.39 -7.21 -6.50
4 Plan Revenue Deficit 13.46 14.92 9.97 13.72 12.98 10.20 13.24 9.51 8.62 10.96 10.89 11.93 7.41
5 Revenue Deficit 11.91 6.79 4.21 6.62 7.49 9.28 9.93 5.65 4.51 6.22 3.50 4.72 0.92
6 Fiscal Deficit -2.81 -8.22 -10.64 -9.25 -7.00 0.09 0.72 -4.19 -6.47 -8.68 -9.41 -4.82 -9.00
Meghalaya
1 Non-Plan Revenue Deficit
(Pre-devolution) -18.92 -19.47 -18.50-19.08 -19.22 -21.14 -21.08 -17.84 -15.97 -16.10-17.80 -18.03 -18.48
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -1.03 -2.01 -3.31 -3.04 -4.55 -5.65 -7.74 -4.69 0.66 0.83 -3.49 -6.25 -8.51
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan
revenue grant) -0.43 -0.58 -3.13 -2.76 -4.40 -5.46 -7.39 -4.52 0.76 1.04 -3.38 -5.92 -8.19
4 Plan Revenue Deficit 12.92 13.73 9.45 7.50 7.84 7.05 8.75 9.51 4.88 4.55 3.88 6.56 6.36
5 Revenue Deficit 12.49 13.15 6.32 4.74 3.44 1.58 1.36 4.99 5.63 5.58 0.50 0.63 -1.83
6 Fiscal Deficit -0.07 -1.62 -4.37 -4.63 -6.97 -8.09 -6.63 -2.40 -2.83 -1.14 -5.38 -5.42 -11.73
Mizoram
1 Non-Plan Revenue Deficit
(Pre-devolution) -59.81 -53.10 -46.40-22.08 -38.07 -39.89 -39.25 -41.08 -40.76 -38.91-37.24 -32.55 -29.45
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -42.53 -37.28 10.03 29.50 8.33 -6.10 -0.32 -5.79 -7.99 -7.22-11.49 -6.81 -8.58
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan
revenue grant) -42.53 -37.16 10.06 31.19 8.54 -5.92 -0.06 -2.95 -5.56 -6.89-11.02 -6.59 -8.52
4 Plan Revenue Deficit 8.92 10.41 23.51 21.93 12.83 15.98 12.19 11.59 12.02 10.62 12.68 12.39 6.95
5 Revenue Deficit -33.62 -26.75 33.57 53.12 21.37 10.06 12.13 8.64 6.46 3.73 1.67 5.80 -1.57
6 Fiscal Deficit -50.95 -47.45 13.82 34.73 3.29 -9.48 -2.85 -7.91 -10.34 -13.75-14.12 -7.35 -10.53
Nagaland
1 Non-Plan Revenue Deficit
(Pre-devolution) -54.87 -52.41 -48.68-40.77 -39.78 -32.06 -32.71 -29.53 -39.92 -31.81-32.38 -27.59 -24.28
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -30.01 -24.36 -19.53 -7.75 -9.56 -2.97 -10.13 -8.48 -13.71 -7.15-11.56 -9.38 -6.95
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant) -27.75 -22.97 -19.49 -7.59 -9.43 -2.91 -9.47 -8.42 -13.69 -7.09-11.50 -7.78 -6.94
4 Plan Revenue Deficit 36.88 29.06 11.21 6.14 7.47 14.39 12.90 10.97 7.42 7.50 5.86 6.91 6.70
5 Revenue Deficit 9.14 6.10 -8.27 -1.45 -1.95 11.47 3.43 2.55 -6.27 0.41 -5.65 -0.87 -0.24
6 Fiscal Deficit -10.52 -12.44 -24.24-14.89 -14.41 2.75 -4.84 -1.00 -12.62 -7.16-11.75 -6.97 -5.23
Sikkim
1 Non-Plan Revenue Deficit
(Pre-devolution) -21.00 -23.48 -21.01-21.05 -23.89 -30.16 -25.99 -26.58 -26.19 -24.76-26.37 -33.67 -27.99
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -3.20 -1.97 -3.35 -1.45 -4.85 -7.68 -9.19 -12.57 -4.45 -2.31-10.09 -19.18 -15.66
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant) 1.79 1.54 -2.79 -1.45 -4.85 -7.68 -9.19 -12.57 -4.45 -2.31 -8.40 -18.06 -15.66
4 Plan Revenue Deficit 14.93 18.09 12.10 14.85 15.41 18.76 19.14 17.18 17.11 9.04 14.29 11.60 18.85
5 Revenue Deficit 16.72 19.63 9.31 13.41 10.56 11.08 9.95 4.61 12.66 6.72 5.90 -6.46 3.18
6 Fiscal Deficit -5.70 -6.11 -14.25 -8.64 -15.86 -12.79 -8.49 -10.63 -8.46 -9.70 -9.57 -17.26 -11.95
Tripura
1 Non-Plan Revenue Deficit
(Pre-devolution) -25.12 -25.34 -26.98-28.60 -28.47 -27.07 -28.64 -27.74 -26.14 -27.71-30.56 -31.16 -39.93
2 Non-Plan Revenue Deficit
(Post tax-devolution ) -5.15 -5.68 -6.93 -3.27 -3.55 -1.80 -6.94 -5.98 -0.78 -2.03 -6.20 -9.90 -21.12
3 Net Non-Plan Revenue Deficit
(line 2 plus non-Plan revenue grant)-4.04 -4.78 -5.82 -2.28 -2.53 -0.94 -6.18 -5.27 -0.01 -0.79 -5.55 -8.02 -20.18
4 Plan Revenue Deficit 7.01 6.55 6.61 2.12 3.87 5.32 6.17 7.64 8.56 7.09 6.58 12.02 12.96
5 Revenue Deficit 2.97 1.77 0.80 -0.17 1.33 4.39 -0.02 2.37 8.55 6.30 1.03 4.00 -7.22
6 Fiscal Deficit -9.41 -9.90 -9.43 -8.30 -8.05 -1.87 -7.86 -7.34 -1.92 -6.30 -9.24 -5.10 -18.76
 184
Annexure II.5
Interest payments as % of Revenue Receipts
Para 2.14

1990-91 1991-92 1992-93 1993-94 1994-95 Average 1995-96 1996-97 1997-98 1998-99 Average
(1990-95) (1995-99)
Centre 39.12 40.28 41.92 48.69 48.37 44.23 45.44 47.10 49.02 52.09 48.68
Non- Special
Category
Andhra Pradesh 11.78 11.79 12.44 13.13 15.28 13.08 16.52 17.59 16.55 19.90 17.75
Bihar 16.29 17.70 22.64 17.45 25.28 20.24 22.59 23.10 21.75 25.95 23.39
Goa 12.71 21.65 18.61 18.75 16.28 17.66 19.17 19.47 19.90 24.76 20.95
Gujarat 14.12 15.10 16.42 15.83 16.20 15.69 16.72 17.92 18.23 19.46 18.22
Haryana 15.36 17.27 16.81 18.05 16.09 16.74 17.60 21.24 21.54 22.35 20.87
Karnataka 11.64 11.21 11.55 11.79 13.02 11.93 12.74 13.05 13.68 15.19 13.75
Kerala 14.49 17.30 16.65 17.83 17.85 17.05 17.36 18.27 18.35 20.41 18.70
Madhya Pradesh 11.28 11.30 11.51 12.28 14.36 12.32 13.38 13.74 14.75 16.17 14.61
Maharashtra 11.18 12.87 13.49 12.71 12.80 12.68 13.45 13.80 15.74 18.59 15.55
Orissa 16.80 19.65 18.61 21.28 22.00 19.96 23.88 25.18 27.89 32.60 27.56
Punjab 17.90 10.07 15.60 34.03 35.29 23.13 23.91 31.24 26.77 37.75 30.21
Rajasthan 14.36 15.68 16.01 16.80 18.07 16.40 19.18 21.33 23.46 27.44 23.11
Tamil Nadu 9.08 8.32 9.93 11.99 11.95 10.48 12.34 12.46 13.10 15.03 13.34
Uttar Pradesh 16.40 18.94 18.75 19.07 25.23 20.04 22.88 25.87 27.23 32.44 27.29
West Bengal 15.46 17.90 18.72 19.99 19.57 18.57 22.15 23.85 27.02 31.82 26.52
Total Non-Special
Category 13.54 14.29 15.42 16.10 17.90 15.72 17.53 18.93 19.57 22.70 19.85
Special Category
Arunachal Pradesh 4.77 4.98 4.45 4.21 5.60 4.80 5.64 6.68 7.32 7.87 6.93
Assam 14.78 3.84 15.72 14.79 19.91 14.11 14.45 14.52 14.77 11.56 13.74
Himachal Pradesh 13.74 14.93 16.90 14.39 17.12 15.49 16.21 15.71 17.67 21.82 18.04
Jammu & Kashmir 12.21 20.59 11.18 19.34 21.23 17.48 11.55 6.85 18.30 15.39 13.69
Manipur 8.34 6.99 9.37 8.75 8.90 8.52 8.44 8.15 9.24 10.33 9.10
Meghalaya 5.07 5.32 5.89 6.66 8.48 6.45 7.38 7.48 8.75 8.35 8.00
Mizoram 8.84 3.21 5.44 4.66 5.84 5.51 5.72 7.41 9.88 9.74 8.30
Nagaland 7.72 9.63 8.88 9.59 11.10 9.52 11.81 10.84 13.41 13.93 12.58
Sikkim 7.10 8.79 9.67 10.30 11.47 9.69 8.66 9.48 10.35 11.69 10.18
Tripura 7.81 9.01 9.87 10.78 10.35 9.68 9.63 10.86 11.24 11.26 10.81
Total Special
Category 11.19 9.79 11.97 13.17 16.06 12.76 11.74 10.91 14.58 13.51 12.81

Source (Basic data): Finance Accounts of State Governments.

 185
Annexure II.6

Annual Growth rate of Pension of States

(Para 2.34)

States 1991-92 1992-93 1993-94 1994-95 Average 1995-96 1996-97 1997-98 1998-99 Average
1991-95 1995-99
Non-Special category States
Andhra Pradesh 24.50 8.10 14.69 46.44 23.43 19.68 12.44 13.44 20.58 16.54
Bihar 26.84 30.54 10.56 30.36 24.58 19.02 26.31 10.55 31.88 21.94
Goa 7.57 22.23 15.45 19.40 16.16 31.23 21.12 23.78 113.01 47.29
Gujarat 9.46 11.98 14.24 27.99 15.92 20.09 33.12 25.10 62.29 35.15
Haryana 18.65 28.09 12.59 14.55 18.47 20.45 46.73 5.62 106.06 44.72
Karnataka 13.98 17.43 17.73 14.64 15.95 18.75 28.26 12.94 20.10 20.01
Kerala 15.63 9.71 24.97 21.68 18.00 26.77 5.13 21.14 26.43 19.87
Madhya Pradesh 28.39 17.67 29.38 16.96 23.10 36.97 29.23 10.31 51.87 32.10
Maharashtra 14.20 14.29 17.50 12.96 14.74 23.44 30.91 16.35 3.68 18.60
Orissa 27.99 28.79 19.53 13.00 22.32 18.02 30.05 25.35 50.02 30.86
Punjab 13.03 9.73 22.06 14.13 14.73 28.11 24.55 24.63 65.63 35.73
Rajasthan 14.87 14.11 26.51 15.20 17.68 24.72 31.00 21.57 47.63 31.23
Tamil Nadu 24.59 17.66 14.34 17.81 18.60 23.79 35.97 20.24 31.45 27.86
Uttar Pradesh 26.96 61.55 -10.14 17.00 23.84 45.31 23.64 17.80 68.58 38.84
West Bengal 18.19 16.05 33.42 18.89 21.64 16.05 34.14 26.67 27.86 26.18
Total (Non- Special
Category) 19.65 19.61 15.88 21.49 19.16 24.65 25.70 17.72 38.45 26.63
Special Category States
Arunachal Pradesh -1.42 51.08 3.65 22.05 18.84 28.73 18.13 45.54 79.99 43.10
Assam 68.83 25.84 27.41 20.89 35.74 11.70 18.53 15.93 22.38 17.13
Himachal Pradesh 16.06 20.33 23.45 8.57 17.10 24.01 22.60 30.80 34.36 27.94
J&K 55.57 5.76 36.32 23.36 30.25 28.46 27.58 25.37 90.05 42.87
Manipur 166.17 -28.40 18.80 19.65 44.06 26.02 44.37 15.46 -0.32 21.38
Meghalaya 13.67 68.76 31.38 11.26 31.27 15.07 29.73 7.41 61.10 28.33
Mizoram 19.60 20.19 29.25 17.74 21.69 35.19 39.96 11.67 4.18 22.75
Nagaland 13.10 44.12 2.39 51.77 27.85 19.34 12.93 14.85 22.57 17.43
Sikkim 38.46 8.33 47.18 5.92 24.97 20.39 36.07 13.25 160.64 57.59
Tripura 9.20 11.01 28.14 9.62 14.49 14.31 24.59 29.76 18.98 21.91
Total (Special cat.) 44.86 16.13 26.26 18.90 26.54 19.74 23.80 21.90 42.12 26.89
All States 21.12 19.37 16.59 21.30 19.59 24.30 25.57 18.00 38.71 26.64

Source (Basic data): Finance accounts of State Governments.

 186
Annexure II.7

Composition of Revenue Transfers to States

(As per cent of total transfer)
(Para 2.39)

Year/Plan Total Share in Plan Grants Discretionary Total

Central taxes Grants transfer
1 2 3 4 5 6
First Five Year Plan 54.43 4.27 58.70 29.27 12.03 100.00
Second Five Year Plan 45.85 13.45 59.30 36.99 3.71 100.00
Third Five Year Plan 47.84 14.20 62.04 36.40 1.56 100.00
Three Annual Plans 48.00 17.63 65.63 33.28 1.09 100.00
Fourth Five Year Plan 54.35 9.45 63.80 24.38 11.82 100.00
Fifth Five Year Plan 50.25 16.78 67.02 29.36 3.62 100.00
Annual Plan 59.80 4.81 64.62 31.68 3.71 100.00
Sixth Five Year Plan 56.86 4.92 61.77 34.18 4.05 100.00
Seventh Five Year Plan 54.17 6.87 61.04 35.05 3.91 100.00
Annual Plan
1990-91 52.40 12.24 64.64 32.57 2.79 100.00
1991-92 52.27 10.48 62.75 34.20 3.05 100.00
Total 52.33 11.28 63.61 33.46 2.93 100.00
Eighth Five Year Plan
1992-93 53.51 5.41 58.92 38.36 2.72 100.00
1993-94 51.64 4.22 55.86 41.10 3.05 100.00
1994-95 55.34 3.79 59.13 39.28 1.59 100.00
1995-96 57.91 10.45 68.36 30.20 1.44 100.00
1996-97 60.22 9.17 69.39 29.29 1.32 100.00
Total 56.13 6.90 63.02 35.04 1.94 100.00
Ninth Five Year Plan
1997-98 66.11 4.98 71.09 27.59 1.33 100.00
1998-99 (RE) 61.09 4.51 65.60 32.55 1.85 100.00
1999-2000(BE) 59.25 6.92 66.17 30.59 3.24 100.00
Total 62.02 5.55 67.57 30.24 2.20 100.00

Source (Basic data): Indian Public Finance Statistics and Budget Documents.
 187
Annexure II.8

Plan Revenue Expenditure as % of Plan Outlay

(Para 2.42)

S. No. States 1987- 1988- 1989- 1990- 1991- 1992- 1993- 1994- 1995- 1996- 1997- 1998- 1999-
88 89 90 91 92 93 94 95 96 97 98 99 2000
(BE)
High Income
States
1 Gujarat 65.26 63.70 58.07 56.36 52.54 66.79 53.80 47.99 51.27 44.85 45.75 50.68 44.93
2 Haryana 67.97 67.63 74.69 67.59 67.15 65.76 63.35 70.54 66.01 60.10 57.28 50.95 38.60
3 Maharashtra 54.32 55.32 54.87 54.09 55.10 54.21 52.74 33.94 50.59 60.18 52.19 57.58 59.51
4 Punjab 64.22 48.70 59.79 64.35 57.14 57.62 58.63 56.63 44.17 68.14 38.63 60.02 41.37
5 Goa 24.25 34.80 33.19 30.94 33.26 37.60 41.71 41.43 38.02 41.04 46.08 49.40 42.70
Middle
Income States
6 Andhra
Pradesh 65.15 63.76 64.93 67.34 72.38 63.96 50.51 43.51 37.08 93.99 71.34 99.60 78.87
7 Karnataka 76.68 76.02 71.10 61.05 62.26 68.08 61.30 66.32 66.88 73.23 71.54 66.79 63.29
8 Kerala 60.02 63.51 57.63 60.25 58.78 65.38 63.44 63.29 62.10 66.38 70.44 71.62 75.69
9 Tamil Nadu 84.14 80.62 82.55 83.40 83.01 82.52 83.60 78.90 76.52 74.62 69.86 89.89 67.20
10 West Bengal 66.33 68.75 61.77 61.84 64.45 72.12 71.99 60.20 54.70 73.13 70.86 74.57 60.94
Low Income
states
11 Bihar 56.48 56.59 57.64 66.46 72.07 71.84 76.71 73.96 68.47 68.01 75.21 67.09 52.09
12 Madhya
Pradesh 59.71 63.37 58.83 65.77 64.59 62.87 68.38 67.19 71.06 70.72 57.72 65.14 69.73
13 Orissa 52.59 54.09 54.49 58.09 50.48 54.18 61.55 59.99 73.29 60.98 61.57 66.41 60.54
14 Rajasthan 67.02 60.70 52.24 56.55 37.47 56.02 57.79 56.44 47.69 45.20 30.06 44.99 38.41
15 Uttar Pradesh 53.01 43.62 63.14 68.09 69.93 66.04 69.56 68.35 68.35 66.92 69.15 65.57 57.11
Special
Category States
16 Arunachal
Pradesh 41.41 39.47 42.69 34.87 41.15 41.97 43.57 38.66 38.40 43.13 46.89 53.18 48.49
17 Assam 59.47 70.75 64.88 68.47 71.54 77.05 78.02 78.75 75.62 79.56 75.85 75.67 64.99
18 Himachal
Pradesh 56.54 60.43 86.44 62.59 60.16 61.22 64.71 47.33 62.98 64.81 60.75 64.14 62.54
19 Jammu &
Kashmir 27.42 29.10 29.44 34.42 31.68 35.76 36.34 30.16 29.48 27.36 32.89 39.30 33.26
20 Manipur 37.90 36.73 40.70 35.59 35.41 49.18 45.58 45.25 46.76 39.95 43.26 44.57 42.90
21 Meghalaya 50.48 51.60 52.11 53.50 55.38 50.47 54.84 49.24 53.88 56.95 56.57 56.67 44.32
22 Mizoram 63.02 59.91 62.64 62.35 60.92 58.33 61.11 58.24 57.57 55.42 51.76 63.02 64.99
23 Nagaland 48.26 46.26 44.01 55.54 56.09 45.56 57.07 64.49 57.85 56.57 60.03 56.14 57.80
24 Sikkim 50.80 44.16 46.45 44.80 43.93 47.11 44.17 49.98 52.00 57.07 52.04 57.92 50.55
25 Tripura 56.88 58.62 59.16 64.89 63.46 64.39 62.10 61.46 56.58 51.62 59.60 64.59 53.87
All States 60.54 59.16 60.45 62.37 60.31 63.41 62.51 56.25 57.59 63.65 59.00 64.46 57.90

Source (Basic data): Finance Accounts and Budget documents of State Governments.
 188
Annexure II.9
Transfers as % of Gross Revenue Receipts of the Centre
(Para 2.51)

Year/Plan Total Share Statutory Transfers Plan Discretionary Total Total

in Central Grants under FC Grants Grants Grants Transfer
(col.2+
col.3)
1 2 3 4 5 6 7
First Five Year Plan 12.86 1.01 13.87 6.92 2.84 10.77 23.63
Second Five Year Plan 14.71 4.32 19.02 11.87 1.19 17.37 32.08
Third Five Year Plan 11.79 3.50 15.29 8.97 0.38 12.85 24.64
Three Annual Plans 14.03 5.15 19.18 9.73 0.32 15.20 29.22
Fourth Five Year Plan 18.60 3.23 21.84 8.34 4.05 15.62 34.23
Fifth Five Year Plan 15.94 5.32 21.26 9.31 1.15 15.79 31.73
Annual Plan 23.53 1.89 25.42 12.46 1.46 15.82 39.34
Sixth Five Year Plan 21.19 1.83 23.02 12.74 1.51 16.08 37.27
Seventh Five Year Plan 20.31 2.58 22.89 13.14 1.47 17.18 37.50
Annual Plan
1990-91 20.90 4.88 25.78 12.99 1.11 18.98 39.88
1991-92 20.64 4.14 24.77 13.50 1.20 18.84 39.48
Total 20.76 4.47 25.23 13.27 1.16 18.91 39.66
Eighth Five Year Plan
1992-93 21.67 2.19 23.86 15.53 1.10 18.82 40.49
1993-94 22.75 1.86 24.61 18.11 1.34 21.31 44.06
1994-95 21.43 1.47 22.90 15.21 0.61 17.29 38.72
1995-96 21.01 3.79 24.80 10.95 0.52 15.27 36.27
1996-97 21.73 3.31 25.04 10.57 0.48 14.35 36.08
Total 21.66 2.66 24.32 13.52 0.75 16.93 38.60
Ninth Five Year Plan
1997-98 24.54 1.85 26.39 10.24 0.49 12.58 37.12
1998-99 (RE) 19.90 1.47 21.37 10.60 0.60 12.67 32.57
1999-2000(BE) 20.59 2.40 22.99 10.63 1.13 14.16 34.75
Total 21.54 1.93 23.47 10.50 0.76 13.19 34.74

Source (Basic data): Indian Public Finance Statistics and Budget Documents.
 189
Annexure III.1
Outstanding Debt of Centre and States
(Para 3.20)
(Rs. in crores)
1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-
2000*
Debt & Liabilities of the
Central Government 477968 538610 606232 675676 778293 891806 1030744

As percentage of GDP 55.63 53.33 51.29 49.61 51.35 50.60 53.36

Debt & Liabilities of the

State Governments 184986 216725 248998 287310 330923 400754 473677

As percentage of GDP 21.53 21.46 21.07 21.10 21.83 22.74 24.52

Loans from Centre to the

States 101122 115238 129264 146168 168653 199007 236696

As percentage of GDP 11.77 11.41 10.94 10.73 11.13 11.29 12.25

Total Debt & Liabilities

of the Centre and
States (1+2-3) 561832 640097 725966 816818 940563 1093553 1267725

As percentage of GDP 65.39 63.38 61.42 59.97 62.06 62.04 65.62

GDP at Market Price 859220 1009906 1181961 1361952 1515646 1762609 1931819

Notes: Total Debt and Liabilities of the Central Government include external debt balances which are according to book value. Total debt and liabilities
of the State Governments also include Reserve Funds and Deposits.
* Revised estimate for Centre and Budget estimate for States.

Source: Budget documents of the Centre and the States.

 190
Annexure III.2
Indian Macro Economy at the Millennium Threshold : Key Indicators
(Paras 3.21 and 3.22)
1994-95 1995-96 1996-97 1997-981 1998-992 1999-003
GDP at factor cost at 1993-94 prices and its Components: Growth over previous year(%)
GDP at 1993-94 prices 7.0 7.3 7.5 5.0 6.8 5.9
Agriculture and Allied Services 5.0 -0.9 9.6 -1.9 7.2 0.8
Industry(exc. Construction) 10.4 12.8 6.8 4.9 3.7 6.4
Sevices(inc. Construction) 6.8 10.0 6.6 9.2 8.0 8.3
Implicit Price Deflator(% change) 9.4 8.8 7.8 6.5 9.0 3.5

Sectoral Shares(% of GDP at factor cost at current prices)

Agriculture and Allied Services 30.4 28.1 28.6 26.7 26.8 25.5
Industry(exc. Construction) 21.7 22.8 22.7 22.7 22.0 22.1
Sevices(inc. Construction) 47.9 49.1 48.7 50.6 51.2 52.3

Saving and Investment ( %of GDP at current market prices)

Gross Domestic Saving 25.0 25.5 23.3 24.7 22.3 -
Gross Domestic Capital Formation 26.1 27.2 24.6 26.2 23.4 -

External Sector Indicators (% of GDP at current market prices)

Trade Balance -2.8 -3.2 -3.9 -3.8 -3.1 -
Current Account Balance -1.0 -1.7 -1.2 -1.4 -1.0 -1.5 *

Monetary Aggregates(% Growth over previous year)

Reserve Money(M0) 22.07 14.87 2.84 13.21 14.56 3.14
Narrow Money(M1) 27.51 11.74 12.00 11.32 15.11 8.99
Broad Money(M3) 22.39 13.57 16.16 18.01 18.37 13.71

Fiscal Balance(as % of GDP at current market prices)

Revenue Deficit of Centre 3.07 2.52 2.40 3.06 3.85 3.81
Revenue Deficit of States 0.70 0.73 1.34 1.22 2.68 2.95
Revenue Deficit of Centre and States 3.77 3.25 3.73 4.28 6.53 6.76
Fiscal Deficit of Centre 5.71 5.10 4.90 5.87 6.43 5.64
Fiscal Deficit of States 2.73 2.60 2.79 2.93 4.23 4.71
Fiscal Deficit of Centre and States 6.94 6.55 6.28 7.49 9.46 9.83
Interest Rate Trends(% per annum) as on
22.01.1999 3.04.1999 21.01.2000
Bank Rate 9.0 8.0 8.0
Medium Term Lending Rate(IDBI) 14.0 13.5 13.5
Prime Lending Rate(5 major banks) 12.75 - 13.00 12.00 - 12.50 12.00 - 12.50
Deposit Rate 9.00 - 11.50 8.00 - 10.50 8.00 - 10.50
Features of Population, 1991 Density Literacy Rate Annual Exp. Gr. Rt.
(per sq.km.) Male Female Total 1981-91(%)

274 64.13 39.29 52.21 2.14

Notes: 1. Provisional estimates; 2. Quick estimates; 3. Advance estimates.
* Annualised (on the basis of figures for April-September).
Source: Reserve Bank of India Bulletin, April 2000; Economic Survey 1999-2000;
Hand Book of Statistics on Indian Economy, Reserve Bank of India, 1999;
Indian Public Finance Statistics; Finance Accounts; Budget Documents; and
Census of India, 1991, Series 1, Primary Census Abstract, 1991.
 191
Annexure III.3

Outstanding Government Guarantees

(outstanding as at end-March)
(Para 3.75)
(Rs. in crores)
Year Centre States* Total
1992 50,575 40,159 90,734
(8.2) (6.5) (14.7)
1993 58,088 42,515 100,603
(8.2) (6.0) (14.3)
1994 62,834 48,866 111,700
(7.2) (5.6) (12.7)
1995 62,468 48,479 110,947
(6.0) (4.7) (10.7)
1996 65,573 52,631 118,204
(5.4) (4.3) (9.7)
1997 69,748 63,409 133,157
(4.9) (4.5) (9.4)
1998 73,877 73,751 147,628
(4.7) (4.7) (9.4)
Note: * Pertains to 17 States. Figures in brackets are ratio of GDP at current market
prices (base: 1993-94).
Source: Report on Currency and Finance (RBI) 1998-99.
 192
Annexure IV.1

Central Public Sector Undertakings

Performance Highlights
(Para 4.10)

1995-96 1996-97 1997-98 1998-99

Number of PSUs 243 242 240 240
Number of Operating PSUs 239 238 236 235
Investment: (Rs. in crores)
a) Paid-up Capital 60743 69985 72122 77066
Central Govt. 58008 59158 61864 64668
Others 2735 10827 10258 12398
b) Loans 117885 134361 145396 149779
Central Govt. 31142 29839 31280 32049
Others 86743 104522 114116 117730
Share application money 0 2309 4469 3295
Total Investment 178628 206655 221987 230140
Profit before Interest and Tax 27587 30915 37217 39766
Interest 13966 15537 17858 20032
Profit before Tax 13621 15378 19354 19734
Profit of Profit making PSUs 14763 16125 20279 22509
Number of PSUs making Profit 132 129 134 127
Loss of Loss making PSUs 5188 5939 6559 9274
Number of PSUs making Losses 102 104 100 106
Net Profit 9574 10186 13720 13235
PSEs in no Profit/Loss 5 3 2 2
Dividend Declared 2205 2836 3609 4932
Number of PSUs declared dividend 80 88 83
Retained Profit 7369 7089 9647 7766
Contribution to Exchequer on investment by
Central Government in PSUs
Dividend Declared 2205 1555 1833 2487
Interest NA 1928 2314 2548
Total (A) 3483 4147 5035
a) Corporate Tax 3998 5280 7026 8479
b) Excise Duty 11916 13895 16693 18771
c) Customs Duty 9785 13246 10970 9352
d) Dividend Tax NA 86 257 450
e) Sales Tax NA 2258 2421 2350
d) Other Duties 2974 763 778 2488
Total (B) 28673 35527 38146 41890
Total Contribution (A+B) 39009 42292 46925
Net Profit/Equity Capital (%) 15.76 14.55 19.02 17.17

Source : Public Enterprises Survey 1998-99, Dept. of Public Enterprises, Ministry of Industry.
Note : A major portion of dividend declared will go to exchequer since Central governnment is majority shareholder. The following categories
have not been included in the above analysis:
1. Financial Institutions
2. Public Sector Banks
3. Insurance Corporations
4. Public Undertakings with Central government investments but without direct responsibility for management.
 193
Annexure IV.2

Profile of Central Finances as per Assessment

(Para 4.20)
(Rs. in crores)
Item 2000-01 2001-02 2002-03 2003-04 2004-05
Revenue Receipts(gross) 255690 298162 347684 405432 472780
Tax Revenues(gross) 198226 230961 269185 313833 366002
Tax Revenues(net to Centre) 144166 167935 195690 228109 265988
Non-tax Revenues 57464 67201 78499 91599 106778
Revenue Receipts(net to Centre) 201630 235137 274189 319707 372766
Non-Plan Revenue Expenditure 228768 248788 270718 294732 321018
of which Interest Payments 101266 112201 124181 137291 151620
Plan Revenue Expenditure 50287 58133 66840 76528 87340
Total Revenue Expenditure 279055 306921 337558 371260 408358
Revenue Deficit 77425 71785 63369 51552 35593
Capital Receipts 134814 146435 158995 172545 187133
Recoveries of Loans 13539 14531 15597 16740 17967
Other Receipts (Disinvest etc.) 9000 9000 9000 9000 9000
Fiscal Deficit 112275 122904 134399 146805 160166
Capital Expenditure 57389 78313 96161 117327 142370
Primary Deficit 11009 10702 10217 9514 8546
Outstanding Debt 1141719 1263623 1397022 1542827 1701993
As percent of
GDP
Revenue Receipts(gross) 11.71 12.09 12.47 12.87 13.28
Tax Revenues(gross) 9.08 9.36 9.66 9.96 10.28
Tax Revenues(net to Centre) 6.60 6.81 7.02 7.24 7.47
Non-tax Revenues 2.63 2.72 2.82 2.91 3.00
Revenue Receipts(net to Centre) 9.24 9.53 9.84 10.15 10.47
Non-Plan Revenue Expenditure 10.48 10.09 9.71 9.36 9.02
of which Interest Payments 4.64 4.55 4.46 4.36 4.26
Plan Revenue Expenditure 2.30 2.36 2.40 2.43 2.45
Total Revenue Expenditure 12.78 12.44 12.11 11.79 11.47
Revenue Deficit 3.55 2.91 2.27 1.64 1.00
Capital Receipts 6.18 5.94 5.70 5.48 5.26
Recoveries of Loans 0.62 0.59 0.56 0.53 0.50
Other Receipts (Disinvest etc.) 0.41 0.36 0.32 0.29 0.25
Fiscal Deficit 5.14 4.98 4.82 4.66 4.50
Capital Expenditure 2.63 3.17 3.45 3.72 4.00
Primary Deficit 0.50 0.43 0.37 0.30 0.24
Outstanding Debt 52.30 51.23 50.12 48.98 47.82
 194
Annexure IV.3

Central Government: Fiscal Profile 2000-01 to 2004-05

(Para 4.20)
(Rs. in crores)
Gr. Rt. 1999-00 R 2000-01 2001-02 2002-03 2003-04 2004-05
Corporation tax 0.195 29915 37978 45384 54233 64809 77447
Income tax 0.1885 26684 31590 37545 44622 53033 63030
Customs 0.143 47800 53572 61233 69989 79998 91437
Union Excise Duties & Service Tax 0.156 63000 73452 84911 98157 113469 131170
Addl.Exc. Duties(net Proceeds) 0.156 3037 3387 3915 4526 5232 6048

Other Taxes 0.156 2580 1634 1889 2184 2524 2918

Gross Tax Revenue 169979 198226 230961 269185 313833 366002
Surcharges and Cesses 11316 12463 14602 17113 20062 23526
Cost of Collection 0.07 2026 2181 2334 2497 2672 2859
Taxes of UTs 0.156 325 329 380 440 508 588
Shareable Tax Revenue 183253 213645 249135 290591 339030
States’Share in Shareable Pool 0.295 43510 54060 63025 73495 85724 100014
Centre’ Net Tax Revenue 126469 144166 167935 195690 228109 265988
Non Tax Revenue 53035 57464 67201 78499 91599 106778
Gross Revenue Receipts 223014 255690 298162 347684 405432 472780
Rev. Rec. Excl. Tax. Dev. 179504 201630 235137 274189 319707 372766
Potential Fiscal Transfer(as % of Gr. Rev. Rec) 0.346 0.375 0.375 0.375 0.375 0.375
Potential Fiscal Transfer 77255 95884 111811 130381 152037 177292
Interest Payments 0.10 91425 101266 112201 124181 137291 151620
Pensions 0.10 14304 15843 17427 19170 21087 23196
Defence Services 0.10 35873 40661 44727 49200 54120 59532
Other General Services 12516 13260 14056 14900 15797 16749
Social Services 6900 6187 6991 7910 8960 10161
Subsidies 25692 22800 22800 22800 22800 22800
Economic Services 6885 7183 7844 8571 9371 10252
Fin. Comm. & Oth.Non-Plan Grants 0.05 6582 17676 18560 19488 20462 21485
Exp.of UTs(without legislature) 0.13 1140 1185 1339 1513 1710 1932
Other Non-Plan Expenditure 0.05 3587 2707 2842 2984 3134 3290
Total Non Plan Rev. Exp. 204904 228768 248788 270718 294732 321018
Total Plan Rev. Exp 48132 50287 58133 66840 76528 87340
Total Revenue Exp. 253036 279055 306921 337558 371260 408358
Revenue Deficit 73532 77425 71785 63369 51552 35593
Potential Plan Grants to States 20842 26403 32980 40742 49888
Cap. Expenditure(net of rep.) 50702 57389 78313 96161 117327 142370
Total Expenditure 303738 336444 385234 433719 488586 550728
Capital Receipts 124234 134814 146435 158995 172545 187133
Recovery of Loans 0.07 12736 13539 14531 15597 16740 17967
Non-debt Cap. Rec. 2600 9000 9000 9000 9000 9000
Fiscal Deficit 108898 112275 122904 134399 146805 160166
Primary Deficit 17473 11009 10702 10217 9514 8546
Disinvestment for retiring debt 1000 1000 1000 1000 1000
Outstanding debt 891506 1030444 1141719 1263623 1397022 1542827 1701993
As % of GDP
Total Expenditure 15.72 15.41 15.62 15.56 15.51 15.47
Rev Expenditure 13.10 12.78 12.44 12.11 11.79 11.47
Cap Exp(net of rep.) 2.62 2.63 3.17 3.45 3.72 4.00
Tax Rev(gross) 8.80 9.08 9.36 9.66 9.96 10.28
Non tax Rev. 2.75 2.63 2.72 2.82 2.91 3.00
Fiscal Deficit 5.64 5.14 4.98 4.82 4.66 4.50
Rev Deficit 3.81 3.55 2.91 2.27 1.64 1.00
Primary Deficit 0.90 0.50 0.43 0.37 0.30 0.24
Outstanding debt 53.34 52.30 51.23 50.12 48.98 47.82
GDP (at current market prices) 0.13 1931819 2182956 2466740 2787417 3149781 3559252
Note : R - Revised Estimates
 195
Annexure IV.4

Centre’s Revenue Transfers to States

(Para 4.21)
(Rs. in crores)
Period Centre’s Gross Total Revenue Total Revenue Transfers
Revenue Transfers to States as % of Centre’s
(Tax+Non-Tax) Gross Revenue

First Plan(1951-52 to 1955-56) 2675 632 23.63

Second Plan(1956-57 to 1960-61) 4542 1457 32.08
Third Plan(1961-62 to 1965-66) 10147 2500 24.64
Annual Plan(1966-67 to 1968-69) 9140 2671 29.22

Fourth Plan(1969-70 to 1973-74) 24521 8393 34.23

Fifth Plan(1974-75 to 1978-79) 51908 16472 31.73

Annual Plan(1979-80) 14467 5692 39.34

Sixth Plan(1980-81 to 1984-85) 112124 41786 37.27
Seventh Plan(1985-86 to 1989-90) 243177 91323 37.55

Two Annual Plans(1990-91 & 1991-92) 152757 60623 39.69

Eigth Plan(1992-93 to 1996-97) 609447 235104 38.58

Ninth Plan(1997-98 to 1999-2000)

1997-98 177450 65692 37.02
1998-99 188655 64226 34.04
1999-2000(RE) 223013 72896 32.69
2000-2001(BE) 257752 94626 36.71

Source: Finance Account and Budget Documents of the Central Government.

 196
Annexure IV.5

Difference between Assessment and Central Forecast

(Para 4.26)
(Rs. in crores)
Item 2000-01 2001-02 2002-03 2003-04 2004-05
Revenue Receipts(gross) -7158 -5779 -3877 -1305 2114
Tax Revenues(gross) -8812 -11042 -13514 -16213 -19108
Tax Revenues(net to Centre) -1656 2114 6780 12502 19458
Non-tax Revenues 1654 5262 9637 14908 21222
Revenue Receipts(net to Centre) -2 7377 16417 27409 40680
Non-Plan Revenue Expenditure -766 -14282 -21026 -41614 -66771
of which Interest Payments -814 -6212 -13178 -22045 -33210
Plan Revenue Expenditure -3367 -3570 -4118 -5074 -6502
Total Revenue Expenditure -4133 -17852 -25144 -46688 -73273
Revenue Deficit -4131 -25228 -41561 -74098 -113952
Capital Receipts 25751 28950 26741 23486 18955
Recoveries of Loans 1122 623 21 -706 -1572
Other Receipts (Disinvest etc.) -1000 -1000 -1000 -1000 -1000
Fiscal Deficit 25629 29326 27720 25192 21527
Capital Expenditure 5445 20771 32411 46693 53016
Primary Deficit 26443 35538 40898 47237 54737
Outstanding Debt 24629 139601 259899 390770 532910
As percent of GDP
Revenue Receipts(gross) 0.19 0.39 0.61 0.83 1.06
Tax Revenues(gross) 0.00 0.05 0.12 0.19 0.28
Tax Revenues(net to Centre) 0.21 0.43 0.65 0.86 1.07
Non-tax Revenues 0.18 0.34 0.49 0.64 0.78
Revenue Receipts(net to Centre) 0.39 0.77 1.14 1.50 1.85
Non-Plan Revenue Expenditure 0.41 -0.03 -0.13 -0.60 -1.05
of which Interest Payments 0.16 -0.01 -0.18 -0.36 -0.54
Plan Revenue Expenditure -0.05 -0.02 0.00 0.01 0.02
Total Revenue Expenditure 0.36 -0.05 -0.13 -0.59 -1.03
Revenue Deficit -0.03 -0.82 -1.27 -2.08 -2.88
Capital Receipts 1.39 1.42 1.24 1.07 0.89
Recoveries of Loans 0.08 0.05 0.03 0.02 0.00
Other Receipts (Disinvest etc.) -0.03 -0.02 -0.01 -0.01 -0.01
Fiscal Deficit 1.34 1.38 1.22 1.06 0.90
Capital Expenditure 0.35 0.96 1.30 1.63 1.68
Primary Deficit 1.18 1.39 1.40 1.42 1.44
Outstanding Debt 3.31 7.98 11.75 14.88 17.46

Note : In computing the percentage to GDP, GDP figures as per Central projections were used for magnitudes in Central forecasts, and as per
assessment for magnitudes in the Assessment exercise. The figures in the table indicate the difference between assessment and Central
forecast.
 197
Annexure V.1 Annexure V.2

Additional Tax Revenues Assessed for the Base Amount of Interest excluded in the base year -
Year - normative assessment normative assessment
(Para 5.13) (Para 5.20)
(Rs. in lakhs) (Rs. in lakhs)
States Additional Tax States Reduce
Amount Amount
Arunachal Pradesh 464 Assam 401
Bihar 18198 Bihar 7355
Jammu & Kashmir 233 Goa 149
Madhya Pradesh 11095 Haryana 1358
Manipur 639 Himachal Pradesh 3359
Meghalaya 90 Jammu & Kashmir 1243
Mizoram 465 Orissa 9720
Nagaland 589 Punjab 13676
Orissa 7491 Rajasthan 7912
Punjab 6005 Uttar Pradesh 35973
Rajasthan 16919 West Bengal 17754
Tripura 492 All States 98900
Uttar Pradesh 28645
West Bengal 49019
All States 140344

Annexure V.3

Buoyancy based growth rates of tax revenues (2000-05)

(Para 5.23)

States Cluster Rate of Prescriptive Prescriptive

group Growth per buoyancies of per annum growth
annum of tax revenue rate of
GSDP tax revenue (%)
Andhra Pradesh G3 14 1.35 18.90
Arunachal Pradesh G2 13 1.20 15.60
Assam G1 12 1.10 13.20
Bihar G1 12 1.20 14.40
Goa G3 14 1.20 16.80
Gujarat G3 14 1.35 18.90
Haryana G3 14 1.35 18.90
Himachal Pradesh G2 13 1.20 15.60
Jammu & Kashmir G1 12 1.10 13.20
Karnataka G3 14 1.20 16.80
Kerala G3 14 1.20 16.80
Madhya Pradesh G2 13 1.30 16.90
Maharashtra G3 14 1.35 18.90
Manipur G1 12 1.10 13.20
Meghalaya G2 13 1.10 14.30
Mizoram G2 13 1.10 14.30
Nagaland G2 13 1.10 14.30
Orissa G1 12 1.20 14.40
Punjab G3 14 1.35 18.90
Rajasthan G3 14 1.30 18.20
Sikkim G2 13 1.10 14.30
Tamil Nadu G3 14 1.20 16.80
Tripura G1 12 1.20 14.40
Uttar Pradesh G2 13 1.30 16.90
West Bengal G2 13 1.30 16.90
 198
Annexure V.4
Estimated Net Return on Investments by States in the Power Sector*
(Para 5.31)
(Rs. in lakhs)
2000-01 2001-02 2002-03 2003-04 2004-05
Andhra Pradesh
Return on o/s State Loans to SEBs 11231 13325 15440 17534 19627
Return on State Equity to SEBs 2640 3630 4619 5609 6599
Assam
Return on o/s State Loans to SEBs 3540 7080 10620 14160 17700
Return on State Equity to SEBs 0 0 0 0 0
Bihar
Return on o/s State Loans to SEBs 6382 12557 18697 24872 31047
Return on State Equity to SEBs 204 281 357 434 510
Gujarat
Return on o/s State Loans to SEBs 6882 13398 19914 26430 32946
Return on State Equity to SEBs 1339 1841 2344 2846 3348
Haryana**
Return on o/s State Loans to SEBs 464 759 1055 1349 1645
Return on State Equity to SEBs 0 0 0 0 0
Himachal Pradesh
Return on o/s State Loans to SEBs 200 355 510 665 819
Return on State Equity to SEBs 17 23 29 36 42
Karnataka
Return on o/s State Loans to SEBs 10983 11559 12134 12710 13286
Return on State Equity to SEBs & KPCL 2219 3051 3883 4715 5547
Kerala
Return on o/s State Loans to SEBs 3689 5462 7234 9007 10779
Return on State Equity to SEBs 0 0 0 0 0
Madhaya Pradesh
Return on o/s State Loans to SEBs 2656 3653 4649 5645 6641
Return on State Equity to SEBs 10 20 30 40 50
Maharashtra
Return on o/s State Loans to SEBs 19646 24524 29403 34325 39204
Return on State Equity to SEBs 2957 4066 5175 6284 7393
Meghalaya
Return on o/s State Loans to SEBs 263 527 790 1053 1316
Return on State Equity to SEBs 0 0 0 0 0
Orissa
Return on o/s State Loans to Power Companies 1064 1689 2310 2935 3560
Return on State Equity to Power Companies &
Other Projects 1073 1476 1878 2281 2683
Punjab
Return on o/s State Loans to SEBs 7502 13683 19827 26008 32152
Return on State Equity to SEBs 3234 4447 5660 6872 8085
Rajasthan
Return on o/s State Loans to SEBs 12707 12707 12707 12707 12707
Return on State Equity to SEBs 3549 4880 6211 7542 8873

Tamil Nadu
Return on o/s State Loans to SEBs 2894 3223 3556 3889 4222
Return on State Equity to SEBs 439 603 768 933 1097
Uttar Pradesh
Return on o/s State Loans to SEBs 25808 47929 70051 92299 114420
Return on State Equity 801 1101 1401 1701 2002
West Bengal
Return on o/s State Loans to SEBs 6168 11884 17633 23349 29065
Return on State Equity to SEBs 6853 9423 11993 14563 32

* The Returns on loans and equity have been calculated for the investments made in SEBs, power companies and other power projects etc. of
the State.
** For Haryana, State Governments investment in equity in the four companies established in August 1999 is not yet available.
Note : In the reassessment exercise the gross returns on loans were taken at 9% and gross returns on equity were taken at 5%, in the last year of
the forecast period, i.e. 2004-05. In the intervening years the returns were accordingly stepped up. Here too, the same percentages as
adopted in the State’s reassessment exercise, have been taken. The returns have been calculated on the stock of loans and investments in
equity as on 31st March 1999, as indicated in the Finance Accounts of 1998-99.
 199
Annexure V.5

Estimated Net Return on the Investments by State Government in the Transport Sector
(Para 5.31)
(Rs. in lakhs)
2000-01 2001-02 2002-03 2003-04 2004-05
Andhra Pradesh
Return on o/s State Loans to SRTC 0 0 0 0 0
Return on State Equity to SRTC 263 361 460 558 657
Total Return 263 361 460 558 657
Assam
Return on o/s State Loans to SRTC 0 0 0 0 0
Return on State Equity to SRTC 427 588 748 908 1069
Total Return 427 588 748 908 1069
Bihar
Return on o/s State Loans to SRTC 55 108 161 214 267
Return on State Equity to SRTC 149 204 260 316 372
Total Return 204 313 421 530 639
Gujarat
Return on o/s State Loans to SRTC 0 0 0 0 0
Return on State Equity to SRTC 659 907 1154 1401 1649
Total Return 659 907 1154 1401 1649
Himachal Pradesh
Return on o/s State Loans to SRTC 0 0 0 0 0
Return on State Equity to SRTC 3 4 5 6 7
Total Return 3 4 5 6 7
Jammu and Kashmir
Return on o/s State Loans to SRTC 244 489 733 977 1222
Return on State Equity to SRTC 162 223 284 345 406
Total Return 407 712 1017 1323 1628
Karnataka
Return on o/s State Loans to SRTC 37 39 41 43 45
Return on State Equity to SRTC 718 987 1256 1525 1794
Total Return 755 1026 1297 1568 1839
Kerala
Return on o/s State Loans to SRTC 253 375 497 619 740
Return on State Equity to SRTC 122 167 213 258 304
Total Return 375 542 710 877 1044
Madhaya Pradesh
Return on o/s State Loans to SRTC 130 150 169 189 209
Return on State Equity to SRTC 135 271 406 541 677
Total Return 266 421 575 731 885
Maharashtra
Return on o/s State Loans to SRTC 0 0 0 0 0
Return on State Equity to SRTC 257 354 450 547 643
Total Return 257 354 450 547 643
Meghalaya
Return on o/s State Loans to SRTC 0 0 0 0 0
Return on State Equity to SRTC 44 61 78 94 111
Total Return 44 61 78 94 111
Manipur
Return on o/s State Loans to SRTC
Return on State Equity to SRTC 48 66 85 103 121
Total Return 48 66 85 103 121
Orissa
Return on o/s State Loans to SRTC 0 0 0 0 0
Return on State Equity to SRTC 98 196 294 392 490
Total Return 98 196 294 392 490
Punjab
Return on o/s State Loans to SRTC 97 177 257 337 417
Return on State Equity to SRTC 174 239 305 370 435
Total Return 271 417 562 707 852
Contd....
 200
(Rs. in lakhs)
2000-01 2001-02 2002-03 2003-04 2004-05
Rajasthan
Return on o/s State Loans to SRTC 0 0 0 0 0
Return on State Equity to SRTC 81 162 243 325 406
Total Return 81 162 243 325 406
Tamil Nadu
Return on o/s State Loans to SRTC 292 325 359 392 426
Return on State Equity to SRTC 1224 1683 2142 2601 3060
Total Return 1516 2008 2501 2994 3486
Tripura
Return on o/s State Loans to SRTC 0 1 1 1 1
Return on State Equity to SRTC 51 102 153 204 255
Total Return 51 103 154 205 256
Uttar Pradesh
Return on o/s State Loans to SRTC 32 59 87 114 142
Return on State Equity to SRTC 192 383 575 766 958
Total Return 223 442 661 880 1099
West Bengal
Return on o/s State Loans to SRTC 1009 1945 2885 3820 4756
Return on State Equity to SRTC 27 37 47 57 67
Total Return 1036 1982 2932 3878 4823

Note : In the reassessment exercise the gross returns on loans were taken at 9% and gross returns on equity were taken at 5%, in the last year of the
forecast period, i.e. 2004-05. In the intervening years the returns were stepped up from the returns reported in 1998-99 to the desired returns
of 2004-05. Here too, the same percentages as adopted in the State’s reassessment exercise, have been taken. The returns have been
calculated on the stock of loans and investments in equity as on 31st March 1999, as indicated in the Finance Accounts of 1998-99.

Annexure V.6

Maintenance Expenditure Provided for Major and Medium Irrigation (2701)

(Para 5.44)
(Rs. in lakhs)
States 2000-01 2001-02 2002-03 2003-04 2004-05 Total
2000-2005
Andhra Pradesh 14145 14937 15797 16697 17639 79215
Arunachal Pradesh 0 0 0 0 0 0
Assam 868 912 957 1005 1055 4798
Bihar 19233 20194 21204 22264 23378 106274
Goa 648 680 714 750 787 3580
Gujarat 16859 17702 18587 19516 20492 93156
Haryana 9295 9818 10388 11059 11685 52244
Himachal Pradesh 137 143 150 158 166 754
Jammu & Kashmir 1035 1108 1179 1256 1329 5907
Karnataka 8303 8771 9279 9809 10365 46526
Kerala 2622 2790 2972 3162 3341 14887
Madhya Pradesh 20377 21396 22466 23589 24769 112598
Maharashtra 18072 18975 19924 20920 21966 99857
Manipur 932 979 1028 1079 1133 5152
Meghalaya 0 0 0 0 0 0
Mizoram 0 0 0 0 0 0
Nagaland 0 0 0 0 0 0
Orissa 7507 7875 8330 8776 9494 41983
Punjab 12154 12791 13482 14154 14953 67534
Rajasthan 13475 14148 14856 15599 16379 74456
Sikkim 0 0 0 0 0 0
Tamil Nadu 15665 16448 17271 18134 19041 86559
Tripura 12 13 14 14 15 68
Uttar Pradesh 40906 42951 45099 47354 49721 226031
West Bengal 8928 9375 9843 10335 10852 49334

All India Total 211172 222008 233539 245631 258559 1170910

 201
Annexure V.7

Maintenance Expenditure Provided for Minor Irrigation (2702)

(Para 5.44)
(Rs. in lakhs)
States 2000-01 2001-02 2002-03 2003-04 2004-05 Total
2000-2005
Andhra Pradesh 6471 6875 7359 7886 8375 36966
Arunachal Pradesh 525 551 579 608 638 2901
Assam 3068 3222 3383 3552 3729 16953
Bihar 12537 13164 13822 14513 15239 69275
Goa 558 585 615 645 678 3081
Gujarat 7286 7650 8033 8434 8856 40259
Haryana 3684 3913 4102 4351 4621 20671
Himachal Pradesh 2662 2795 2935 3081 3235 14708
Jammu & Kashmir 5390 5659 5942 6239 6551 29781
Karnataka 5841 6133 6440 6762 7100 32276
Kerala 3687 3871 4064 4268 4481 20371
Madhya Pradesh 5899 6336 6784 7272 7801 34091
Maharashtra 11221 11782 12372 12990 13640 62005
Manipur 247 259 272 286 300 1363
Meghalaya 540 567 595 625 656 2982
Mizoram 48 51 53 56 59 267
Nagaland 389 408 428 450 472 2147
Orissa 3189 3348 3516 3691 3876 17620
Punjab 7843 8286 8731 9168 9735 43762
Rajasthan 7166 7525 7901 8296 8711 39598
Sikkim 110 116 122 128 134 609
Tamil Nadu 4993 5250 5506 5783 6082 27614
Tripura 860 903 948 995 1045 4752
Uttar Pradesh 60487 64234 68044 72182 77433 342380
West Bengal 22211 23321 24487 25712 26997 122728

All India Total 176909 186804 197032 207973 220442 989161

 202
Annexure V.8

Maintenance Expenditure provided for Roads & Bridges

(MH-3054)
(Para 5.47)
(Rs. in lakhs)
States 2000-01 2001-02 2002-03 2003-04 2004-05 Total
2000-2005
Andhra Pradesh 46809 49149 51607 54187 56897 258649
Arunachal Pradesh 359 377 396 416 436 1984
Assam 15381 16151 16958 17806 18696 84992
Bihar 25467 26740 28077 29481 30955 140720
Goa 2020 2121 2227 2339 2456 11163
Gujarat 43651 45833 48125 50531 53058 241197
Haryana 16409 17230 18091 18996 19946 90672
Himachal Pradesh 17647 18530 19456 20429 21450 97513
Jammu & Kashmir 3277 3441 3613 3794 3984 18109
Karnataka 23668 24852 26094 27399 28769 130782
Kerala 22100 23205 24366 25584 26863 122119
Madhya Pradesh 48796 51235 53797 56487 59311 269626
Maharashtra 93747 98435 103356 108524 113950 518012
Manipur 242 254 266 280 294 1334
Meghalaya 3810 4001 4201 4411 4632 21055
Mizoram 1993 2093 2197 2307 2422 11012
Nagaland 2124 2230 2341 2458 2581 11734
Orissa 13284 13948 14645 15378 16147 73401
Punjab 15158 15916 16711 17547 18424 83756
Rajasthan 23737 24923 26170 27478 28852 131159
Sikkim 1517 1593 1673 1756 1844 8384
Tamil Nadu 36333 38150 40057 42060 44163 200764
Tripura 1043 1096 1150 1208 1268 5766
Uttar Pradesh 41248 43310 45476 47750 50137 227921
West Bengal 16260 17073 17927 18823 19764 89848

All States 516081 541885 568980 597429 627300 2851675

 203
Annexure V.9

Maintenance Expenditure provided for Buildings

(MH-2059 & 2216)
(Para 5.50)
(Rs. in lakhs)
States Forecast Period Projections (5%) Total
Provision
2000-01 2001-02 2002-03 2003-04 2004-05 2000-2005
Andhra Pradesh 9371 9840 10332 10848 11391 51782
Arunachal Pradesh 2199 2309 2424 2545 2673 12149
Assam 5986 6286 6600 6930 7276 33078
Bihar 11984 12583 13212 13873 14566 66217
Goa 1866 1959 2057 2160 2268 10310
Gujarat 18636 19568 20547 21574 22653 102978
Haryana 4086 4290 4504 4730 4966 22575
Himachal Pradesh 4829 5070 5324 5590 5870 26683
Jammu & Kashmir 9520 9996 10496 11021 11572 52606
Karnataka 17707 18593 19522 20498 21523 97843
Kerala 5188 5448 5720 6006 6306 28669
Madhya Pradesh 10577 11105 11661 12244 12856 58443
Maharashtra 52487 55112 57867 60761 63799 290026
Manipur 942 989 1039 1091 1145 5207
Meghalaya 3023 3174 3333 3499 3674 16704
Mizoram 1447 1519 1595 1675 1759 7995
Nagaland 4975 5224 5485 5759 6047 27489
Orissa 12872 13515 14191 14901 15646 71124
Punjab 12919 13565 14243 14956 15703 71387
Rajasthan 7506 7882 8276 8690 9124 41478
Sikkim 885 929 975 1024 1075 4888
Tamil Nadu 12642 13274 13938 14635 15366 69855
Tripura 3514 3689 3874 4067 4271 19415
Uttar Pradesh 24635 25867 27160 28518 29944 136124
West Bengal 18462 19385 20355 21372 22441 102015

All States 258259 271171 284730 298967 313915 1427041

Annexure V.10
Provision for Committed Liabilities for
maintenance of Plan Scheme
(Para 5.55)
(Rs. in lakhs)
States Projected Committed Liabilities
2002-03 2003-04 2004-05
Andhra Pradesh 138403 152244 167468
Bihar 66200 72820 80102
Goa 4293 4722 5195
Gujarat 87941 96735 106408
Haryana 28196 31015 34117
Karnataka 99454 109400 120340
Kerala 85819 94401 103841
Madhya Pradesh 80395 88434 97278
Maharashtra 135982 149580 164539
Orissa 63944 70338 77372
Punjab 22891 25180 27698
Rajasthan 46841 51525 56677
Tamil Nadu 95008 104509 114960
Uttar Pradesh 133826 147208 161929
West Bengal 67962 74758 82234
All State 1157155 1272871 1400158
 204
Annexure V.11
STATE: Andhra Pradesh

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 1102798 1311226 1559048 1853708 2204059 8030839
2 Own Non Tax Revenue 140547 162991 188372 217397 264815 974122
3 Other Non-Plan Grants 1851 2036 2240 2464 2710 11302
Total 1245195 1476254 1749660 2073570 2471584 9016263
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 334442 367886 404675 445142 489656 2041801
(ii) Pension 173742 191116 210227 231250 254375 1060710
(iii) Elections 3578 4071 4562 5048 33247 50506
(iv) Other General Services 181415 190855 200793 211255 222270 1006588
Total (i) to (iv) 693177 753928 820257 892695 999548 4159605
II Social Services 388264 433375 484595 542810 609033 2458077
III Economic Services 214004 229510 246391 264696 284481 1239082
IV Compensation and Assignment
to Local Bodies 18996 21466 24257 27410 30973 123102
V Committed Liabilities 138403 152244 167468 458115
VI Total Non-Plan Revenue Expenditure(I to V) 1314441 1438279 1713902 1879855 2091503 8437981
VII NON PLAN REVENUE DEFICIT/SURPLUS -69246 37975 35758 193715 380081 578282

Annexure V.12
STATE: Arunachal Pradesh

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 2074 2398 2772 3204 3704 14152
2 Own Non Tax Revenue 7966 8889 9988 11308 14431 52582
3 Other Non-Plan Grants 234 257 283 311 343 1428
Total 10274 11544 13042 14823 18478 68162
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 8855 9741 10715 11786 12965 54061
(ii) Pension 3300 3630 3993 4392 4832 20147
(iii) Elections 490 551 612 674 3796 6123
(iv) Other General Services 11764 12436 13147 13900 14697 65944
Total (i) to (iv) 24409 26357 28467 30752 36289 146275
II Social Services 12964 14016 15182 16476 17915 76554
III Economic Services 10555 11222 11939 12708 13534 59957
IV Compensation and Assignment
to Local Bodies
V Committed Liabilities
VI Total Non-Plan Revenue Expenditure(I to V) 47928 51596 55587 59936 67738 282785
VII NON PLAN REVENUE DEFICIT/SURPLUS -37653 -40052 -42545 -45113 -49260 -214624
 205
Annexure V.13
STATE: Assam

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 126952 143709 162679 184152 208460 825952
2 Own Non Tax Revenue 67819 79149 91516 105161 125725 469370
3 Other Non-Plan Grants 21783 23962 26358 28994 31893 132989
Total 216554 246820 280553 318307 366078 1428311
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 65425 71968 79165 87081 95789 399429
(ii) Pension 38374 42211 46432 51075 56183 234274
(iii) Elections 1709 7264 2137 2350 7905 21365
(iv) Other General Services 85705 90425 95411 100679 106246 478466
Total (i) to (iv) 191213 211868 223145 241186 266123 1133534
II Social Services 151550 162330 174130 187073 201298 876381
III Economic Services 61893 65959 70334 75045 80228 353459
IV Compensation and Assignment
to Local Bodies 553 624 706 797 901 3581
V Committed Liabilities
VI Total Non-Plan Revenue Expenditure(I to V) 405209 440781 468315 504101 548550 2366955
VII NON PLAN REVENUE DEFICIT/SURPLUS -188655 -193961 -187762 -185794 -182471 -938644

Annexure V.14
STATE: Bihar

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 368023 421018 481644 551001 630345 2452031
2 Own Non Tax Revenue 141530 164506 189629 217392 268128 981185
3 Other Non-Plan Grants 5249 5774 6352 6987 7685 32047
Total 514801 591298 677625 775379 906159 3465262
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 297069 326776 359454 395399 434939 1813638
(ii) Pension 129556 142511 156763 172439 189683 790951
(iii) Elections 5511 6199 6888 7577 42709 68884
(iv) Other General Services 171363 180973 191137 201886 213257 958617
Total (i) to (iv) 603500 656460 714241 777302 880588 3632091
II Social Services 412822 456916 506733 563086 626909 2566466
III Economic Services 141850 151181 161225 172046 183711 810013
IV Compensation and Assignment
to Local Bodies 229 259 293 331 374 1487
V Committed Liabilities 66200 72820 80102 219122
VI Total Non-Plan Revenue Expenditure(I to V) 1158401 1264816 1448692 1585584 1771684 7229178
VII NON PLAN REVENUE DEFICIT/SURPLUS -643599 -673518 -771067 -810205 -865526 -3763915
 206
Annexure V.15
STATE: Goa

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 50328 58783 68659 80193 93666 351629
2 Own Non Tax Revenue 12012 14531 17632 21460 26456 92091
3 Other Non-Plan Grants 563 620 681 750 825 3438
Total 62903 73934 86972 102403 120946 447158
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 18034 19837 21821 24003 26403 110098
(ii) Pension 4950 5445 5990 6588 7247 30220
(iii) Elections 65 74 83 92 625 939
(iv) Other General Services 7749 8183 8643 9129 9643 43348
Total (i) to (iv) 30798 33540 36536 39813 43919 184605
II Social Services 31790 35508 39732 44534 49999 201563
III Economic Services 7037 7442 7874 8335 8826 39515
IV Compensation and Assignment
to Local Bodies
V Committed Liabilities 4293 4722 5195 14210
VI Total Non-Plan Revenue Expenditure(I to V) 69624 76489 88436 97404 107939 439893
VII NON PLAN REVENUE DEFICIT/SURPLUS -6721 -2556 -1464 4999 13007 7265

Annexure V.16
STATE: Gujarat

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 1048188 1246295 1481845 1761914 2094916 7633158
2 Own Non Tax Revenue 190776 220168 251830 286228 331257 1280259
3 Other Non-Plan Grants 1102 1212 1333 1467 1613 6728
Total 1240066 1467676 1735008 2049609 2427786 8920145
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 285190 313709 345080 379588 417547 1741116
(ii) Pension 97232 106956 117651 129416 142358 593613
(iii) Elections 2338 2630 10229 3215 10813 29225
(iv) Other General Services 126937 133927 141312 149115 157359 708650
Total (i) to (iv) 511697 557222 614273 661334 728077 3072604
II Social Services 469715 524420 586543 657158 737496 2975332
III Economic Services 147973 157453 167638 178582 190360 842006
IV Compensation and Assignment
to Local Bodies 6334 7157 8087 9139 10327 41044
V Committed Liabilities 87941 96735 106408 291084
VI Total Non-Plan Revenue Expenditure(I to V) 1135719 1246252 1464482 1602948 1772668 7222069
VII NON PLAN REVENUE DEFICIT/SURPLUS 104347 221424 270527 446661 655118 1698076
 207
Annexure V.17
STATE: Haryana

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 434222 516289 613868 729889 867838 3162107
2 Own Non Tax Revenue 67355 78748 91981 107497 127507 473088
3 Other Non-Plan Grants 752 828 910 1001 1102 4593
Total 502329 595865 706760 838388 996447 3639788
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 124626 137088 150797 165877 182465 760853
(ii) Pension 41327 45460 50006 55006 60507 252305
(iii) Elections 532 2262 665 732 2462 6653
(iv) Other General Services 64423 67905 71580 75459 79552 358920
Total (i) to (iv) 230907 252715 273048 297074 324986 1378732
II Social Services 169464 187521 207919 230989 257114 1053008
III Economic Services 63131 67217 71565 76357 81428 359698
IV Compensation and Assignment
to Local Bodies 55 63 71 80 90 359
V Committed Liabilities 28196 31015 34117 93328
VI Total Non-Plan Revenue Expenditure (I to V) 463559 507516 580799 635515 697736 2885124
VII NON PLAN REVENUE DEFICIT/SURPLUS 38770 88349 125961 202873 298711 754664

Annexure V.18
STATE: Himachal Pradesh

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 77141 89175 103086 119168 137758 526328
2 Own Non Tax Revenue 26497 32054 38773 46083 56614 200021
3 Other Non-Plan Grants 296 325 358 393 432 1805
Total 103934 121555 142217 165644 194804 728154
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 59304 65235 71758 78934 86828 362059
(ii) Pension 28128 30941 34035 37439 41182 171725
(iii) Elections 491 553 2150 676 2273 6143
(iv) Other General Services 35075 37006 39047 41203 43481 195811
Total (i) to (iv) 122998 133735 146990 158251 173764 735738
II Social Services 77828 83368 89434 96087 103400 450117
III Economic Services 44978 47715 50643 53777 57135 254248
IV Compensation and Assignment
to Local Bodies
V Committed Liabilities
VI Total Non-Plan Revenue Expenditure(I to V) 245804 264818 287067 308116 334299 1440103
VII NON PLAN REVENUE DEFICIT/SURPLUS -141870 -143264 -144850 -142472 -139495 -711949
 208
Annexure V.19
STATE: Jammu & Kashmir

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 58666 66410 75176 85100 96333 381685
2 Own Non Tax Revenue 27536 29718 32023 34703 44107 168087
3 Other Non-Plan Grants 28593 31453 34598 38058 41864 174566
Total 114796 127581 141797 157860 182304 724338
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 82721 90993 100093 110102 121112 505022
(ii) Pension 32046 35251 38776 42654 46919 195646
(iii) Elections 2003 8513 2504 2755 9266 25041
(iv) Other General Services 101214 106992 113109 119586 126444 567344
Total (i) to (iv) 217985 241749 254482 275096 303741 1293053
II Social Services 125590 135853 147228 159858 173910 742439
III Economic Services 52125 55368 58835 62554 66534 295415
IV Compensation and Assignment
to Local Bodies
V Committed Liabilities
VI Total Non-Plan Revenue Expenditure(I to V) 395700 432970 460545 497508 544185 2330907
VII NON PLAN REVENUE DEFICIT/SURPLUS -280904 -305390 -318748 -339648 -361881 -1606570

Annexure V.20
STATE: Karnataka

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 941101 1099206 1283872 1499563 1751489 6575231
2 Own Non Tax Revenue 114186 131912 152808 177659 219763 796328
3 Other Non-Plan Grants 1800 1980 2178 2396 2635 10988
Total 1057086 1233097 1438858 1679618 1973887 7382547
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 204501 224951 247446 272191 299410 1248499
(ii) Pension 122921 135213 148734 163607 179968 750443
(iii) Elections 3031 3460 3884 4305 29372 44052
(iv) Other General Services 140005 147574 155561 163990 172886 780015
Total (i) to (iv) 470458 511197 555625 604093 681636 2823008
II Social Services 402171 445194 493804 548797 611086 2501051
III Economic Services 116593 124176 132340 141117 150563 664790
IV Compensation and Assignment
to Local Bodies 42742 48299 54578 61673 69690 276981
V Committed Liabilities 99454 109400 120340 329194
VI Total Non-Plan Revenue Expenditure(I to V) 1031964 1128866 1335800 1465080 1633314 6595025
VII NON PLAN REVENUE DEFICIT/SURPLUS 25122 104231 103058 214538 340573 787522
 209
Annexure V.21
STATE: Kerala

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 635998 742846 867644 1013408 1183661 4443557
2 Own Non Tax Revenue 68478 82578 98424 116436 144108 510024
3 Other Non-Plan Grants 1154 1270 1397 1536 1690 7047
Total 705630 826694 967465 1131380 1329458 4960628
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 180674 198741 218615 240477 264525 1103032
(ii) Pension 146021 160623 176685 194353 213789 891470
(iii) Elections 1880 9094 2385 2636 9846 25841
(iv) Other General Services 95557 100626 105969 111601 117538 531289
Total (i) to (iv) 424131 469084 503654 549067 605697 2551633
II Social Services 328630 363776 403486 448410 499293 2043594
III Economic Services 82970 88825 95162 102020 109425 478402
IV Compensation and Assignment
to Local Bodies 6215 7023 7936 8968 10133 40275
V Committed Liabilities 85819 94401 103841 284061
VI Total Non-Plan Revenue Expenditure(I to V) 841946 928707 1096057 1202866 1328389 5397965
VII NON PLAN REVENUE DEFICIT/SURPLUS -136316 -102013 -128592 -71486 1069 -437337

Annexure V.22
STATE: Madhya Pradesh

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 697423 815288 953071 1114140 1302430 4882352
2 Own Non Tax Revenue 219208 242560 269326 300290 344199 1375583
3 Other Non-Plan Grants 25220 27742 30516 33567 36924 153969
Total 941851 1085589 1252913 1447998 1683553 6411904
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 232097 255306 280837 308921 339813 1416974
(ii) Pension 126894 139583 153541 168896 185785 774699
(iii) Elections 1099 1236 1374 4946 5083 13738
(iv) Other General Services 180319 190068 200354 211210 222668 1004620
Total (i) to (iv) 540409 586193 636107 693973 753349 3210031
II Social Services 396160 438515 486370 540507 601824 2463375
III Economic Services 215731 231058 247627 265578 285040 1245035
IV Compensation and Assignment
to Local Bodies 56105 63398 71640 80953 91477 363572
V Committed Liabilities 80395 88434 97278 266107
VI Total Non-Plan Revenue Expenditure(I to V) 1208404 1319164 1522139 1669445 1828967 7548119
VII NON PLAN REVENUE DEFICIT/SURPLUS -266554 -233575 -269226 -221447 -145414 -1136216
 210
Annexure V.23
STATE: Maharashtra

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 1988217 2363990 2810784 3342023 3973665 14478680
2 Own Non Tax Revenue 260306 311197 371853 444354 539572 1927282
3 Other Non-Plan Grants 2297 2527 2780 3058 3363 14025
Total 2250820 2677714 3185417 3789434 4516601 16419987
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 464651 511116 562228 618450 680296 2836741
(ii) Pension 120579 132637 145900 160490 176539 736145
(iii) Elections 2660 2993 3325 3658 20617 33253
(iv) Other General Services 294818 310158 326308 343310 361210 1635804
Total (i) to (iv) 882707 956904 1037761 1125909 1238662 5241943
II Social Services 890467 994424 1112494 1246719 1399447 5643550
III Economic Services 244675 258834 273911 289978 307108 1374506
IV Compensation and Assignment
to Local Bodies 14670 16577 18732 21167 23918 95063
V Committed Liabilities 135982 149580 164539 450101
VI Total Non-Plan Revenue Expenditure(I to V) 2032519 2226738 2578879 2833352 3133674 12805163
VII NON PLAN REVENUE DEFICIT/SURPLUS 218301 450976 606538 956082 1382926 3614823

Annexure V.24
STATE: Manipur

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 5815 6583 7451 8435 9548 37833
2 Own Non Tax Revenue 2225 2795 3456 4238 5857 18571
3 Other Non-Plan Grants 1875 2063 2269 2496 2745 11447
Total 9915 11440 13176 15169 18151 67851
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 10859 11945 13140 14454 15899 66297
(ii) Pension 6789 7468 8215 9036 9940 41449
(iii) Elections 219 247 274 302 1704 2746
(iv) Other General Services 15281 16107 16979 17899 18870 85135
Total (i) to (iv) 33148 35767 38607 41691 46413 195626
II Social Services 24469 26217 28131 30231 32540 141587
III Economic Services 7552 8026 8535 9082 9668 42863
IV Compensation and Assignment
to Local Bodies
V Committed Liabilities
VI Total Non-Plan Revenue Expenditure(I to V) 65169 70010 75273 81004 88621 380076
VII NON PLAN REVENUE DEFICIT/SURPLUS -55254 -58570 -62097 -65835 -70470 -312225
 211
Annexure V.25
STATE: Meghalaya

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 11979 13692 15650 17888 20446 79657
2 Own Non Tax Revenue 6527 7831 9290 10940 13617 48205
3 Other Non-Plan Grants 800 880 969 1065 1172 4886
Total 19306 22403 25909 29893 35235 132747
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 8785 9663 10629 11692 12862 53631
(ii) Pension 4489 4938 5432 5975 6572 27406
(iii) Elections 252 283 1102 346 1165 3148
(iv) Other General Services 16697 17634 18624 19672 20780 93407
Total (i) to (iv) 30223 32518 35787 37685 41379 177592
II Social Services 26258 28407 30788 33433 36375 155261
III Economic Services 15126 16075 17092 18183 19356 85833
IV Compensation and Assignment
to Local Bodies
V Committed Liabilities
VI Total Non-Plan Revenue Expenditure(I to V) 71608 77000 83668 89301 97110 418686
VII NON PLAN REVENUE DEFICIT/SURPLUS -52301 -54597 -57759 -59408 -61875 -285939

Annexure V.26
STATE: Mizoram

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 1716 1962 2242 2563 2930 11414
2 Own Non Tax Revenue 3709 4717 5879 7240 10164 31709
3 Other Non-Plan Grants 340 374 412 453 498 2077
Total 5765 7053 8533 10256 13592 45200
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 9389 10327 11360 12496 13746 57318
(ii) Pension 1889 2078 2285 2514 2765 11531
(iii) Elections 421 473 526 1892 1945 5257
(iv) Other General Services 12507 13221 13977 14778 15625 70109
Total (i) to (iv) 24206 26099 28149 31680 34081 144215
II Social Services 17286 18700 20268 22008 23945 102208
III Economic Services 7256 7690 8151 8646 9175 40918
IV Compensation and Assignment
to Local Bodies
V Committed Liabilities
VI Total Non-Plan Revenue Expenditure(I to V) 48748 52489 56568 62334 67201 287340
VII NON PLAN REVENUE DEFICIT/SURPLUS -42982 -45437 -48034 -52078 -53609 -242140
 212
Annexure V.27
STATE: Nagaland

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 5167 5906 6750 7715 8819 34356
2 Own Non Tax Revenue 1517 1817 2140 2499 4517 12490
3 Other Non-Plan Grants 1419 1561 1717 1889 2078 8663
Total 8103 9283 10607 12103 15413 55510
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 17056 18761 20637 22701 24971 104126
(ii) Pension 4896 5386 5924 6517 7168 29891
(iii) Elections 518 582 2264 711 2392 6467
(iv) Other General Services 26130 27595 29145 30784 32518 146171
Total (i) to (iv) 48599 52324 57970 60712 67049 286655
II Social Services 25973 27829 29861 32091 34543 150297
III Economic Services 9856 10392 10960 11563 12201 54973
IV Compensation and Assignment
to Local Bodies
V Committed Liabilities
VI Total Non-Plan Revenue Expenditure(I to V) 84428 90545 98791 104367 113794 491925
VII NON PLAN REVENUE DEFICIT/SURPLUS -76325 -81262 -88184 -92264 -98380 -436415

Annexure V.28
STATE: Orissa

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 201223 230199 263347 301269 344652 1340691
2 Own Non Tax Revenue 67322 77184 88295 100946 120746 454493
3 Other Non-Plan Grants 18943 20837 22921 25213 27734 115649
Total 287488 328220 374563 427429 493132 1910833
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 177141 194855 214341 235775 259352 1081464
(ii) Pension 48528 53380 58718 64590 71049 296266
(iii) Elections 758 853 948 1042 5874 9475
(iv) Other General Services 82369 86656 91168 95918 100919 457029
Total (i) to (iv) 308796 335744 365175 397325 437195 1844234
II Social Services 189906 210115 232941 258757 287989 1179708
III Economic Services 95927 102359 109363 116887 125259 549795
IV Compensation and Assignment
to Local Bodies 2035 2300 2599 2936 3318 13188
V Committed Liabilities 63944 70338 77372 211654
VI Total Non-Plan Revenue Expenditure(I to V) 596665 650518 774022 846243 931132 3798579
VII NON PLAN REVENUE DEFICIT/SURPLUS -309176 -322298 -399459 -418814 -438000 -1887747
 213
Annexure V.29
STATE: Punjab

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 444933 529026 629012 747895 889247 3240112
2 Own Non Tax Revenue 104137 107388 115199 124388 139075 590188
3 Other Non-Plan Grants 3676 4043 4448 4893 5382 22442
Total 552747 640457 748658 877176 1033704 3852742
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 158115 181464 206768 234257 264130 1044735
(ii) Pension 66033 72636 79900 87890 96679 403138
(iii) Elections 1223 5200 1529 1682 5659 15293
(iv) Other General Services 121962 128679 135775 143271 151193 680880
Total (i) to (iv) 347333 387979 423972 467101 517661 2144045
II Social Services 212451 235059 260594 289474 322176 1319755
III Economic Services 73995 78497 83303 88357 93960 418112
IV Compensation and Assignment
to Local Bodies 9395 10616 11996 13556 15318 60881
V Committed Liabilities 22891 25180 27698 75769
VI Total Non-Plan Revenue Expenditure(I to V) 643174 712151 802757 883668 976812 4018561
VII NON PLAN REVENUE DEFICIT/SURPLUS -90428 -71694 -54098 -6491 56892 -165820

Annexure V.30
STATE: Rajasthan

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 561800 664047 784904 927757 1096608 4035116
2 Own Non Tax Revenue 119863 135661 154535 177241 212256 799556
3 Other Non-Plan Grants 12834 14117 15529 17082 18790 78351
Total 694497 813826 954968 1122079 1327654 4913023
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 275026 302529 332782 366060 402666 1679064
(ii) Pension 111244 122369 134605 148066 162872 679156
(iii) Elections 2153 2422 2692 9689 9957 26913
(iv) Other General Services 143089 150969 159293 168089 177382 798822
Total (i) to (iv) 531512 578288 629373 691904 752878 3183955
II Social Services 446943 494577 548385 609246 678167 2777318
III Economic Services 104195 111174 118698 126812 135573 596452
IV Compensation and Assignment
to Local Bodies 3243 3665 4141 4679 5288 21016
V Committed Liabilities 46841 51525 56677 155043
VI Total Non-Plan Revenue Expenditure(I to V) 1085893 1187704 1347438 1484167 1628582 6733784
VII NON PLAN REVENUE DEFICIT/SURPLUS -391397 -373878 -392470 -362088 -300928 -1820761
 214
Annexure V.31
STATE: Sikkim

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 3615 4132 4723 5399 6171 24040
2 Own Non Tax Revenue 4451 4880 5398 6030 7204 27963
3 Other Non-Plan Grants 787 865 952 1047 1152 4802
Total 8853 9877 11073 12475 14526 56805
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 6637 7301 8031 8834 9718 40522
(ii) Pension 1860 2046 2251 2476 2723 11356
(iii) Elections 128 144 160 176 989 1597
(iv) Other General Services 7051 7439 7849 8282 8740 39361
Total (i) to (iv) 15676 16930 18291 19769 22171 92836
II Social Services 12168 13160 14259 15478 16835 71900
III Economic Services 7926 8457 9029 9645 10311 45369
IV Compensation and Assignment
to Local Bodies
V Committed Liabilities
VI Total Non-Plan Revenue Expenditure(I to V) 35770 38547 41579 44892 49316 210105
VII NON PLAN REVENUE DEFICIT/SURPLUS -26918 -28670 -30506 -32417 -34790 -153300

Annexure V.32
STATE: Tamil Nadu

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 1319028 1540625 1799450 2101758 2454853 9215714
2 Own Non Tax Revenue 129660 151548 177602 208853 265315 932978
3 Other Non-Plan Grants 4905 5395 5935 6528 7181 29945
Total 1453593 1697568 1982987 2317139 2727349 10178637
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 264143 290557 319613 351574 386732 1612619
(ii) Pension 205337 225871 248458 273304 300634 1253603
(iii) Elections 5153 24571 6531 7213 26616 70084
(iv) Other General Services 215656 227314 239617 252600 266303 1201491
Total (i) to (iv) 690289 768313 814219 884691 980285 4137797
II Social Services 679670 752411 834602 927589 1032914 4227187
III Economic Services 179460 192155 205880 220752 236879 1035127
IV Compensation and Assignment
to Local Bodies 103978 117495 132770 150030 169534 673806
V Committed Liabilities 95008 104509 114960 314477
VI Total Non-Plan Revenue Expenditure(I to V) 1653397 1830375 2082479 2287571 2534572 10388393
VII NON PLAN REVENUE DEFICIT/SURPLUS -199804 -132806 -99492 29568 192778 -209757
 215
Annexure V.33
STATE: Tripura

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 11844 13550 15501 17733 20287 78916
2 Own Non Tax Revenue 3559 4384 5341 6472 8573 28329
3 Other Non-Plan Grants 2976 3273 3600 3960 4356 18166
Total 18379 21207 24443 28166 33217 125411
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 17784 19562 21518 23670 26037 108571
(ii) Pension 8747 9622 10584 11643 12807 53403
(iii) Elections 243 273 1062 333 1123 3034
(iv) Other General Services 20318 21458 22663 23938 25286 113663
Total (i) to (iv) 47092 50915 55827 59583 65253 278671
II Social Services 33664 36068 38700 41588 44764 194784
III Economic Services 11181 11848 12560 13319 14133 63041
IV Compensation and Assignment
to Local Bodies 2098 2371 2679 3028 3421 13597
V Committed Liabilities
VI Total Non-Plan Revenue Expenditure(I to V) 94035 101202 109766 117519 127571 550093
VII NON PLAN REVENUE DEFICIT/SURPLUS -75656 -79995 -85324 -89353 -94354 -424682

Annexure V.34
STATE: Uttar Pradesh

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 1084380 1267640 1481871 1732307 2025067 7591264
2 Own Non Tax Revenue 188582 249716 317296 392916 494383 1642893
3 Other Non-Plan Grants 2595 2854 3140 3454 3799 15842
Total 1275556 1520210 1802307 2128677 2523249 9249999
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 658282 724110 796521 876173 963790 4018875
(ii) Pension 194468 213915 235306 258837 284720 1187246
(iii) Elections 4332 18414 5416 5957 20039 54158
(iv) Other General Services 356949 376246 396609 418099 440779 1988681
Total (i) to (iv) 1214030 1332684 1433852 1559065 1709329 7248960
II Social Services 813159 908032 1015781 1138269 1277637 5152878
III Economic Services 319020 339916 362197 386246 412974 1820353
IV Compensation and Assignment
to Local Bodies 102274 115570 130594 147571 166755 662763
V Committed Liabilities 133826 147208 161929 442963
VI Total Non-Plan Revenue Expenditure(I to V) 2448483 2696201 3076250 3378359 3728624 15327917
VII NON PLAN REVENUE DEFICIT/SURPLUS -1172926 -1175991 -1273943 -1249683 -1205375 -6077918
 216
Annexure V.35
STATE: West Bengal

Assessed Own Revenue Receipts and Non-Plan Revenue Expenditure

(Para 5.59)
(Rs. in lakhs)

Particulars 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

A Revenue Receipts
1 Own Tax Revenue 710290 830329 970655 1134696 1326459 4972429
2 Own Non Tax Revenue 99374 126738 156963 189724 242530 815329
3 Other Non-Plan Grants 6542 7196 7915 8707 9578 39938
Total 816206 964263 1135534 1333127 1578567 5827696
B Non-Plan Revenue Expenditure
I General Services
(i) Interest Payments 353628 388991 427890 470679 517747 2158936
(ii) Pension 110143 121157 133273 146600 161260 672434
(iii) Elections 5410 22994 6763 7439 25023 67629
(iv) Other General Services 197776 208667 220174 232331 245176 1104123
Total (i) to (iv) 666957 741810 788100 857049 949206 4003122
II Social Services 582883 650934 728224 816090 916068 3694200
III Economic Services 161167 171877 183415 195853 209273 921585
IV Compensation and Assignment
to Local Bodies 12896 14572 16466 18607 21026 83567
V Committed Liabilities 67962 74758 82234 224954
VI Total Non-Plan Revenue Expenditure(I to V) 1423902 1579193 1784168 1962358 2177807 8927428
VII NON PLAN REVENUE DEFICIT/SURPLUS -607696 -614930 -648634 -629231 -599240 -3099732
 217
Annexure VI.1

Devolution of Central Taxes to States - 1980 to 2000

- Recommended by the successive Finance Commissions
(Para 6.10)
(Rs. in crores)

Years Tax Gross Tax Cess and Cost of Taxes Gross Tax Net Tax
Devolution Revenue Surcharge Collection of UTs Revenue* Revenue As Percentage of
(GTR) (C&S) (CoC) (TUT) (TFC) (NTR) $
{3-(4+6)} {3-(4+5+6)} (Col.2/7) (Col. 2/8)

1 2 3 4 5 6 7 8 9 10
1999-2000 43889.50 169979.00 11316.59 1798.51 325.00 158337.40 156538.90 27.72 28.04

1998-99 39525.00 143797.00 3875.95 1728.28 317.00 139604.10 137875.80 28.31 28.67
1997-98 36333.69 139220.40 3555.96 1139.39 313.00 135351.50 134212.10 26.84 27.07

1996-97 35440.67 128761.80 4327.83 810.06 278.00 124155.90 123345.90 28.55 28.73
1995-96 29664.84 111224.10 4214.62 703.51 246.00 106763.50 106060.00 27.79 27.97
1994-95 24992.79 92297.22 3777.12 616.80 201.00 88319.10 87702.30 28.30 28.50

1993-94 22390.05 75742.26 3120.20 542.76 1201.00 71421.06 70878.30 31.35 31.59
1992-93 20674.40 74638.72 3226.86 480.86 1515.00 69896.86 69416.00 29.58 29.78

1991-92 17346.88 67361.25 3505.89 402.79 1265.00 62590.36 62187.57 27.71 27.89
1990-91 14683.67 57575.37 3372.66 345.18 1118.00 53084.71 52739.53 27.66 27.84
1989-90 13326.25 51635.24 3459.26 317.07 969.00 47206.98 46889.91 28.23 28.42

1988-89 10762.84 44474.07 2402.36 267.70 881.00 41190.71 40923.01 26.13 26.30
1987-88 9686.61 37665.88 2086.50 248.92 723.00 34856.38 34607.46 27.79 27.99

1986-87 8560.58 32838.46 1189.19 212.60 607.00 31042.27 30829.67 27.58 27.77
1985-86 7566.85 28669.82 1314.95 167.54 536.00 26818.87 26651.33 28.21 28.39
1984-85 5812.99 23502.27 1289.26 151.04 453.00 21760.01 21608.97 26.71 26.90

1983-84 5251.85 20716.55 1252.23 134.25 392.00 19072.32 18938.07 27.54 27.73
1982-83 4660.19 17696.18 496.83 115.05 356.00 16843.35 16728.30 27.67 27.86

1981-82 4276.26 15850.22 357.40 99.01 308.00 15184.82 15085.81 28.16 28.35
1980-81 3796.21 13180.49 299.34 87.76 255.00 12626.15 12538.39 30.07 30.28
Notes:- * TFC Gross in Col.7 is the definition adopted by the Tenth Finance Commission.
$ Net Tax Revenue in Col. 8 is the concept adopted in the 80th Constitution (Amendment) Act. The figures from 1980-81 to 1997-98 are
based on the Finance Accounts and for 1998-99 & 1999-2000 are the Actuals and Revised Estimates respectively taken from the
Receipts Budget. The figures of Taxes of UTs in Col.6 have been taken from Receipts Budgets of the relevant years.
 218
Annexure VI.2 Annexure VI.3
Population of States Per Capita GSDP of States
(Para 6.34) Comparable Estimates : New Series
(lakhs) (Para 6.34)
(In Rupees)
State 1971 1991
States 1994-95 1995-96 1996-97 Average
Andhra Pradesh 435.03 665.08
Arunachal Pradesh 4.68 8.64 Andhra Pradesh 9992.00 11316.00 12791.00 11366.33
Assam 146.25 224.14 Arunachal Pradesh 9708.00 11371.00 11037.00 10705.33
Bihar 563.53 863.74 Assam 7457.00 8042.00 8406.00 7968.33
Goa 7.95 11.70 Bihar 5099.00 5242.00 6245.00 5528.67
Gujarat 266.97 413.10 Goa 21110.00 24569.00 29548.00 25075.67
Haryana 100.37 164.64 Gujarat 14560.00 16105.00 18330.00 16331.67
Himachal Pradesh 34.60 51.71 Haryana 14728.00 16347.00 19707.00 16927.33
Jammu & Kashmir 46.17 77.19 Himachal Pradesh 11018.00 11693.00 13750.00 12153.67
Karnataka 292.99 449.77 Jammu & Kashmir 8820.00 10139.00 11063.00 10007.33
Kerala 213.47 290.99 Karnataka 10890.00 12244.00 13968.00 12367.33
Madhya Pradesh 416.54 661.81 Kerala 10874.00 13203.00 15197.00 13091.33
Maharashtra 504.12 789.37 Madhya Pradesh 8383.00 9602.00 10783.00 9589.33
Manipur 10.73 18.37 Maharashtra 16109.00 19644.00 21541.00 19098.00
Meghalaya 10.12 17.75 Manipur 7817.00 8218.00 10363.00 8799.33
Mizoram 3.32 6.90 Meghalaya 9055.00 10145.00 10271.00 9823.67
Nagaland 5.16 12.10 Mizoram 10378.00 12489.00 14267.00 12378.00
Orissa 219.45 316.60 Nagaland 12153.00 12919.00 13726.00 12932.67
Punjab 135.51 202.82 Orissa 7340.00 8246.00 8141.00 7909.00
Rajasthan 257.66 440.06 Punjab 16620.00 18177.00 20908.00 18568.33
Sikkim 2.10 4.07 Rajasthan 9053.00 10068.00 12010.00 10377.00
Tamilnadu 411.99 558.59 Sikkim 10133.00 11067.00 12128.00 11109.33
Tripura 15.56 27.57 Tamilnadu 12171.00 13679.00 15929.00 13926.33
Uttar Pradesh 883.41 1391.12 Tripura 7460.00 7474.00 9017.00 7983.67
West Bengal 443.12 680.78 Uttar Pradesh 6748.00 7409.00 8950.00 7702.33
All States 5430.80 8348.61 West Bengal 8922.00 10271.00 11320.00 10171.00
Source: Registrar General of India Source : Central Statistical Organisation, Government of India

Annexure VI.4 Annexure VI.5

Area of States Index of Social and Economic
(Para 6.34) Infrastructure
(Para 6.34)
State ‘000 Percent Adjusted
States Index
sq km. to total percentage
Andhra Pradesh 103.30
Andhra Pradesh 275.05 8.40 7.26
Arunachal Pradesh 83.74 2.56 2.21 Arunachal Pradesh 69.71
Assam 78.44 2.39 2.07 Assam 77.72
Bihar 173.88 5.31 4.59 Bihar 81.33
Goa 3.70 0.11 2.00 Goa 200.57
Gujarat 196.02 5.98 5.17 Gujarat 124.31
Haryana 44.21 1.35 2.00 Haryana 137.54
Himachal Pradesh 55.67 1.70 2.00 Himachal Pradesh 95.03
Jammu & Kashmir 222.24 6.78 5.87 Jammu & Kashmir 71.46
Karnataka 191.79 5.85 5.06 Karnataka 104.88
Kerala 38.86 1.19 2.00 Kerala 178.68
Madhya Pradesh 443.45 13.54 10.00 Madhya Pradesh 76.79
Maharashtra 307.71 9.39 8.12
Maharashtra 112.80
Manipur 22.33 0.68 2.00
Meghalaya 22.43 0.68 2.00 Manipur 75.39
Mizoram 21.08 0.64 2.00 Meghalaya 75.49
Nagaland 16.58 0.51 2.00 Mizoram 82.13
Orissa 155.71 4.75 4.11 Nagaland 76.14
Punjab 50.36 1.54 2.00 Orissa 81.00
Rajasthan 342.24 10.45 10.00 Punjab 187.57
Sikkim 7.10 0.22 2.00 Rajasthan 75.86
Tamilnadu 130.06 3.97 3.43 Sikkim 108.99
Tripura 10.49 0.32 2.00 Tamilnadu 149.10
Uttar Pradesh 294.41 8.99 7.77 Tripura 74.87
West Bengal 88.75 2.71 2.34 Uttar Pradesh 101.23
All States 3276.30 100.00 100.00 West Bengal 111.25
Source : Area Census 1991, Series1, Paper II. Source : T.C.A.Anant,K.L.Krishna and UmaDatta Roychoudhry(1999),
Registrar General of India. Measuring Inter State Differentials in Infrastructure.
 219
Annexure VI.6 Annexure VI.7
Tax GSDP Ratio Index of Fiscal Self Reliance
(Para 6.34) (Para 6.34)
Average 1994/95 to 1996/97 State Own Rev/Rev Relative to Improve-
Expenditure All States ment
States Per cent Average Average Average Average Index
Andhra Pradesh 5.45 1990/91- 1996/97- 1990/91- 1996/97-
Arunachal Pradesh 0.66 92/93 98/99 92/93 98/99
Assam 3.58 Andhra Pradesh 0.5965 0.5611 1.0620 1.0344 97.40
Bihar 3.83 Arunachal
Pradesh 0.1628 0.0926 0.2899 0.1707 58.88
Goa 7.77 Assam 0.3784 0.3142 0.6738 0.5793 85.97
Gujarat 7.29 Bihar 0.3429 0.3537 0.6105 0.6521 106.82
Haryana 6.72 Goa 0.5250 0.6701 0.9347 1.2354 132.18
Himachal Pradesh 4.82 Gujarat 0.8297 0.7850 1.4772 1.4472 97.97
Jammu & Kashmir 3.10 Haryana 0.7954 0.7385 1.4162 1.3615 96.14
Himachal
Karnataka 8.43 Pradesh 0.2580 0.2497 0.4593 0.4603 100.21
Kerala 8.33 Jammu &
Madhya Pradesh 4.94 Kashmir 0.1621 0.1299 0.2885 0.2395 83.01
Maharashtra 6.55 Karnataka 0.7273 0.7418 1.2950 1.3676 105.61
Manipur 1.46 Kerala 0.5710 0.6042 1.0166 1.1138 109.56
Madhya Pradesh 0.6011 0.5546 1.0703 1.0224 95.53
Meghalaya 3.23 Maharashtra 0.8359 0.8013 1.4882 1.4772 99.26
Mizoram 0.56 Manipur 0.0855 0.0862 0.1523 0.1589 104.37
Nagaland 1.30 Meghalaya 0.1683 0.1739 0.2996 0.3206 107.01
Orissa 4.16 Mizoram 0.0740 0.0625 0.1317 0.1151 87.39
Punjab 6.52 Nagaland 0.0851 0.0500 0.1515 0.0922 60.82
Orissa 0.3808 0.3418 0.6780 0.6302 92.95
Rajasthan 5.33 Punjab 0.6742 0.6741 1.2004 1.2427 103.52
Sikkim 3.49 Rajasthan 0.5600 0.5115 0.9970 0.9430 94.58
Tamilnadu 8.47 Sikkim 0.2023 0.1395 0.3601 0.2573 71.44
Tripura 1.94 Tamil Nadu 0.6381 0.6469 1.1361 1.1925 104.96
Uttar Pradesh 4.66 Tripura 0.0813 0.0966 0.1447 0.1781 123.08
Uttar Pradesh 0.3985 0.3781 0.7096 0.6970 98.22
West Bengal 5.39 West Bengal 0.4997 0.4241 0.8897 0.7818 87.88
Source (Basic Data) : Finance Accounts of State Governments(various Total All States 0.5617 0.5424 1.0000 1.0000 100.00
issues) Source(Basic Data) : Finance Accounts of State governments (various
issues).
Annexure VI.8
States’ Share in Central Tax Revenues as Per Assessment
(Para 6.36)
(Rs. in crores)

States 2000-01 2001-02 2002-03 2003-04 2004-05 2000-05

1 2 3 4 5 6 7
Andhra Pradesh 4163 4854 5660 6602 7702 28980
Arunachal Pradesh 132 154 179 209 244 918
Assam 1776 2070 2414 2816 3285 12362
Bihar 7892 9200 10729 12514 14600 54935
Goa 111 130 151 177 206 775
Gujarat 1525 1778 2073 2418 2821 10616
Haryana 510 595 694 809 944 3552
Himachal Pradesh 369 430 502 585 683 2570
Jammu & Kashmir 697 813 948 1106 1290 4855
Karnataka 2665 3107 3623 4226 4931 18552
Kerala 1653 1927 2247 2621 3057 11504
Madhya Pradesh 4778 5570 6495 7576 8839 33259
Maharashtra 2504 2919 3404 3971 4633 17431
Manipur 198 231 269 314 366 1377
Meghalaya 185 216 251 293 342 1287
Mizoram 107 125 146 170 198 745
Nagaland 119 139 162 189 220 828
Orissa 2733 3187 3716 4334 5057 19027
Punjab 620 723 843 983 1147 4316
Rajasthan 2959 3449 4022 4692 5474 20596
Sikkim 99 116 135 158 184 692
Tamil Nadu 2911 3394 3958 4616 5386 20265
Tripura 263 307 358 417 487 1833
Uttar Pradesh 10703 12477 14550 16971 19800 74502
West Bengal 4387 5115 5964 6957 8117 30540
Total of All States 54059 63026 73493 85724 100013 376318
 Annexure VII.1

Overview of States’ Demands for Upgradation and Special Problem Grants for 2000-05
(Para No.7.5)
(Rs. in lakhs)
State District Fire Fiscal Health Prisons Judicial Police Training Special Total
adminis- Education services adminis- services adminis- adminis- adminis- infra- Others problems
tration tration tration tration tration structure
1 2 3 4 5 6 7 8 9 10 11 12 13

1. Andhra Pradesh 125946 64377 6000 3767 35378 2150 20140 32207 11889 417151 140870 859875
2. Arunachal Pradesh ... 4382 460 348 ... 4900 191 6023 ... ... 71227 87531
3. Assam 9472 53232 5680 6825 ... 17500 6619 70324 2885 12990 2248 187775
4. Bihar 34728 139247 2372 25323 276571 26293 23918 87024 ... 25526 5000 646002
5. Goa 100 1852 1200 ... 2375 ... 375 907 ... ... 20711 27520
6. Gujarat ... 399700 ... ... ... 3470 ... 103117 ... 536315 526200 1568802
7. Haryana 80768 247627 5007 1598 91179 21306 38927 84020 ... 142 160000 730574
8. Himachal Pradesh 13120 44636 6600 8543 109395 2857 6844 10271 844 590 67100 270800
9. Jammu & Kashmir 8117 43500 3010 2000 58243 4025 872 42459 600 44132 269600 476558

220
10. Karnataka ... 100670 4024 21663 45777 73579 5443 399202 3088 ... 24234 677680
11. Kerala 17976 50859 9661 83318 61246 63137 31468 15547 4642 65888 66853 470595
12. Madhya Pradesh 251325 606680 13165 6415 76123 16657 74740 316256 5056 157881 20047 1544345
13. Maharashtra ... 374100 ... ... ... 36400 110000 1126166 ... 2161756 827500 4635922
14. Manipur 11895 51293 1976 1005 5245 7797 972 89953 105 ... 181648 351889
15. Meghalaya 227 36437 839 665 4780 1619 949 27266 395 5420 ... 78597
16. Mizoram 6030 1626 1975 2740 7925 828 422 46374 720 58628 20000 147268
17. Nagaland 5164 2740 1025 2443 425 1450 1989 64087 4069 71795 6555 161742
18. Orissa 16810 31136 4300 320 10900 5789 4416 32139 5175 ... 852745 963730
19. Punjab ... 5000 ... ... ... ... ... ... ... ... 856700 861700
20. Rajasthan 27165 51274 5498 1245 20839 16085 13899 209946 9103 245908 10002 610964
21. Sikkim 703 ... 761 200 776 415 1148 1013 705 ... 336000 341721
22. Tamil Nadu 37222 31053 2626 9850 10000 2585 8234 11500 2239 5570 25720 146599
23. Tripura 15091 2847 ... 480 995 1346 450 26402 ... 35369 34742 117722
24. Uttar Pradesh 203609 24388 4824 29949 46467 60041 135001 201871 2889 222737 39200 970976
25. West Bengal ... ... ... ... ... ... ... ... ... ... 1164200 1164200

Total - All States 865468 2368656 81003 208697 864639 370229 487017 3004074 54404 4067798 5729102 18101087
 Annexure VII.2
Basic data used for determination of upgradation grants
(Para No.7.5)

District Elementary Fire services Fiscal Prisons District & subordinate Police Water
administration education adminis- adminis- courts administration harve-
tration tration sting
State No. No. Average Average No. of Area- Area- Existing Tax Authorised No. of Closing Average No. of No. of Unirri-
districts districts, annual population illiterates Rural, Urban, No. of Revenue accom- courts balance disposal police police gated
created as on expend- during in age 1991 1991 Fire Receipts modation (as in of cases, rate per stations stations geogra-
during 31.3.2000 iture 1995-98 group 7- (Sq. Kms.) (Sq. Kms.) Stations during in prisons Sept. as on court per (as on housed phical,
1995- under (in lakhs) 14 (1991 (1.1.1998) 1997-98 during 1999) 31.12.1998 year 1.1.1998) in own area,
2000 2202- Census (Rs. in 1996-97 (1995-98) build- as in
General (in lakhs) lakhs) ing 1993-
education (1.1.1998) 94 (in
during thou-
1995-98 sand
(Rs. in hecta-
lakhs) res)

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
1. Andhra Pradesh 23 187038 725.50 48.48 269874 5171 226 711353 9269 672 1302172 1553 1477 1056 23615
2. Arunachal Pradesh 13 8610 10.30 0.74 83743 ... 11 983 ... 48 1849 15 68 55 8338
3. Assam 23 101620 248.32 17.20 77610 828 72 88193 6041 221 186799 547 239 191 7272
4. Bihar 55 221656 942.57 90.58 170133 3744 49 239983 40424 1648 1223190 200 1159 1117 13935

221
5. Goa 2 12675 13.86 0.15 3317 385 11 36530 306 44 43299 532 25 14 347
6. Gujarat 6 25 198521 456.88 16.16 190887 5137 22 659106 5077 640 3000330 2918 457 377 17062
7. Haryana 3 19 71453 185.51 7.81 43245 967 27 236863 3580 266 416768 820 175 122 1758
8. Himachal Pradesh 12 41357 59.61 1.41 55403 270 21 47616 505 94 136443 1422 84 77 5467
9. Jammu & Kashmir 14 41447 88.67 7.82 101134 393 102 36828 2060 162 121841 697 126 114 21912
10. Karnataka 7 27 182511 495.67 23.68 187521 4270 88 641189 7285 632 1254655 1151 770 177 16852
11. Kerala 14 150226 313.33 1.21 35498 3365 55 450105 5495 382 601696 1872 414 311 3562
12. Madhya Pradesh 16 61 173794 742.82 53.90 435538 7908 154 456432 17762 988 1446853 977 1208 1087 38999
13. Maharashtra 4 35 391023 869.84 27.97 301485 6228 47 1371925 16491 1250 2955103 1795 886 763 28091
14. Manipur 1 9 16145 21.82 0.98 22182 145 14 3572 1247 30 7996 329 54 22 2168
15. Meghalaya 7 11866 21.09 1.75 22275 154 1 7355 560 8 2229 155 26 15 2198
16. Mizoram 5 8 9264 8.22 0.23 20588 493 7 787 561 53 3732 87 31 23 2100
17. Nagaland 1 8 11439 14.49 0.75 16432 147 8 3157 1180 22 1660 19 47 7 1597
18. Orissa 30 103055 345.90 24.32 153163 2544 113 142173 7428 457 647665 533 416 385 13481
19. Punjab 3 17 101974 224.36 8.04 48921 1441 12 304468 9119 301 350428 933 229 207 1109
20. Rajasthan 1 32 189497 497.23 47.97 337375 4864 55 361057 13330 761 875065 693 700 519 29627
21. Sikkim 4 5272 4.84 0.22 7096 ... 8 2744 75 12 1780 270 26 24 694
22. Tamil Nadu 7 29 240058 600.98 14.61 123882 6176 277 868565 17318 602 828097 2292 1139 752 10207
23. Tripura 1 4 19502 32.76 1.65 10339 147 23 7164 772 73 18853 337 45 34 1014
24. Uttar Pradesh 17 83 367463 1568.02 137.98 288808 5603 162 699795 32259 2239 3244351 790 1444 1050 17877
25. West Bengal 17 221823 750.27 50.03 85674 3078 84 451678 18663 773 1311518 492 390 340 6964

Total - All States 72 571 3079289 9242.85 585.64 3092123 63458 1649 7829621 216807 12378 19984372 1048 11635 8839 276246
Source : For Cols.2, 3, 9, 11, 13 & 14, State Governments; Cols.4 & 10, Finance Accounts; Col.5, Registrar General of India, Cols.6, 7 & 8, Census 1991; Col.12, State Governments and the report of the First
National Judicial Pay Commission (1999); Cols.15 & 16, BPR&D; and Col.17, Central Water Commission.
 Annexure VII.3

Upgradation and Special Problem Grants for 2000-2005

(Para No.7.7)
(Rs. in crores)
State District Police Prisons Fire Judicial Fiscal Health Elementary Computer Public Heritage Augmen- Special Total
adminis- adminis- adminis- services adminis- adminis- services education training for libraries protection tation of problems
tration tration tration tration tration (Classes school traditional
I-VIII) children water
sources
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
1. Andhra Pradesh ... 29.00 4.00 17.00 25.00 18.00 18.00 51.00 9.89 5.60 5.00 42.74 60.00 285.23
2. Arunachal Pradesh ... 7.00 10.00 5.00 1.31 1.00 9.00 1.00 5.59 3.60 2.00 15.09 30.00 90.59
3. Assam ... 24.00 3.00 5.00 5.89 3.00 18.00 10.00 9.89 5.60 5.00 13.16 30.00 132.54
4. Bihar ... 30.00 19.00 11.00 78.73 6.00 42.00 84.00 23.65 12.00 10.00 25.22 60.00 401.60
5. Goa ... 5.00 1.00 1.00 1.39 1.00 3.00 1.00 0.86 1.40 1.00 0.63 10.00 27.28
6. Gujarat ... 25.00 2.00 13.00 48.22 17.00 18.00 9.00 10.75 6.00 5.00 30.88 50.00 234.85
7. Haryana ... 19.00 2.00 3.00 10.50 6.00 15.00 6.00 8.17 4.80 5.00 3.18 50.00 132.65
8. Himachal Pradesh ... 8.00 1.00 3.00 2.70 1.00 9.00 1.00 5.16 3.40 2.00 9.90 45.00 91.16

222
9. Jammu & Kashmir ... 9.00 1.00 6.00 3.34 1.00 12.00 3.00 6.02 3.80 2.00 39.66 41.00 127.82
10. Karnataka 70.00 30.00 3.00 12.00 27.02 16.00 21.00 19.00 11.61 6.40 10.00 30.50 55.00 311.53
11. Kerala ... 23.00 3.00 3.00 10.87 11.00 9.00 1.00 6.02 3.80 2.00 6.45 50.00 129.14
12. Madhya Pradesh 94.00 38.00 8.00 28.00 33.50 12.00 45.00 56.00 26.23 13.20 10.00 70.59 60.00 494.52
13. Maharashtra ... 36.00 8.00 20.00 54.08 30.00 27.00 13.00 15.05 8.00 10.00 50.84 60.00 331.97
14. Manipur 5.00 9.00 1.00 1.00 1.00 1.00 6.00 1.00 3.87 2.80 1.00 3.92 22.00 58.59
15. Meghalaya ... 6.00 1.00 1.00 1.00 1.00 6.00 1.00 3.01 2.40 1.00 3.98 30.00 57.39
16. Mizoram 17.00 4.00 1.00 1.00 1.00 1.00 6.00 1.00 3.44 2.60 1.00 3.80 47.00 89.84
17. Nagaland ... 12.00 1.00 1.00 0.91 1.00 6.00 1.00 3.44 2.60 1.00 2.89 30.00 62.84
18. Orissa ... 17.00 3.00 10.00 20.74 4.00 24.00 22.00 12.90 7.00 10.00 24.41 60.00 215.05
19. Punjab ... 26.00 4.00 3.00 8.29 8.00 12.00 3.00 7.31 4.40 2.00 2.01 30.00 110.01
20. Rajasthan ... 42.00 6.00 22.00 24.07 9.00 24.00 28.00 13.76 7.40 10.00 53.62 60.00 299.85
21. Sikkim ... 3.00 1.00 1.00 1.00 1.00 3.00 1.00 1.72 1.80 1.00 1.26 50.00 66.78
22. Tamil Nadu 44.00 27.00 8.00 8.00 14.12 20.00 21.00 13.00 12.47 6.80 10.00 18.47 49.00 251.86
23. Tripura 10.00 6.00 1.00 1.00 0.82 1.00 3.00 1.00 1.72 1.80 1.00 1.84 30.00 60.18
24. Uttar Pradesh 130.00 54.00 15.00 19.00 83.26 18.00 63.00 132.00 35.69 17.60 10.00 32.36 60.00 669.91
25. West Bengal ... 20.00 9.00 6.00 44.14 12.00 12.00 47.00 7.31 4.40 5.00 12.60 60.00 239.45

Total - All States 370.00 509.00 116.00 201.00 502.90 200.00 432.00 506.00 245.53 139.20 122.00 500.00 1129.00 4972.63
 223
Annexure VII.4

Year-wise phasing of the grants for upgradation and special problems

(Para 7.7)
(Rs. in crores)

State 2000-01 2001-02 2002-03 2003-04 2004-05 Total

1 2 3 4 5 6 7

1. Andhra Pradesh 114.72 57.36 57.36 55.79 ... 285.23

2. Arunachal Pradesh 36.43 18.22 18.22 17.72 ... 90.59
3. Assam 53.31 26.65 26.65 25.93 ... 132.54
4. Bihar 161.53 80.76 80.76 78.55 ... 401.60
5. Goa 10.97 5.49 5.49 5.33 ... 27.28
6. Gujarat 94.46 47.23 47.23 45.93 ... 234.85
7. Haryana 53.35 26.68 26.68 25.94 ... 132.65
8. Himachal Pradesh 36.66 18.33 18.33 17.84 ... 91.16
9. Jammu & Kashmir 51.41 25.70 25.70 25.01 ... 127.82
10. Karnataka 125.30 62.65 62.65 60.93 ... 311.53
11. Kerala 51.94 25.97 25.97 25.26 ... 129.14
12. Madhya Pradesh 198.90 99.45 99.45 96.72 ... 494.52
13. Maharashtra 133.52 66.76 66.76 64.93 ... 331.97
14. Manipur 23.57 11.78 11.78 11.46 ... 58.59
15. Meghalaya 23.08 11.54 11.54 11.23 ... 57.39
16. Mizoram 36.13 18.07 18.07 17.57 ... 89.84
17. Nagaland 25.27 12.64 12.64 12.29 ... 62.84
18. Orissa 86.49 43.24 43.25 42.07 ... 215.05
19. Punjab 44.25 22.12 22.12 21.52 ... 110.01
20. Rajasthan 120.60 60.30 60.30 58.65 ... 299.85
21. Sikkim 26.86 13.43 13.43 13.06 ... 66.78
22. Tamil Nadu 101.30 50.65 50.65 49.26 ... 251.86
23. Tripura 24.20 12.11 12.10 11.77 ... 60.18
24. Uttar Pradesh 269.44 134.72 134.72 131.03 ... 669.91
25. West Bengal 96.31 48.15 48.15 46.84 ... 239.45

Total - All States 2000.00 1000.00 1000.00 972.63 ... 4972.63

 224
Annexure VII.5
Estimates for setting up a new State/Regional Forensic Science Laboratory
(Para No.7.11)
Item Cost (Rs. in lakhs)
I. Equipment
A. Physical Science
1. Comparison microscope & accessories 25.00
2. Screwgauges 0.60
3. Infra-red and ultra-violet spectrometers 20.00
4. Refractometer 1.00
5. Glassware, labware, chemicals. etc. 2.00
TOTAL (Physical science) 48.60
B. Biological science
1. Microscope- 2 Nos. 2.00
2. Microtome unit with accessories 1.50
3. Electronic balance 1.50
4. Refrigerators- 2 Nos. 0.30
5. Incubator 0.25
6. Hot air oven 0.25
7. Dissection set- 2 Nos. 0.50
8. Glassware, labware, chemicals. etc. 10.00
9. Centrifuge equipment 3.00
10. X-ray machine 5.00
11. Anthropology equipment 5.00
TOTAL (Biological science) 29.30
C. Chemical science
1. Ultra-violet visible spectro-photometer 10.00
2. Gas chromatograph with capillary facility- Flame ionisation/Electron capture detector 10.00
3. High performance liquid chromatograph- with photo-diode array detector 25.00
4. Meter- Electronic Balance (Range: 0-200 gm; Sensitivity: 1X10) 3.00
5. Thin layer chromatograph- plate assembles & accessories 2.00
6. Distillation set- E Marck 2.00
7. Hot air oven 0.25
8. Refrigerators-2 Nos. 0.30
9. Cold room 4.50
10. Glassware, labware, chemicals. etc. 10.00
TOTAL (Chemical science) 67.05
D. Document science
1. Stereo-microscope 1.00
2. Wild M-8 microscope 7.00
3. Magnifying lenses 1.00
4. Video-spectral comparator: VSC-4 (Porable) 4.00
5. Electro-static detection apparatus 2.00
TOTAL (Document science) 15.00
Grand total - for equipment (A+B+C+D) 159.95
II. Building
A. For Regional Forensic Science Laboratory 20.00
B. For State Forensic Science Laboratory 32.00
 225
Annexure VII.6
Upgradation and Special Problem Grants under the Awards of the Ninth and the Tenth Finance
Commissions- Recommendations, Approvals and Releases thereof.
(Para No.7.54)

(Rs. in lakhs)

Ninth Finance Commission (1st Report, 1989-90) Tenth Finance Commission (1995-2000)
State As recom- As appro- Grants Percentage As recom- As appro- Grants Percen-
mended by the released # utilisa- mended ved by the released* tage
by the IMEC tion by the IMEC* utilisa-
Commission Commission tion
1 2 3 4 5 6 7 8 9
1. Andhra Pradesh 3119.00 3119.00 3102.55 99.47 15387.63 15387.63 12346.73 80.24
2. Arunachal Pradesh 1533.00 1531.99 1467.04 95.70 6831.66 6831.65 1313.03 19.22
3. Assam 1196.46 1196.46 1139.51 95.24 20685.82 20685.32 13711.99 66.29
4. Bihar 6507.77 6507.77 6081.63 93.45 24062.53 24005.11 8454.78 35.14
5. Goa 555.00 554.91 491.48 88.55 1078.99 1076.99 563.31 52.21
6. Gujarat ... ... ... ... 5000.00 5000.00 4500.00 90.00
7. Haryana 2488.00 2488.00 1689.90 67.92 4000.00 4000.00 2999.99 75.00
8. Himachal Pradesh 1363.06 1363.06 1335.47 97.98 10503.06 10503.02 8708.10 82.91
9. Jammu & Kashmir 4532.85 4405.55 1513.08 33.38 10577.03 10572.86 8019.22 75.82
10. Karnataka 1264.00 1264.00 781.50 61.83 2900.00 2900.00 790.25 27.25
11. Kerala 210.95 210.95 165.43 78.42 8182.93 8182.81 6728.90 82.23
12. Madhya Pradesh 4177.87 4170.07 3791.77 90.76 20637.46 20604.32 12998.54 62.99
13. Maharashtra 5000.00 4995.00 4833.00 96.66 10000.00 10000.00 9000.00 90.00
14. Manipur 658.45 658.45 624.53 94.85 7473.76 7467.17 6519.63 87.23
15. Meghalaya 421.41 421.41 319.47 75.81 1671.60 1671.55 1407.65 84.21
16. Mizoram 1705.00 1699.88 1692.88 99.29 6412.61 6412.56 6288.42 98.06
17. Nagaland 1787.39 1787.39 1784.68 99.85 5395.70 5291.72 4441.90 82.32
18. Orissa 2879.99 2879.99 2879.99 100.00 13779.40 13777.83 10047.28 72.92
19. Punjab 8901.00 8717.13 7847.92 88.17 8130.91 8130.91 5148.39 63.32
20. Rajasthan 2943.09 2942.15 2844.93 96.66 14987.33 14979.48 11043.42 73.69
21. Sikkim 319.99 319.99 311.99 97.50 1006.01 1004.36 589.76 58.62
22. Tamil Nadu 2500.00 2500.00 2500.00 100.00 10084.57 10078.43 7199.95 71.40
23. Tripura 305.55 305.55 245.39 80.31 2590.40 2590.40 2139.13 82.58
24. Uttar Pradesh 8805.07 8800.72 8783.19 99.75 27554.30 27554.30 21006.16 76.24
25. West Bengal 9147.07 9145.86 9145.76 99.99 21916.63 21915.53 14519.29 66.25

Total - All States 72321.97 71985.28 65373.09 90.39 260850.33 260623.95 180485.82 69.19
# Up to 31.3.1994.
* Up to 31.3.2000.
 226
Annexure VIII.1
Constitution and submission of SFC Reports and Action Taken thereon
[Para 8.11.c]
(Position as on 1.6.2000)

Sl. State Date of constitution Time given Date of submission Date of Period covered by SFC
No. of SFC for of SFC report submission
submission of ATR
of report,
as per TOR
(months)
1 2 3 4 5 6 7
1 Andhra Pradesh 22.6.1994 36 31.5 1997 November-1997 1997-98 to 1999-2000
2 Arunachal
Pradesh SFC not consitituted yet. -
3 Assam 23.6.1995 6 29.2.1996 18.3.1996 1996-97 to 2000-01
4 Bihar 23.4.1994/ 2.6.1999* 3 Not submitted . Not submitted. -
5 Goa 22.4.1994/29.9.1997*/ 1.4.1999* 3 5.6.1999 Not submitted. 2000-01 to 2004-05
6 Gujarat 15.9.1994/ 13.8.1998* @ RLBs-13.7.1998/ Not submitted. 1996-97 to 2000-01
ULBs-October-98
7 Haryana 31.5.1994 34 31.3.1997 Not submitted. 1997-98 to 2000-01
8 Himachal Pradesh 23.4.1994 @ November-1996 March-1997 1996-97 to 2000-01
9 Jammu &
Kashmir SFC not consitituted yet. -
10 Karnataka 10.6.1994 25 RLBs- 5.8.1996/ 31.3.1997 1997-98 to 2001-02
ULBs-30.1.1996
11 Kerala 23.4.1994 @ 29.2.1996 13.3.1997 1996-97 to 2000-01
12 Madhya Pradesh 17.6.1994/ 25.2.1995* 16 20.7.1996 20/ 21.3.1997 1996-97 to 2000-01
13 Maharashtra 23.4.1994 33 31.1.1997 5.3.1999 1996-97 to 2000-01#
14 Manipur 22.4.1994/ 31.5.1996* 6 December 1996 28.7.1997 1996-97 to 2000-01
15 Meghalaya SFC not consitituted yet. -
16 Mizoram SFC not consitituted yet. -
17 Nagaland SFC not consitituted yet. -
18 Orissa 21.11.1996/ 24.8.1998* 4 30.12.1998 9.7.1999 1998-99 to 2004-05 $
19 Punjab 22.4.1994 20 31.12.1995 13.9.1996 1996-97 to 2000-01
20 Rajasthan 23.4.1994 20 30.12.1995 16.3.1996 1995-96 to 1999-2000
21 Sikkim 23.4.1997/22.7.1998* @ 16.08.1999 Not submitted. 2000-01 to 2004-05
22 Tamil Nadu 23.4.1994 18 29.11.1996 28.4.1997 1997-98 to 2001-02
23 Tripura RLBs - 23.4.1994 RLBs - 21 RLBs - 12.1.1996 RLBs- 1st RLBs - Jan.1996 - Jan.
ULBs - 19.8.1996 ULBs - 38 ULBs - 17.9.1999 quarter of 2001 ULBs - 2000-01
1996 ULBs- to 2004-05
Not submitted
24 Uttar Pradesh 22.10.1994 26 26.12.1996 20.1.1998 1996-97 to 2000-01
25 West Bengal 30.5.1994 @ 27.11.1995 22.7.1996 From 1996-97 till
acceptance of the
recommendaions
of the second SFC.

@ Time limit not prescribed in the TOR.

* Date of re-constitution. In case of Gujarat, the SFC report on RLBs was submitted prior to the reconstitution of the SFC.
# As per the ATR, the SFC recommendations shall be effective from 1.4.1999.
$ Though SFC was asked to submit the report covering a period of five years w.e.f. 1.4.1998, its report covers the period from
1998-99 TO 2004-05.
Source: State Governments and SFC reports.
 227
Annexure VIII.2A
State-wise Revenue and Expenditure of Panchayati Raj Institutions (all tiers)
(Para 8.25)
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
1. Andhra pradesh
Revenue Own Tax 4574.44 5003.91 4762.89 4621.45 4944.84 5766.94 7748.39 7990.07
Own Non-Tax 1695.13 3368.16 2896.80 3654.03 4349.83 4784.81 5263.29 5789.62
Own Revenue 6269.57 8372.07 7659.69 8275.48 9294.67 10551.75 13011.68 13779.69
Other Revenue 93790.47 107432.44 133170.55 137650.34 148856.74 153050.27 191052.11 237378.88
Total Revenue 100060.04 115804.51 140830.24 145925.82 158151.41 163602.02 204063.79 251158.57
Expenditure Exp. on C S 7573.29 12727.08 15634.97 13564.69 15778.76 20187.95 26742.82 40338.49
Other
Exp. 92460.57 103035.71 125646.83 131623.31 144624.47 146503.97 176813.05 210020.08
Total Exp. 100033.86 115762.79 141281.80 145188.00 160403.23 166691.92 203555.87 250358.57
2. Arunachal Pradesh PRIs do not exist.

3. Assam
Revenue Own Tax 298.25 304.34 310.51 316.76 323.10 329.56 336.14 342.86
Own Non-Tax 2.71 2.77 2.83 2.89 2.95 3.01 3.07 3.13
Own Revenue 300.96 307.11 313.34 319.65 326.05 332.57 339.21 345.99
Other Revenue 0.00 0.00 42.86 43.72 44.59 45.47 46.39 1204.32
Total Revenue 300.96 307.11 356.20 363.37 370.64 378.04 385.60 1550.31
Expenditure Exp. on C S 0.00 0.00 1398.35 1407.93 1431.03 1454.08 1477.93 1082.14
Other Exp. 213.17 826.95 2006.57 2144.02 2559.65 2623.02 2961.45 2974.77
Total Exp. 213.17 826.95 3404.92 3551.95 3990.68 4077.10 4439.38 4056.91
4. Bihar
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 359.08 565.13 29494.98 63315.94 59164.15 44218.27 38379.39 36596.09
Total Revenue 359.08 565.13 29494.98 63315.94 59164.15 44218.27 38379.39 36596.09
Expenditure 6. Exp. on CS* 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 13630.18 15087.41 46320.38 89672.76 92655.67 64214.39 59158.97 66039.74
Total Exp. 13630.18 15087.41 46320.38 89672.76 92655.67 64214.39 59158.97 66039.74
5. Goa
Revenue Own Tax 75.15 95.83 103.22 128.54 186.39 211.44 254.13 291.36
Own Non-Tax 29.70 24.23 31.54 34.35 72.35 92.94 104.44 104.88
Own Revenue 104.85 120.06 134.76 162.89 258.74 304.38 358.57 396.24
Other Revenue 262.45 438.11 412.66 473.78 517.52 464.33 323.22 661.24
Total Revenue 367.30 558.17 547.42 636.67 776.26 768.71 681.79 1057.48
Expenditure Exp. on C S 47.11 57.28 80.13 88.30 137.46 153.88 175.63 222.55
Other Exp. 160.81 243.39 208.68 259.95 267.05 319.27 348.95 540.79
Total Exp. 207.92 300.67 288.81 348.25 404.51 473.15 524.58 763.34
6. Gujarat
Revenue Own Tax 1750.89 1900.74 2090.77 2341.96 2504.42 2590.59 2959.83 3093.28
Own Non-Tax 994.18 949.07 1053.36 1005.66 861.96 967.95 1031.40 942.83
Own Revenue 2745.07 2849.81 3144.13 3347.62 3366.38 3558.54 3991.23 4036.11
Other Revenue 99071.21 108972.06 115932.00 120241.71 146078.56 165152.38 229501.80 219217.60
Total Revenue 101816.28 111821.87 119076.14 123589.33 149444.94 168710.92 233493.03 223253.71
Expenditure Exp. on C S 883.67 1077.16 1157.75 1191.74 1151.09 1185.98 1533.76 1657.28
Other Exp. 107213.66 121758.43 133711.66 140314.72 149767.42 178499.78 198333.74 225223.57
Total Exp. 108097.32 122835.59 134869.41 141506.46 150918.51 179685.76 199867.50 226880.85
 228
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
7. Haryana
Revenue Own Tax 98.00 208.00 264.00 260.00 266.00 18.00 334.00 450.00
Own Non-Tax 2841.00 2685.00 3804.00 3707.00 4006.00 3833.00 3801.00 4851.00
Own Revenue 2939.00 2893.00 4068.00 3967.00 4272.00 3851.00 4135.00 5301.00
Other Revenue 1690.00 1447.00 1521.00 1718.00 1884.00 2219.00 2796.00 3221.00
Total Revenue 4629.00 4340.00 5589.00 5685.00 6156.00 6070.00 6931.00 8522.00
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Expen. 6787.00 5829.40 8615.80 9862.30 10824.80 12230.10 9782.10 14642.90
Total Expen. 6787.00 5829.40 8615.80 9862.30 10824.80 12230.10 9782.10 14642.90
8. Himachal Pradesh
Revenue Own Tax 2.00 67.39 32.14 42.86 54.30 46.49 41.20 67.70
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 2.00 67.39 32.14 42.86 54.30 46.49 41.20 67.70
Other Revenue 401.72 505.84 486.86 467.89 524.08 574.95 1608.08 2457.34
Total Revenue 403.72 573.23 519.00 510.75 578.38 621.44 1649.28 2525.04
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 403.76 570.12 519.07 510.76 578.48 621.44 1649.28 2525.04
Total Exp. 403.76 570.12 519.07 510.76 578.48 621.44 1649.28 2525.04
9. Jammu & Kashmir Information not furnished

10. Karnataka
Revenue Own Tax 1474.48 1439.56 1620.61 1681.71 2156.29 2320.12 2317.13 2592.43
Own Non-Tax 258.57 319.96 344.25 257.36 308.18 409.04 454.94 421.29
Own Revenue 1733.05 1759.52 1964.86 1939.07 2464.47 2729.16 2772.07 3013.72
Other Revenue 129709.57 159385.99 175708.71 216177.07 243281.12 276679.73 321889.48 373792.82
Total Revenue 131442.62 161145.51 177673.57 218116.14 245745.59 279408.89 324661.55 376806.54
Expenditure Exp. on C S 10968.91 13836.07 17655.87 21942.24 20381.74 27621.64 31369.24 36124.04
Other Exp. 114122.98 136118.90 148223.15 186262.13 178867.45 231474.97 297535.32 333516.85
Total Exp. 125091.89 149954.97 165879.02 208204.37 199249.19 259096.61 328904.56 369640.89
11. Kerala
Revenue Own Tax 2835.23 3504.03 3514.91 4292.66 5104.44 6967.60 7866.22 8755.35
Own Non-Tax 296.28 219.24 358.04 404.03 456.89 824.52 1073.67 1153.99
Own Revenue 3131.51 3723.27 3872.95 4696.69 5561.33 7792.12 8939.89 9909.34
Other Revenue 6530.42 6639.22 9404.58 10932.81 13791.34 20124.30 50232.80 88367.25
Total Revenue 9661.93 10362.49 13277.53 15629.50 19352.67 27916.42 59172.69 98276.59
Expenditure Exp. on C S 3160.70 2976.38 3715.94 4357.63 5309.33 3859.99 6220.83 8725.05
Other Exp. 6712.83 7581.01 9868.74 11553.71 14143.48 26374.29 49491.12 64331.03
Total Exp. 9873.53 10557.39 13584.68 15911.34 19452.81 30234.28 55711.95 73056.08
12. Madhya Pradesh
Revenue Own Tax 294.22 360.71 477.96 635.58 931.55 1066.53 1145.84 1167.10
Own Non-Tax 899.95 1181.76 1054.94 1041.43 1649.67 1903.53 1992.99 2036.73
Own Revenue 1194.17 1542.47 1532.90 1677.01 2581.22 2970.06 3138.83 3203.83
Other Revenue 22173.46 22041.78 30486.24 30489.52 27652.60 45377.35 67354.24 174697.64
Total Revenue 23367.63 23584.25 32019.14 32166.53 30233.82 48347.41 70493.07 177901.47
Expenditure Exp. on C S 794.00 1063.19 1502.06 1318.97 1628.64 3958.55 5089.95 5640.33
Other Exp. 21849.13 22306.04 30930.82 31058.47 28637.01 45133.96 67069.34 172889.57
Total Exp. 22643.13 23369.23 32432.88 32377.44 30265.65 49092.51 72159.29 178529.90
13. Maharashtra
Revenue Own Tax 2425.87 3076.22 3042.93 4482.72 4700.62 5821.72 6900.26 7459.15
Own Non-Tax 994.63 1085.19 1012.02 1404.11 1606.25 1827.01 2681.32 3757.86
Own Revenue 3420.51 4161.41 4054.95 5886.82 6306.88 7648.74 9581.58 11217.00
Other Revenue 101099.43 114407.29 162615.29 164956.48 198381.31 240627.58 279077.82 319530.01
Total Revenue 104519.94 118568.70 166670.24 170843.30 204688.19 248276.31 288659.40 330747.02
Expenditure Exp. on C S 10165.49 11793.42 15875.33 17676.57 19949.00 27255.22 32223.91 34154.14
Other Exp. 134259.58 176536.43 191513.41 230455.78 299746.14 291987.42 362443.10 424384.16
Total Exp. 144425.07 188329.85 207388.74 248132.35 319695.14 319242.64 394667.01 458538.30
 229
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
14. Manipur
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 33.88 40.66 41.45 58.40 73.39 62.97 36.00 34.81
Total Revenue 33.88 40.66 41.45 58.40 73.39 62.97 36.00 34.81
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 92.69 96.90 91.76 124.16 165.21 157.06 133.59 208.70
Total Exp. 92.69 96.90 91.76 124.16 165.21 157.06 133.59 208.70
15. Meghalaya
Revenue Own Tax 0.00 0.64 0.71 1.40 5.32 6.95 3.70 4.80
Own Non-Tax 225.74 254.54 177.44 209.37 132.64 218.72 250.77 311.17
Own Revenue 225.95 255.18 178.15 210.77 137.96 225.67 254.47 315.97
Other Revenue 687.61 717.99 694.64 793.02 850.97 948.88 1197.91 1436.25
Total Revenue 913.56 973.17 872.79 1003.79 988.93 1174.55 1452.38 1752.22
Expenditure 6. Exp. on CS* 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 1179.12 1528.97 1523.78 1601.90 1477.88 1964.58 2109.14 2356.28
Total Exp. 1179.12 1528.97 1523.78 1601.90 1477.88 1964.58 2109.14 2356.28
16. Mizoram
Revenue Own Tax 0.00 0.00 0.00 0.11 0.07 0.80 0.17 1.07
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.11 0.07 0.80 0.17 1.07
Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 74.00 74.00
Total Revenue 0.00 0.00 0.00 0.11 0.07 0.80 74.17 75.07
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 66.73 75.09 79.09 75.09 81.89 81.89 155.89 149.58
Total Exp. 66.73 75.09 79.09 75.09 81.89 81.89 155.89 149.58
17. Nagaland
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 2273.13 1937.24 1904.65 2795.39 4769.59 8160.00 9461.08 9283.93
Total Revenue 2273.13 1937.24 1904.65 2795.39 4769.59 8160.00 9461.08 9283.93
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 2273.13 1937.24 1904.65 2795.39 4769.59 8160.00 9461.08 9283.93
Total Exp. 2273.13 1937.24 1904.65 2795.39 4769.59 8160.00 9461.08 9283.93
18. Orissa
Revenue Tax 355.38 725.75 383.08 411.37 474.53 469.99 449.21 462.34
Own Non-Tax 234.99 122.15 267.50 291.86 327.37 248.81 264.55 237.04
Own Revenue 590.37 847.90 650.58 703.23 801.90 718.80 713.76 699.38
Other Revenue 17222.62 16690.13 20245.96 35244.39 38971.40 51816.49 60622.82 63302.87
Total Revenue 17812.99 17538.03 20896.54 35947.62 39773.30 52535.29 61336.58 64002.25
Expenditure Exp. on C S 988.23 1527.73 1601.59 1467.14 1121.03 1300.62 462.21 793.25
Other Exp. 16824.76 16010.30 19294.95 34480.48 38652.27 51234.67 60874.37 63209.00
Total Exp. 17812.99 17538.03 20896.54 35947.62 39773.30 52535.29 61336.58 64002.25
19. Punjab
Revenue Own Tax 65.02 65.09 65.42 66.14 65.20 67.30 67.99 69.85
Own Non-Tax 2090.68 2346.70 2941.30 3855.86 4467.96 4925.52 4680.89 5316.77
Own Revenue 2155.70 2411.79 3006.72 3922.00 4533.16 4992.82 4748.88 5386.62
Other Revenue 7589.91 8563.48 9687.64 10893.85 12083.11 12747.32 9214.66 8154.42
Total Revenue 9745.61 10975.27 12694.36 14815.85 16616.27 17740.14 13963.54 13541.04
Expenditure Exp. on C S 3945.25 4219.64 4752.36 7540.67 7077.72 8464.64 4869.60 3915.10
Other Exp. 6054.11 7034.02 8050.31 7784.22 8751.77 10149.84 11115.09 12038.01
Total Exp. 9999.36 11253.66 12802.67 15324.89 15829.49 18614.48 15984.69 15953.11
 230
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
20. Rajasthan
Revenue Own Tax Break up of tax and non-tax is not furnished
Own Non-Tax
Own Revenue 2427.61 2332.55 2084.36 2359.96 2554.04 2635.68 3204.12 3074.57
Other Revenue 73022.18 64477.40 68265.69 82349.35 105920.31 126338.02 141603.75 148946.18
Total Revenue 75449.79 66809.95 70350.05 84709.31 108474.35 128973.70 144807.87 152020.75
Expenditure Exp. on C S 3.60 48.40 243.50 504.65 810.15 1043.84 1091.00 1163.57
Other Exp. 74288.48 65692.47 69790.46 84154.95 108075.65 127186.15 144352.01 152574.73
Total Exp. 74292.08 65740.87 70033.96 84659.60 108885.80 128229.99 145443.01 153738.30
21. Sikkim
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 116.00 71.00 66.00 64.93 122.17 143.84 146.23
Total Revenue 0.00 116.00 71.00 66.00 64.93 122.17 143.84 146.23
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 116.00 70.90 66.00 64.93 122.17 143.84 146.23
Total Exp. 0.00 116.00 70.90 66.00 64.93 122.17 143.84 146.23
22. Tamil Nadu
Revenue Own Tax 1479.76 1776.61 1580.61 2269.00 2380.20 3121.19 2813.03 3293.80
Own Non-Tax 91.83 79.82 93.84 85.05 90.95 90.89 101.96 109.97
Own Revenue 1571.59 1856.43 1674.45 2354.05 2471.15 3212.08 2914.99 3403.77
Other Revenue 26378.03 29316.70 38211.64 42659.05 30133.58 30655.38 39250.98 38812.64
Total Revenue 27949.62 31173.13 39886.09 45013.10 32604.73 33867.46 42165.97 42216.41
Expenditure Exp. on C S 6644.63 5631.30 6825.87 8436.90 7879.21 9287.42 10215.66 16386.42
Other Exp. 15322.21 13577.40 15480.36 17623.22 18255.16 19250.11 28896.03 32675.45
Total Exp. 21966.84 19208.70 22306.23 26060.12 26134.37 28537.53 39111.69 49061.87
23. Tripura
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 1.42 2.31 2.59 2.80 3.44 5.02 5.19 6.03
Own Revenue 1.42 2.31 2.59 2.80 3.44 5.02 5.19 6.03
Other Revenue 123.35 103.00 94.00 73.53 125.99 508.87 1095.55 6981.00
Total Revenue 124.77 105.31 96.59 76.33 129.43 513.89 1100.74 6987.03
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 123.35 103.00 94.00 73.53 125.99 508.87 1095.55 6981.00
Total Exp. 123.35 103.00 94.00 73.53 125.99 508.87 1095.55 6981.00
24. Uttar Pradesh
Revenue Own Tax 622.12 671.83 744.58 911.36 900.01 798.53 661.63 865.36
Own Non-Tax 1653.23 1836.91 2236.67 2804.11 3002.66 2938.46 3288.30 3799.81
Own Revenue 2275.35 2508.74 2981.25 3715.47 3902.67 3736.99 3949.93 4665.17
Other Revenue 40655.36 42171.17 43327.35 58923.65 57467.86 67875.95 59166.23 83659.19
Total Revenue 42930.71 44679.91 46308.60 62639.12 61370.53 71612.94 63116.16 88324.36
Expenditure Exp. on C S 236.00 307.00 633.00 653.00 673.00 693.00 770.00 5060.44
Other Exp. 43139.90 44977.45 46645.71 61481.52 60487.57 70956.52 66668.00 85653.63
Total Exp. 43375.90 45284.45 47278.71 62134.52 61160.57 71649.52 67438.00 90714.07
25. West Bengal
Revenue Own Tax 546.73 553.01 576.55 501.69 549.79 593.78 602.58 784.61
Own Non-Tax 876.69 899.35 876.76 868.53 907.88 896.70 896.73 1174.60
Own Revenue 1423.42 1452.36 1453.31 1370.22 1457.67 1490.48 1499.31 1959.21
Other Revenue 5796.96 18859.76 27159.16 41315.26 47312.86 53347.40 50145.79 46816.25
Total Revenue 7220.38 20312.12 28612.47 42685.48 48770.53 54837.88 51645.10 48775.46
Expenditure Exp. on C S 192.35 194.68 190.00 192.29 195.49 196.02 197.21 194.51
Other Exp. 11908.78 31983.50 34866.03 41518.34 53391.86 57855.42 52406.74 55293.40
Total Exp. 12101.13 32178.18 35056.03 41710.63 53587.35 58051.44 52603.95 55487.91
 231
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
Total (All States)
Revenue Own Tax 23849.68 19753.66 19570.89 22965.31 25547.08 30197.54 34501.45 37691.13
Own Non-Tax 13186.73 15377.16 17153.88 19628.43 22246.98 23969.93 25894.51 30016.72
Own Revenue 37036.41 35130.82 36724.77 42593.74 47794.06 54167.47 60395.96 67707.85
Other Revenue 624346.53 707160.94 871063.27 1023999.11 1140504.04 1303752.76 1557478.07 1867846.53
Total Revenue 661382.94 742291.76 907788.05 1066592.85 1188298.10 1357920.23 1617874.02 1935554.38
Expenditure Exp. on C S 41661.98 55459.33 71266.72 80342.72 83523.65 106662.83 122439.75 155457.31
Other Exp. 673028.18 773026.13 895457.11 1085496.71 1216971.39 1347609.89 1602997.74 1937658.44
Total Exp. 714690.16 828485.46 966723.83 1165839.43 1300495.04 1454272.72 1725437.49 2093115.75
Source: State Governments.
CS = Core Services (water supply, street lighting, sanitation and roads).
* Information/details not furnished.
 232

Annexure VIII.2B
Statement of Revenue and Exp. of Panchayats at Village level
(Para 8.25)
(Rs. in lakhs)

State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
1. Andhra Pradesh
Revenue Own Tax 4574.44 5003.91 4762.89 4621.45 4944.84 5766.94 7748.39 7990.07
Own Non-Tax 645.37 2201.76 1600.80 2214.03 2749.83 3024.81 3327.29 3660.02
Own Revenue 5219.81 7205.67 6363.69 6835.48 7694.67 8791.75 11075.68 11650.09
Other Revenue 17762.47 18939.21 20179.01 26088.36 19477.48 14617.48 25979.10 18451.15
Total Revenue 22982.28 26144.88 26542.70 32923.84 27172.15 23409.23 37054.78 30101.24
Expenditure Exp. on C S 2842.46 3961.50 4930.57 4629.50 5812.55 7370.49 8476.04 9519.61
Other Exp. 16763.01 18656.08 19259.21 27202.93 19414.68 14913.30 26109.47 19284.31
Total Exp. 19605.47 22617.58 24189.78 31832.43 25227.23 22283.79 34585.51 28803.92
2. Arunachal Pradesh PRIs do not exist.

3. Assam
Revenue Own Tax 201.95 205.99 210.11 214.31 218.60 222.97 227.42 231.97
Own Non-Tax 2.53 2.58 2.63 2.68 2.73 2.78 2.83 2.88
Own Revenue 204.48 208.57 212.74 216.99 221.33 225.75 230.25 234.85
Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1157.00
Total Revenue 204.48 208.57 212.74 216.99 221.33 225.75 230.25 1391.85
Expenditure Exp. on C S INF 0.00 1368.95 1377.93 1400.43 1422.88 1446.10 1049.68
Other Exp. 291.10 1287.14 1330.92 1644.42 1645.14 1892.63 1870.01
Total Exp. 291.10 2656.09 2708.85 3044.85 3068.02 3338.73 2919.69
4. Bihar
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 23781.46 51289.74 47020.65 35826.40 30857.30 29529.84
Total Revenue 0.00 0.00 23781.46 51289.74 47020.65 35826.40 30857.30 29529.84
Expenditure Exp. on C S* 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 2795.05 3173.59 27301.03 54880.59 50953.78 40203.21 35697.81 34823.96
Total Exp. 2795.05 3173.59 27301.03 54880.59 50953.78 40203.21 35697.81 34823.96
5. Goa
Revenue Own Tax 75.15 95.83 103.22 128.54 186.39 211.44 254.13 291.36
Own Non-Tax 29.70 24.23 31.54 34.35 72.35 92.94 104.44 104.88
Own Revenue 104.85 120.06 134.76 162.89 258.74 304.38 358.57 396.24
Other Revenue 262.45 438.11 412.66 473.78 517.52 464.33 323.22 661.24
Total Revenue 367.30 558.17 547.42 636.67 776.26 768.71 681.79 1057.48
Expenditure Exp. on C S 47.11 57.28 80.13 88.30 137.46 153.88 175.63 222.55
Other Exp. 160.81 243.39 208.68 259.95 267.05 319.27 348.95 540.79
Total Exp. 207.92 300.67 288.81 348.25 404.51 473.15 524.58 763.34
6. Gujarat
Revenue Own Tax 1502.92 1648.17 1694.95 1927.84 2051.75 2052.66 2443.20 2571.62
Own Non-Tax 533.56 543.01 619.77 600.41 428.09 590.95 696.35 586.63
Own Revenue 2036.48 2191.18 2314.72 2528.25 2479.84 2643.61 3139.55 3158.25
Other Revenue 7027.18 4135.24 4323.65 4567.62 5032.63 4709.69 11019.66 6180.15
Total Revenue 9063.65 6326.42 6638.38 7095.87 7512.47 7353.30 14159.21 9338.40
Expenditure Exp. on C S 883.67 1077.16 1157.75 1191.74 1151.09 1185.98 1533.76 1657.28
Other Exp. 2285.26 2492.25 2512.74 2815.17 2396.19 2884.71 3817.79 4251.25
Total Exp. 3168.92 3569.41 3670.49 4006.91 3547.28 4070.69 5351.55 5908.53
 233
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
7. Haryana
Revenue Own Tax 98.00 208.00 264.00 260.00 266.00 3.00 328.00 444.00
Own Non-Tax 2841.00 2685.00 3804.00 3707.00 4006.00 3833.00 3801.00 4851.00
Own Revenue 2939.00 2893.00 4068.00 3967.00 4272.00 3836.00 4129.00 5295.00
Other Revenue 1199.00 1001.00 1064.00 1214.00 1345.00 1613.00 2015.00 2449.00
Total Revenue 4138.00 3894.00 5132.00 5181.00 5617.00 5449.00 6144.00 7744.00
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 6201.00 5288.00 8062.00 9261.00 10187.00 11484.00 8711.00 13652.00
Total Exp. 6201.00 5288.00 8062.00 9261.00 10187.00 11484.00 8711.00 13652.00
8. Himachal Pradesh
Revenue Own Tax 2.00 67.39 32.14 42.86 54.30 46.49 41.20 67.70
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 2.00 67.39 32.14 42.86 54.30 46.49 41.20 67.70
Other Revenue 390.59 481.75 467.86 440.57 513.32 558.02 1340.33 2013.46
Total Revenue 392.59 549.14 500.00 483.43 567.62 604.51 1381.53 2081.16
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 392.63 546.03 500.07 483.44 567.72 604.51 1381.53 2081.16
Total Exp. 392.63 546.03 500.07 483.44 567.72 604.51 1381.53 2081.16
9. Jammu & Kashmir Information not furnished

10.Karnataka
Revenue Own Tax 1474.48 1439.56 1620.61 1681.71 2156.29 2320.12 2317.13 2592.43
Own Non-Tax 258.57 319.96 344.25 257.36 308.18 409.04 454.94 421.29
Own Revenue 1733.05 1759.52 1964.86 1939.07 2464.47 2729.16 2772.07 3013.72
Other Revenue 10509.57 10947.99 11044.71 12816.07 16545.12 19452.73 20116.23 20351.57
Total Revenue 12242.62 12707.51 13009.57 14755.14 19009.59 22181.89 22888.30 23365.29
Expenditure Exp. on C S 2112.90 2708.20 2453.63 2720.43 3222.88 4727.61 5250.33 5727.05
Other Exp. 9347.01 9775.65 9882.92 11265.62 13650.91 15115.04 18132.16 18637.97
Total Exp. 11459.91 12483.85 12336.55 13986.05 16873.79 19842.65 23382.49 24365.02
11. Kerala
Revenue Own Tax 2835.23 3504.03 3514.91 4292.66 5104.44 6967.60 7866.22 8755.35
Own Non-Tax 296.28 219.24 358.04 404.03 456.89 824.52 1073.67 1153.99
Own Revenue 3131.51 3723.27 3872.95 4696.69 5561.33 7792.12 8939.89 9909.34
Other Revenue 6530.42 6639.22 9404.58 10932.81 13791.34 12708.52 31105.69 64518.05
Total Revenue 9661.93 10362.49 13277.53 15629.50 19352.67 20500.64 40045.58 74427.39
Expenditure Exp. on C S 3160.70 2976.38 3715.94 4357.63 5309.33 3520.50 5635.29 7191.05
Other Exp. 6712.83 7581.01 9868.74 11553.71 14143.48 17402.57 34570.86 36866.84
Total Exp. 9873.53 10557.39 13584.68 15911.34 19452.81 20923.07 40206.15 44057.89
12. Madhya Pradesh
Revenue Own Tax 286.16 351.21 455.69 525.42 838.44 898.51 982.38 1002.03
Own Non-Tax 885.54 1162.27 1004.77 934.97 1504.88 1587.91 1683.04 1716.21
Own Revenue 1171.70 1513.48 1460.46 1460.39 2343.32 2486.42 2665.42 2718.24
Other Revenue 20970.04 20682.32 28939.03 28580.06 25657.87 37625.26 41817.59 65524.43
Total Revenue 22141.74 22195.80 30399.49 30040.45 28001.19 40111.68 44483.01 68242.67
Expenditure Exp. on C S 569.00 813.19 1202.06 1018.97 1328.64 1835.88 2441.65 2563.73
Other Exp. 21380.02 21181.03 29786.01 29592.34 27098.60 39579.35 44162.01 68204.13
Total Exp. 21949.02 21994.22 30988.07 30611.31 28427.24 41415.23 46603.66 70767.86
13. Maharashtra
Revenue Own Tax 2259.91 2870.04 2749.22 4177.56 4355.80 5389.07 6334.56 7096.51
Own Non-Tax 909.82 952.25 871.28 1217.75 1377.34 1627.67 2387.05 3453.87
Own Revenue 3169.73 3822.29 3620.50 5395.31 5733.14 7016.74 8721.61 10550.38
Other Revenue 14035.54 9718.25 12130.78 13235.45 21956.25 27587.20 31994.34 40595.47
Total Revenue 17205.27 13540.54 15751.28 18630.76 27689.39 34603.94 40715.95 51145.85
Expenditure Exp. on C S 3134.02 3741.00 3704.25 4358.95 4894.79 5506.25 7351.60 9406.45
Other Exp. 16909.62 17668.20 18980.27 28681.36 24552.29 16529.22 37070.30 44348.61
Total Exp. 20043.64 21409.20 22684.52 33040.31 29447.08 22035.47 44421.90 53755.06
 234
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
14. Manipur
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 33.88 40.66 41.45 58.40 73.39 62.97 36.00 34.81
Total Revenue 33.88 40.66 41.45 58.40 73.39 62.97 36.00 34.81
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 92.69 96.90 91.76 124.16 165.21 157.06 133.59 186.31
Total Exp. 92.69 96.90 91.76 124.16 165.21 157.06 133.59 186.31
15. Meghalaya
Revenue Own Tax 0.21 0.64 0.71 1.40 5.32 6.95 3.70 4.80
Own Non-Tax 225.74 254.54 177.44 209.37 132.64 218.72 250.77 311.17
Own Revenue 225.95 255.18 178.15 210.77 137.96 225.67 254.47 315.97
Other Revenue 687.61 717.99 694.64 793.02 850.97 948.88 1197.91 1436.25
Total Revenue 913.56 973.17 872.79 1003.79 988.93 1174.55 1452.38 1752.22
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 1179.12 1528.97 1523.78 1601.90 1477.88 1964.58 2109.14 2356.28
Total Exp. 1179.12 1528.97 1523.78 1601.90 1477.88 1964.58 2109.14 2356.28
16. Mizoram
Revenue Own Tax 0.11 0.07 0.80 0.17 1.07
Own Non-Tax 0.00 0.00 0.00 0.00 0.00
Own Revenue INF INF INF 0.11 0.07 0.80 0.17 1.07
Other Revenue 0.00 0.00 0.00 74.00 74.00
Total Revenue 0.11 0.07 0.80 74.17 75.07
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 66.73 75.09 79.09 75.09 81.89 81.89 155.89 149.58
Total Exp. 66.73 75.09 79.09 75.09 81.89 81.89 155.89 149.58
17. Nagaland
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 2273.13 1937.24 1904.65 2795.39 4769.59 8160.00 9461.08 9283.93
Total Revenue 2273.13 1937.24 1904.65 2795.39 4769.59 8160.00 9461.08 9283.93
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 2273.13 1937.24 1904.65 2795.39 4769.59 8160.00 9461.08 9283.93
Total Exp. 2273.13 1937.24 1904.65 2795.39 4769.59 8160.00 9461.08 9283.93
18. Orissa
Revenue Own Tax 355.38 725.75 383.08 411.37 474.53 469.99 449.21 462.34
Own Non-Tax 234.99 122.15 267.50 291.86 327.37 248.81 264.55 237.04
Own Revenue 590.37 847.90 650.58 703.23 801.90 718.80 713.76 699.38
Other Revenue 7926.65 6933.67 8898.35 13612.68 11461.91 13188.31 12495.66 13873.77
Total Revenue 8517.02 7781.57 9548.93 14315.91 12263.81 13907.11 13209.42 14573.15
Expenditure Exp. on C S 308.23 476.89 363.82 619.42 407.73 458.46 461.35 436.63
Other Exp. 8208.79 7304.68 9185.11 13696.49 11856.08 13448.65 12748.07 14136.52
Total Exp. 8517.02 7781.57 9548.93 14315.91 12263.81 13907.11 13209.42 14573.15
19. Punjab
Revenue Own Tax 65.02 65.09 65.42 66.14 65.20 67.30 67.99 69.85
Own Non-Tax 1750.69 1895.34 2462.71 3283.27 3886.76 4197.64 4016.06 4540.45
Own Revenue 1815.71 1960.43 2528.13 3349.41 3951.96 4264.94 4084.05 4610.30
Other Revenue 6299.34 7261.07 8131.11 9349.90 10559.58 10304.25 6439.25 5507.21
Total Revenue 8115.05 9221.50 10659.24 12699.31 14511.54 14569.19 10523.30 10117.51
Expenditure Exp. on C S# 3941.25 4215.14 4747.86 7536.07 7072.72 8459.14 4863.60 3910.10
Other Exp. 4190.35 5014.22 5905.39 5412.43 6145.17 7135.47 7867.99 8472.78
Total Exp. 8131.60 9229.36 10653.25 12948.50 13217.89 15594.61 12731.59 12382.88
 235
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
20. Rajashtan
Revenue Own Tax Break-up of tax and non-tax not furnished.
Own Non-Tax
Own Revenue 1672.00 1425.00 1242.00 1292.00 1305.00 1318.00 1331.00 1344.00
Other Revenue 19804.72 23107.72 26993.26 34917.00 52875.89 65396.68 74341.47 78765.82
Total Revenue 21476.72 24532.72 28235.26 36209.00 54180.89 66714.68 75672.47 80109.82
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 21003.62 24445.03 28544.93 36671.84 54840.28 68146.65 77388.97 82123.69
Total Exp. 21003.62 24445.03 28544.93 36671.84 54840.28 68146.65 77388.97 82123.69
21. Sikkim
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 80.00 29.33 26.00 27.17 83.17 101.49 98.23
Total Revenue 0.00 80.00 29.33 26.00 27.17 83.17 101.49 98.23
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 80.00 29.23 26.00 27.17 83.17 101.49 98.23
Total Exp. 0.00 80.00 29.23 26.00 27.17 83.17 101.49 98.23
22. Tamil Nadu
Revenue Own Tax 974.37 1309.60 1076.86 1733.47 1791.12 2473.21 2100.26 2509.76
Own Non-Tax 57.45 49.86 52.96 50.19 53.89 51.31 61.04 65.54
Own Revenue 1031.82 1359.46 1129.82 1783.66 1845.01 2524.52 2161.30 2575.30
Other Revenue 8171.64 7842.88 15415.32 11159.69 23189.45 23025.30 22051.93 25353.74
Total Revenue 9203.46 9202.34 16545.14 12943.35 25034.46 25549.82 24213.23 27929.04
Expenditure Exp. on C S 5697.00 4498.00 5635.00 6894.00 6977.00 8336.00 9169.00 10832.00
Other Exp. 6149.55 4577.86 5640.28 7518.29 8267.54 9094.70 10546.49 12921.93
Total Exp. 11846.55 9075.86 11275.28 14412.29 15244.54 17430.70 19715.49 23753.93
23. Tripura
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 1.42 2.31 2.59 2.80 3.44 5.02 5.19 6.03
Own Revenue 1.42 2.31 2.59 2.80 3.44 5.02 5.19 6.03
Other Revenue 123.35 103.00 94.00 73.53 117.74 346.48 871.14 4031.48
Total Revenue 124.77 105.31 96.59 76.33 121.18 351.50 876.33 4037.51
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 123.35 103.00 94.00 73.53 117.74 346.48 871.14 4031.48
Total Exp. 123.35 103.00 94.00 73.53 117.74 346.48 871.14 4031.48
24. Uttar Pradesh
Revenue Own Tax 332.20 349.69 386.65 523.07 484.26 406.29 231.19 382.13
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 332.20 349.69 386.65 523.07 484.26 406.29 231.19 382.13
Other Revenue 39687.60 41095.88 42132.58 56133.68 53852.99 63653.77 53875.64 72899.09
Total Revenue 40019.80 41445.57 42519.23 56656.75 54337.25 64060.06 54106.83 73281.22
Expenditure Exp. on C S 236.00 307.00 633.00 653.00 673.00 693.00 770.00 5060.44
Other Exp. 40019.80 41445.57 42519.23 56656.75 54301.24 64060.06 54106.83 69301.54
Total Exp. 40255.80 41752.57 43152.23 57309.75 54974.24 64753.06 54876.83 74361.98
25. West Bengal
Revenue Own Tax 546.73 553.01 576.55 501.69 549.79 593.78 602.58 784.61
Own Non-Tax 312.34 317.72 312.15 286.13 304.02 303.73 308.72 511.90
Own Revenue 859.07 870.73 888.70 787.82 853.81 897.51 911.30 1296.51
Other Revenue 4173.66 14810.32 21471.61 28639.42 29565.97 32922.46 27004.38 24210.95
Total Revenue 5032.73 15681.05 22360.31 29427.24 30419.78 33819.97 27915.68 25507.46
Expenditure Exp. on C S $ 59.62 59.75 59.98 60.12 60.56 61.01 61.29 63.00
Other Exp. 8935.14 25395.90 27786.31 31196.88 35055.37 37735.83 29403.37 31452.93
Total Exp. 8994.76 25455.65 27846.29 31257.00 35115.93 37796.84 29464.66 31515.93
 236
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
Total (All States)
Revenue Own Tax 22577.79 18397.91 17897.01 21109.60 23547.14 27897.12 31997.73 35257.60
Own Non-Tax 8985.00 10752.22 11912.43 13496.20 15614.41 17018.85 18436.94 21622.90
Own Revenue 31562.79 29150.13 29809.44 34605.80 39161.55 44915.97 50434.67 56880.50
Other Revenue 162547.19 178338.52 238796.04 308489.17 340506.83 374572.90 405849.41 488344.64
Total Revenue 194109.98 207488.65 268605.49 343094.97 379668.38 419488.87 456284.08 545225.14
Expenditure Exp. on C S 19050.71 24891.49 30052.94 35506.06 38448.18 43731.08 47635.64 57639.57
Other Exp. 179130.75 198900.79 250952.57 333175.78 341981.28 371094.86 416788.56 479076.23
Total Exp. 198181.46 223792.28 281005.51 368681.84 380429.46 414825.94 464424.20 536715.79

Source: State Governments.

CS = Core Services (water supply, street lighting, sanitation and roads).
INF= Information/details not furnished.
* Details not furnished.
# Expenditure on streets/drains only.
$ Details not furnished except for water supply.
 237
Annexure VIII. 2C
Statement of Revenue and Expenditure of Panchayats at Intermediate level
(Para 8.25)
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
1. Andhra Pradesh
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 262.44 291.60 324.00 360.00 400.00 440.00 484.00 532.40
Own Revenue 262.44 291.60 324.00 360.00 400.00 440.00 484.00 532.40
Other Revenue 45052.99 48463.30 52048.61 57434.74 64083.14 64979.11 75281.32 81304.06
Total Revenue 45315.43 48754.90 52372.61 57794.74 64483.14 65419.11 75765.32 81836.46
Expenditure Exp. on C S 1492.83 1435.58 1330.40 1364.34 1765.36 1801.72 1839.91 1880.01
Other Exp. 44871.23 48499.90 52837.69 58383.99 65788.61 65856.69 76803.60 83006.94
Total Exp. 46364.06 49935.48 54168.09 59748.33 67553.97 67658.41 78643.51 84886.95
2. Arunachal Pradesh PRIs do not exist.

3. Assam
Revenue Own Tax 96.30 98.35 100.40 102.45 104.50 106.59 108.72 110.89
Own Non-Tax 0.18 0.19 0.20 0.21 0.22 0.23 0.24 0.25
Own Revenue 96.48 98.54 100.60 102.66 104.72 106.82 108.96 111.14
Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Revenue 96.48 98.54 100.60 102.66 104.72 106.82 108.96 111.14
Expenditure Exp. on C S 0.00 0.00 29.40 30.00 30.60 31.20 31.83 32.46
Other Exp. 213.17 479.81 551.01 624.76 704.76 755.18 824.71 852.90
Total Exp. 213.17 479.81 580.41 654.76 735.36 786.38 856.54 885.36
4. Bihar
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 5473.14 11821.20 10850.92 8267.63 7106.03 6327.82
Total Revenue 0.00 0.00 5473.14 11821.20 10850.92 8267.63 7106.03 6327.82
Expenditure Exp. on C S* 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 9273.42 10080.95 16301.94 30948.54 22890.81 20594.09 19741.54 19079.27
Total Exp. 9273.42 10080.95 16301.94 30948.54 22890.81 20594.09 19741.54 19079.27
5. Goa Panchayats at intermediate level do not exist.

6. Gujarat
Revenue Own Tax 132.12 128.42 146.72 162.75 206.53 272.16 291.95 279.60
Own Non-Tax 37.84 33.92 58.19 54.05 47.50 54.11 78.52 78.21
Own Revenue 169.96 162.34 204.91 216.80 254.03 326.27 370.47 357.81
Other Revenue 42453.66 52620.07 57400.12 57691.76 71149.33 78561.49 95411.36 102524.30
Total Revenue 42623.62 52782.41 57605.03 57908.56 71403.36 78887.76 95781.83 102882.11
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 61983.77 66418.68 74216.14 81401.28 85429.52 100288.30 110445.57 122974.47
Total Exp. 61983.77 66418.68 74216.14 81401.28 85429.52 100288.30 110445.57 122974.47
7. Haryana
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 491.00 446.00 457.00 504.00 539.00 606.00 678.00 617.00
Total Revenue 491.00 446.00 457.00 504.00 539.00 606.00 678.00 617.00
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 586.00 541.40 553.80 601.30 637.80 718.40 792.10 731.90
Total Exp. 586.00 541.40 553.80 601.30 637.80 718.40 792.10 731.90
 238
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
8. Himachal Pradesh
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 11.13 24.09 19.00 27.32 10.76 16.93 115.00 219.74
Total Revenue 11.13 24.09 19.00 27.32 10.76 16.93 115.00 219.74
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 11.13 24.09 19.00 27.32 10.76 16.93 115.00 219.74
Total Exp. 11.13 24.09 19.00 27.32 10.76 16.93 115.00 219.74
9. Jammu & Kashmir Information not furnished

10.Karnataka
Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Revenue Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 4405.25 5313.25
Total Revenue 0.00 0.00 0.00 0.00 0.00 0.00 4405.25 5313.25
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 0.00 0.00 0.00 0.00 0.00 1041.25 1041.25
Total Exp. 0.00 0.00 0.00 0.00 0.00 0.00 1041.25 1041.25
11. Kerala
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 0.00 0.00 0.00 7297.39 8701.16 16180.08
Total Revenue 0.00 0.00 0.00 0.00 0.00 7297.39 8701.16 16180.08
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 339.49 433.26 781.97
Other Exp. 0.00 0.00 0.00 0.00 0.00 8853.33 10288.67 17762.42
Total Exp. 0.00 0.00 0.00 0.00 0.00 9192.82 10721.93 18544.39
12. Madhya Pradesh
Revenue Own Tax 8.06 9.50 22.27 110.16 93.11 168.02 163.46 165.07
Own Non-Tax 9.12 10.11 37.94 95.71 131.67 279.60 254.98 263.74
Own Revenue 17.18 19.61 60.21 205.87 224.78 447.62 418.44 428.81
Other Revenue 864.79 988.43 1122.96 1459.25 1532.57 2066.76 7409.02 33640.78
Total Revenue 881.97 1008.04 1183.17 1665.12 1757.35 2514.38 7827.46 34069.59
Exp. Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 348.62 982.67 1006.52 1296.29 1361.01 2021.84 8063.77 34091.92
Total Exp. 348.62 982.67 1006.52 1296.29 1361.01 2021.84 8063.77 34091.92
13. Maharashtra
Revenue Own Tax 49.61 71.47 142.35 92.37 114.64 125.53 190.38 151.77
Own Non-Tax 24.26 34.79 17.29 32.57 19.49 30.03 36.86 36.66
Own Revenue 73.87 106.26 159.64 124.94 134.13 155.56 227.24 188.43
Other Revenue 11510.27 13084.30 27995.23 17978.80 19320.44 23832.57 30173.34 33834.08
Total Revenue 11584.14 13190.56 28154.87 18103.74 19454.57 23988.13 30400.57 34022.51
Expenditure Exp. on C S 1333.20 1745.49 2493.64 2715.99 2864.05 3576.36 4296.79 4951.97
Other Exp. 49247.12 58039.12 65877.36 79848.33 134033.20 104568.00 125529.83 151535.93
Total Exp. 50580.32 59784.61 68371.00 82564.32 136897.25 108144.36 129826.62 156487.90
14. Manipur Panchayats at intermediate level do not exist

15. Meghalaya Panchayats at intermediate level do not exist.

16. Mizoram Panchayats at intermediate level do not exist.

17. Nagaland Panchayats at intermediate level do not exist.

 239
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
18. Orissa
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 9295.97 9756.46 11347.61 21631.71 27509.49 38628.18 43302.16 44711.49
Total Revenue 9295.97 9756.46 11347.61 21631.71 27509.49 38628.18 43302.16 44711.49
Expenditure Exp. on C S 680.00 1050.84 1237.77 847.72 713.30 842.16 0.86 0.00
Other Exp. 8615.97 8705.62 10109.84 20783.99 26796.19 37786.02 43301.30 44711.49
Total Exp. 9295.97 9756.46 11347.61 21631.71 27509.49 38628.18 43302.16 44711.49
19. Punjab
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 255.10 356.82 382.36 459.19 461.10 551.93 448.57 550.17
Own Revenue 255.10 356.82 382.36 459.19 461.10 551.93 448.57 550.17
Other Revenue 1120.57 1123.98 1380.47 1387.22 1398.10 2318.36 2523.32 2523.30
Total Revenue 1375.67 1480.80 1762.83 1846.41 1859.20 2870.29 2971.89 3073.47
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 1224.16 1320.85 1380.12 1547.19 1737.80 1980.87 2085.90 2318.73
Total Exp. 1224.16 1320.85 1380.12 1547.19 1737.80 1980.87 2085.90 2318.73
20. Rajashtan
Revenue Own Tax Break-up of tax and non-tax not furnished.
Own Non-Tax
Own Revenue 631.37 694.51 763.96 840.36 924.40 1016.84 1118.52 1230.37
Other Revenue 36052.93 40735.22 40848.57 46935.77 52264.56 58127.12 65550.06 69307.56
Total Revenue 36684.30 41429.73 41612.53 47776.13 53188.96 59143.96 66668.58 70537.93
Expenditure Exp. on C S 3.60 48.40 218.20 472.05 755.15 1016.84 1089.00 1126.57
Other Exp. 36052.93 40735.22 40848.57 46935.77 52264.56 58127.12 65550.06 69307.56
Total Exp. 36056.53 40783.62 41066.77 47407.82 53019.71 59143.96 66639.06 70434.13
21. Sikkim Panchayats at intermediate level do not exist.

22. Tamil Nadu

Revenue Own Tax 505.39 467.01 503.75 535.53 589.08 647.98 712.77 784.04
Own Non-Tax 34.38 29.96 40.88 34.86 37.06 39.58 40.92 44.43
Own Revenue 539.77 496.97 544.63 570.39 626.14 687.56 753.69 828.47
Other Revenue 18206.39 21473.82 22796.32 31499.36 6944.13 7630.08 14399.05 12058.90
Total Revenue 18746.16 21970.79 23340.95 32069.75 7570.27 8317.64 15152.74 12887.37
Expenditure Exp. on C S 947.63 1133.30 1190.87 1542.90 902.21 951.42 1046.66 5554.42
Other Exp. 9172.66 8999.54 9840.08 10104.93 9987.62 10155.41 15549.54 15149.52
Total Exp. 10120.29 10132.84 11030.95 11647.83 10889.83 11106.83 16596.20 20703.94
23. Tripura
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 0.00 0.00 1.17 100.49 149.92 2094.58
Total Revenue 0.00 0.00 0.00 0.00 1.17 100.49 149.92 2094.58
Exp. Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 0.00 0.00 0.00 1.17 100.49 149.92 2094.58
Total Exp. 0.00 0.00 0.00 0.00 1.17 100.49 149.92 2094.58
24. Uttar Pradesh
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 0.00 0.00 0.00 0.00 0.00 3086.85 6701.01
Total Exp. 0.00 0.00 0.00 0.00 0.00 0.00 3086.85 6701.01
 240
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
25. West Bengal
Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 298.89 307.35 314.40 313.74 328.47 328.78 314.34 408.49
Own Revenue 298.89 307.35 314.40 313.74 328.47 328.78 314.34 408.49
Other Revenue 666.50 562.91 637.46 6002.61 10741.33 12855.51 15883.43 15178.77
Total Revenue 965.39 870.26 951.86 6316.35 11069.80 13184.29 16197.77 15587.26
Expenditure Exp. on C S* 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 1179.74 1111.24 1197.59 3554.71 10519.50 12070.68 15668.25 16131.43
Total Exp. 1179.74 1111.24 1197.59 3554.71 10519.50 12070.68 15668.25 16131.43
Total (All States)
Revenue Own Tax 791.48 774.75 915.49 1003.26 1107.86 1320.28 1467.28 1491.37
Own Non-Tax 922.21 1064.74 1175.26 1350.33 1425.51 1724.26 1658.43 1914.35
Own Revenue 1713.69 1839.49 2090.75 2353.59 2533.37 3044.54 3125.71 3405.72
Other Revenue 166357.57 189973.09 222290.45 255214.10 267269.33 306304.46 372206.94 427066.09
Total Revenue 168071.26 191812.58 224381.20 257567.68 269802.71 309349.00 375332.65 430471.80
Exp. Exp. on C S 4457.26 5413.61 6500.28 6973.00 7030.67 8559.19 8738.31 14327.40
Other Exp. 222779.92 245939.09 274739.66 336058.40 412163.31 423893.35 499037.85 587711.06
Total Exp. 227237.18 251352.70 281239.94 343031.40 419193.98 432452.54 507776.16 602038.46

Source: State Governments.

CS = Core Services (water supply, street lighting, sanitation and roads).
* Information/details not furnished.
 241
Annexure VIII. 2D
Statement of Revenue and Exp. of Panchayats at District level
(Para 8.25)
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
1. Andhra Pradesh
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 787.32 874.80 972.00 1080.00 1200.00 1320.00 1452.00 1597.20
Own Revenue 787.32 874.80 972.00 1080.00 1200.00 1320.00 1452.00 1597.20
Other Revenue 30975.01 40029.93 60942.93 54127.24 65296.12 73453.68 89791.69 137623.67
Total Revenue 31762.33 40904.73 61914.93 55207.24 66496.12 74773.68 91243.69 139220.87
Expenditure Exp. on C S 3238.00 7330.00 9374.00 7570.85 8200.85 11015.74 16426.87 28938.87
Other Exp. 30826.33 35879.73 53549.93 46036.39 59421.18 65733.98 73899.98 107728.83
Total Exp. 34064.33 43209.73 62923.93 53607.24 67622.03 76749.72 90326.85 136667.70
2. Arunachal Pradesh PRIs do not exist.

3. Assam
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 42.86 43.72 44.59 45.47 46.39 47.32
Total Revenue 0.00 0.00 42.86 43.72 44.59 45.47 46.39 47.32
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 56.04 168.42 188.34 210.47 222.70 244.11 251.86
Total Exp. 0.00 56.04 168.42 188.34 210.47 222.70 244.11 251.86
4. Bihar
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 359.08 565.13 240.38 205.00 1292.58 124.24 416.06 738.43
Total Revenue 359.08 565.13 240.38 205.00 1292.58 124.24 416.06 738.43
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 1561.71 1832.87 2717.41 3843.63 18811.08 3417.09 3719.62 12136.51
Total Exp. 1561.71 1832.87 2717.41 3843.63 18811.08 3417.09 3719.62 12136.51
5. Goa Information not furnished.

6. Gujarat
Revenue Own Tax 115.85 124.15 249.10 251.37 246.14 265.77 224.68 242.06
Own Non-Tax 422.78 372.14 375.40 351.20 386.37 322.89 256.53 277.99
Own Revenue 538.63 496.29 624.50 602.57 632.51 588.66 481.21 520.05
Other Revenue 49590.38 52216.74 54208.23 57982.33 69896.61 81881.20 123070.78 110513.15
Total Revenue 50129.01 52713.03 54832.73 58584.90 70529.12 82469.86 123551.99 111033.20
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 42944.63 52847.50 56982.78 56098.27 61941.71 75326.77 84070.38 97997.85
Total Exp. 42944.63 52847.50 56982.78 56098.27 61941.71 75326.77 84070.38 97997.85
7. Haryana
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 15.00 6.00 6.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 15.00 6.00 6.00
Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 103.00 155.00
Total Revenue 0.00 0.00 0.00 0.00 0.00 15.00 109.00 161.00
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 0.00 0.00 0.00 0.00 27.70 279.00 259.00
Total Exp. 0.00 0.00 0.00 0.00 0.00 27.70 279.00 259.00
 242
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
8. Himachal Pradesh
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 152.75 224.14
Total Revenue 0.00 0.00 0.00 0.00 0.00 0.00 152.75 224.14
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 0.00 0.00 0.00 0.00 0.00 152.75 224.14
Total Exp. 0.00 0.00 0.00 0.00 0.00 0.00 152.75 224.14
9. Jammu & Kashmir Information not furnished.

10.Karnataka
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 119200.00 148438.00 164664.00 203361.00 226736.00 257227.00 297368.00 348128.00
Total Revenue 119200.00 148438.00 164664.00 203361.00 226736.00 257227.00 297368.00 348128.00
Expenditure Exp. on C S 8856.01 11127.87 15202.24 19221.81 17158.86 22894.03 26118.91 30396.99
Other Exp. 104775.97 126343.25 138340.23 174996.51 165216.54 216359.93 278361.91 313837.63
Total Exp. 113631.98 137471.12 153542.47 194218.32 182375.40 239253.96 304480.82 344234.62
11. Kerala
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 0.00 0.00 0.00 118.39 10425.95 7669.12
Total Revenue 0.00 0.00 0.00 0.00 0.00 118.39 10425.95 7669.12
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 152.28 752.03
Other Exp. 0.00 0.00 0.00 0.00 0.00 118.39 4631.59 9701.77
Total Exp. 0.00 0.00 0.00 0.00 0.00 118.39 4783.87 10453.80
12. Madhya Pradesh
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 5.29 9.38 12.23 10.75 13.12 36.02 54.97 56.78
Own Revenue 5.29 9.38 12.23 10.75 13.12 36.02 54.97 56.78
Other Revenue 338.63 371.03 424.25 450.21 462.16 5685.33 18127.63 75532.43
Total Revenue 343.92 380.41 436.48 460.96 475.28 5721.35 18182.60 75589.21
Expenditure Exp. on C S 225.00 250.00 300.00 300.00 300.00 2122.67 2648.30 3076.60
Other Exp. 120.49 142.34 138.29 169.84 177.40 3532.77 14843.56 70593.52
Total Exp. 345.49 392.34 438.29 469.84 477.40 5655.44 17491.86 73670.12
13. Maharashtra
Revenue Own Tax 116.35 134.71 151.36 212.79 230.18 307.12 375.32 210.87
Own Non-Tax 60.55 98.15 123.45 153.79 209.42 169.31 257.41 267.33
Own Revenue 176.90 232.86 274.81 366.58 439.60 476.43 632.73 478.20
Other Revenue 75553.62 91604.74 122489.28 133742.23 157104.62 189207.81 216910.15 245100.46
Total Revenue 75730.53 91837.60 122764.09 134108.81 157544.22 189684.24 217542.88 245578.66
Expenditure Exp. on C S 5698.27 6306.93 9677.44 10601.63 12190.16 18172.61 20575.52 19795.72
Other Exp. 68102.85 100829.11 106655.78 121926.09 141160.65 170890.20 199842.97 228499.63
Total Exp. 73801.12 107136.04 116333.22 132527.72 153350.81 189062.81 220418.49 248295.35
14. Manipur
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 22.39
Total Exp. 0.00 0.00 0.00 0.00 0.00 0.00 0.00 22.39
 243
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
15. Meghalaya Panchayats at district level do not exist.

16. Mizoram Panchayats at district level do not exist.

17. Nagaland Panchayats at district level do not exist.

18. Orissa
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 4825.00 4717.61
Total Revenue 0.00 0.00 0.00 0.00 0.00 0.00 4825.00 4717.61
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 356.62
Other Exp. 0.00 0.00 0.00 0.00 0.00 0.00 4825.00 4360.99
Total Exp. 0.00 0.00 0.00 0.00 0.00 0.00 4825.00 4717.61
19. Punjab
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 84.89 94.54 96.23 113.40 120.10 175.95 216.26 226.15
Own Revenue 84.89 94.54 96.23 113.40 120.10 175.95 216.26 226.15
Other Revenue 170.00 178.43 176.06 156.73 125.43 124.71 252.09 123.91
Total Revenue 254.89 272.97 272.29 270.13 245.53 300.66 468.35 350.06
Expenditure Exp. on C S# 4.00 4.50 4.50 4.60 5.00 5.50 6.00 5.00
Other Exp. 639.60 698.95 764.80 824.60 868.80 1033.50 1161.20 1246.50
Total Exp. 643.60 703.45 769.30 829.20 873.80 1039.00 1167.20 1251.50
20. Rajashtan
Revenue Own Tax Break-up of tax and non-tax not furnished.
Own Non-Tax
Own Revenue 124.24 213.04 78.40 227.60 324.64 300.84 754.60 500.20
Other Revenue 17164.53 634.46 423.86 496.58 779.86 2814.22 1712.22 872.80
Total Revenue 17288.77 847.50 502.26 724.18 1104.50 3115.06 2466.82 1373.00
Expenditure Exp. on C S 0.00 0.00 25.30 32.60 55.00 27.00 2.00 37.00
Other Exp. 17231.93 512.22 396.96 547.34 970.81 912.38 1412.98 1143.48
Total Exp. 17231.93 512.22 422.26 579.94 1025.81 939.38 1414.98 1180.48
21. Sikkim
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 36.00 41.67 40.00 37.76 39.00 42.35 48.00
Total Revenue 0.00 36.00 41.67 40.00 37.76 39.00 42.35 48.00
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 36.00 41.67 40.00 37.76 39.00 42.35 48.00
Total Exp. 0.00 36.00 41.67 40.00 37.76 39.00 42.35 48.00
22. Tamil Nadu
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 2800.00 1400.00
Total Revenue 0.00 0.00 0.00 0.00 0.00 0.00 2800.00 1400.00
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 0.00 0.00 0.00 0.00 0.00 2800.00 4604.00
Total Exp. 0.00 0.00 0.00 0.00 0.00 0.00 2800.00 4604.00
 244
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
23. Tripura
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Revenue 0.00 0.00 0.00 0.00 7.08 61.90 74.49 854.94
Total Revenue 0.00 0.00 0.00 0.00 7.08 61.90 74.49 854.94
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 0.00 0.00 0.00 0.00 7.08 61.90 74.49 854.94
Total Exp. 0.00 0.00 0.00 0.00 7.08 61.90 74.49 854.94
24. Uttar Pradesh
Revenue Own Tax 289.92 322.14 357.93 388.29 415.75 392.24 430.44 483.23
Own Non-Tax 1653.23 1836.91 2236.67 2804.11 3002.66 2938.46 3288.30 3799.81
Own Revenue 1943.15 2159.05 2594.60 3192.40 3418.41 3330.70 3718.74 4283.04
Other Revenue 967.76 1075.29 1194.77 2789.97 3614.87 4222.18 5290.59 10760.10
Total Revenue 2910.91 3234.34 3789.37 5982.37 7033.28 7552.88 9009.33 15043.14
Expenditure Exp. on C S 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Exp. 3120.10 3531.88 4126.48 4824.77 6186.33 6896.46 9474.32 9651.08
Total Exp. 3120.10 3531.88 4126.48 4824.77 6186.33 6896.46 9474.32 9651.08
25. West Bengal
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 265.46 274.28 250.21 268.66 275.39 264.19 273.67 254.21
Own Revenue 265.46 274.28 250.21 268.66 275.39 264.19 273.67 254.21
Other Revenue 956.80 3486.53 5050.09 6673.23 7005.56 7569.43 7257.98 7426.53
Total Revenue 1222.26 3760.81 5300.30 6941.89 7280.95 7833.62 7531.65 7680.74
Expenditure Exp. on C S* 132.73 134.93 130.02 132.17 134.93 135.01 135.92 131.51
Other Exp. 1793.90 5476.36 5882.13 6766.75 7816.99 8048.91 7335.12 7709.04
Total Exp. 1926.63 5611.29 6012.15 6898.92 7951.92 8183.92 7471.04 7840.55
Total (All States)
Revenue Own Tax 480.41 581.00 758.39 852.45 892.07 980.13 1036.44 942.16
Own Non-Tax 3279.52 3560.20 4066.19 4781.91 5207.06 5226.82 5799.14 6479.47
Own Revenue 3759.93 4141.20 4824.58 5634.36 6099.13 6206.95 6835.58 7421.63
Other Revenue 295441.77 338849.32 409976.78 460295.84 532727.88 622875.40 779421.72 952435.81
Total Revenue 299201.70 342990.52 414801.36 465930.20 538827.01 629082.35 786257.30 959857.43
Expenditure Exp. on C S 18154.01 25154.23 34713.50 37863.66 38044.80 54372.56 66065.80 83490.34
Other Exp. 271117.51 328186.25 369764.88 416262.53 462826.80 552621.68 687171.33 870871.16
Total Exp. 289271.52 353340.48 404478.38 454126.19 500871.60 606994.24 753237.13 954361.50

Source: State Governments.

CS = Core Services (water supply, street lighting, sanitation and roads).
# Exp. for roads only.
* Information/details not furnished except for roads.
 245
Annexure VIII.3A

Statement of Revenue and Expenditure of Urban Local Bodies

(Para 8.25)
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98

1.Andhra Pradesh
Revenue Own Tax 2185.17 2924.66 3535.70 12061.00 12669.00 16243.91 17761.13 20829.74
Own Non-Tax 1191.23 1357.93 1522.20 4368.05 5758.96 6442.15 8780.04 13626.43
Own Revenue 3376.40 4282.59 5057.90 16429.05 18427.96 22686.06 26541.17 34456.17
Other Revenue 5033.39 4793.18 6761.97 19642.64 20966.75 22986.34 26364.47 30727.00
Total Revenue 8409.79 9075.77 11819.87 36071.69 39394.71 45672.40 52905.64 65183.17
Expenditure Exp. on Core
Services 214654.63 399403.78 380114.33 676675.77 623716.77 656096.68 1663481.48 1438886.82
Other
Expenditure 785679.37 958889.22 950261.67 1484361.89 2001138.25 1981210.79 2221533.63 2719812.18
Total Exp. 1000334.00 1358293.00 1330376.00 2161037.66 2624855.02 2637307.47 3885015.11 4158699.00

2.Arunachal Pradesh ULBs do not exist.

3.Assam
Revenue Own Tax 443.05 497.80 657.51 781.49 693.71 838.22 796.98 820.47
Own Non-Tax 781.04 819.82 751.69 1021.86 1102.64 1269.39 1744.80 1541.70
Own Revenue 1224.09 1317.62 1409.20 1803.35 1796.35 2107.61 2541.78 2362.17
Other Revenue 1565.22 641.99 559.12 696.30 542.12 1184.69 1126.20 1597.90
Total Revenue 2789.31 1959.61 1968.32 2499.65 2338.47 3292.30 3667.98 3960.07
Expenditure Exp. on Core
Services 933.30 1099.70 917.32 1189.09 933.24 1109.05 1525.83 2022.22
Other Expenditure 1661.47 1775.18 2038.21 2015.34 2753.08 2614.40 3141.98 3316.25
Total Expenditure 2594.77 2874.88 2955.53 3204.43 3686.32 3723.45 4667.81 5338.47

4.Bihar
Revenue Own Tax Information not furnished.
Own Non-Tax
Own Revenue Information not furnished. 2102.58 1324.04 2332.48 3775.09 3966.66
Other Revenue Information not furnished.
Total Revenue
Expenditure Exp. on Core Services
Other Expenditure
Total Expenditure

5.Goa
Revenue Own Tax 141.46 170.18 187.05 184.15 239.45 262.70 329.53 442.92
Own Non-Tax 77.11 100.67 170.70 168.10 177.82 209.04 258.65 258.91
Own Revenue 218.57 270.85 357.75 352.25 417.27 471.74 588.18 701.83
Other Revenue 332.51 458.74 634.23 505.77 560.12 661.13 546.91 893.73
Total Revenue 551.08 729.59 991.98 858.02 977.39 1132.87 1135.09 1595.56
Expenditure Exp. on Core
Services 108.14 139.84 222.57 179.97 192.47 252.81 315.92 366.55
Other Expenditure 441.55 528.15 548.60 686.43 726.75 835.95 1028.39 1339.96
Total Expenditure 549.69 667.99 771.17 866.40 919.22 1088.76 1344.31 1706.51

6.Gujarat
Revenue Own Tax 22648.97 27751.14 33326.56 38162.29 48470.96 59479.35 66851.72 72090.57
Own Non-Tax 3840.52 4284.39 4005.00 5217.03 5748.03 7126.97 7047.76 8939.37
Own Revenue 26489.49 32035.53 37331.56 43379.32 54218.99 66606.32 73899.47 81029.95
Other Revenue 12269.62 14349.51 18283.10 19288.40 22775.49 17974.93 18011.83 38180.24
Total Revenue 38759.11 46385.04 55614.66 62667.72 76994.48 84581.25 91911.30 119210.19
Expenditure Exp. on Core
Services 12636.22 15377.96 16864.36 19325.13 21205.16 25793.19 32899.65 36927.09
Other Exp. 22095.53 28034.56 30535.49 32554.76 38290.96 42814.69 45072.27 58162.16
Total Expenditure 34731.75 43412.52 47399.85 51879.89 59496.12 68607.88 77971.92 95089.25
 246
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
7.Haryana
Revenue Own Tax 3438.11 5409.65 4897.32 4321.42 4945.86 5818.99 6280.85 6701.74
Own Non-Tax 1166.95 2420.88 2872.95 2851.00 3350.62 3496.95 2867.37 3705.58
Own Revenue 4605.06 7830.53 7770.27 7172.42 8296.48 9315.94 9148.22 10407.32
Other Revenue 1876.83 3022.92 2363.18 3014.64 3404.74 4611.64 12541.08 7415.12
Total Revenue 6481.89 10853.45 10133.45 10187.06 11701.22 13927.58 21689.30 17822.44
Expenditure Exp. on Core
Services 7299.31 12742.00 13202.43 13095.38 12405.53 14484.55 23025.77 16453.00
Other Expenditure 11172.21 11785.07 13685.65 18657.79 15807.01 13936.00 22760.22 17972.57
Total Expenditure 18471.52 24527.07 26888.08 31753.17 28212.54 28420.55 45785.99 34425.57

8.Himachal Pradesh
Revenue Own Tax 341.39 387.31 410.28 446.48 422.47 514.03 629.63 818.73
Own Non-Tax 375.69 493.21 493.15 562.23 708.38 727.50 829.51 1330.95
Own Revenue 717.08 880.52 903.43 1008.71 1130.85 1241.53 1459.14 2149.68
Other Revenue 283.70 365.51 351.77 502.44 624.37 800.51 1656.78 1800.88
Total Revenue 1000.78 1246.03 1255.20 1511.15 1755.22 2042.04 3115.92 3950.56
Expenditure Exp. on Core
Services 330.33 355.05 380.53 423.53 487.48 610.66 843.22 1100.63
Other Expenditure 687.86 753.04 823.30 935.02 1025.48 1246.34 1400.06 2355.53
Total Expenditure 1018.19 1108.09 1203.83 1358.55 1512.96 1857.00 2243.28 3456.16

9.Jammu & Kashmir

Revenue Own Tax 29.08 31.43 47.97 34.60 79.15 91.25 151.61 138.53
Own Non-Tax 27.98 35.18 53.88 53.76 68.54 89.88 83.20 135.95
Own Revenue 80.45 112.90 139.85 129.05 186.04 225.12 280.61 322.48
Other Revenue 991.38 1073.39 1624.21 1415.86 1965.03 2019.06 2499.65 3378.47
Total Revenue 1071.83 1186.29 1764.06 1544.91 2151.07 2244.18 2780.26 3700.95
Expenditure Exp. on Core
Services 127.93 858.20 456.01 171.24 451.32 657.67 1288.51 1195.69
Other Exp. 2309.79 2410.38 2540.24 2380.59 2991.32 3546.15 5096.16 6309.65
Total Expenditure 2437.72 3268.58 2996.25 2551.83 3442.64 4203.82 6384.67 7505.34

10.Karnataka
Revenue Own Tax 6155.56 6835.47 8005.94 8417.24 9586.98 10165.75 13118.76 13554.94
Own Non-Tax 958.33 1594.48 1499.14 5481.08 2680.54 2382.14 2612.85 2683.89
Own Revenue 7113.89 8429.95 9505.08 13898.32 12267.52 12547.89 15731.61 16238.83
Other Revenue 7356.55 12003.56 7185.54 10891.14 15574.78 16091.09 17268.51 25438.71
Total Revenue 14470.44 20433.51 16690.62 24789.46 27842.30 28638.98 33000.12 41677.54
Expenditure Exp. on Core
Services 4212.48 5022.89 5448.50 5995.07 6798.01 9011.89 10546.29 15181.21
Other Expenditure 12428.42 13746.75 15124.52 18644.69 18466.93 22402.89 28910.93 29404.17
Total Expenditure 16640.90 18769.64 20573.02 24639.76 25264.94 31414.78 39457.22 44585.38

11.Kerala
Revenue Own Tax 4073.23 4639.62 4682.61 5277.38 5885.47 6411.71 7124.77 7873.34
Own Non-Tax 1883.45 2062.82 2401.64 2566.63 2467.40 2680.84 3115.26 3522.02
Own Revenue 5956.68 6702.44 7084.25 7844.01 8352.87 9092.55 10240.03 11395.36
Other Revenue 2517.40 2787.65 2788.20 3300.19 3756.94 6185.62 11269.17 14713.63
Total Revenue 8474.08 9490.09 9872.45 11144.20 12109.81 15278.17 21509.20 26108.99
Expenditure Exp. on Core
Services 2735.23 3103.09 3539.44 4094.88 4646.25 5100.25 6475.97 8447.37
Other Expenditure 6611.61 7180.00 7877.70 9559.97 10135.53 10994.40 15363.41 18814.27
Total Expenditure 9346.84 10283.09 11417.14 13654.85 14781.78 16094.65 21839.38 27261.64
 247
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
12.Madhya Pradesh
Revenue Own Tax 7210.43 9559.02 8103.21 9609.55 11229.59 5468.02 6861.00 8804.19
Own Non-Tax 3719.91 4203.28 4179.56 4975.83 4802.97 3485.30 5235.07 6017.10
Own Revenue 10930.34 13762.30 12282.77 14585.38 16032.56 8953.32 12096.07 14821.29
Other Revenue 12263.08 12826.61 14518.05 16003.43 17560.14 25373.51 32966.66 33623.10
Total Revenue 23193.42 26588.91 26800.82 30588.81 33592.70 34326.83 45062.73 48444.39
Expenditure Exp. on Core
Services 8890.50 10016.95 10725.33 12884.78 14792.28 16565.09 19482.98 22672.31
Other Expenditure 16382.44 18554.68 19960.80 22389.82 24558.99 27596.74 36835.16 39471.33
Total Expenditure 25272.94 28571.63 30686.13 35274.60 39351.27 44161.83 56318.14 62143.64
13.Maharashtra
Revenue* Own Tax 107595.00 127086.81 150112.46 177313.15 209018.00 246899.83 291652.75 344524.11
Own Non-Tax 39102.00 45146.07 52128.07 60198.22 68612.00 79247.51 91568.50 105862.14
Own Revenue 146697.00 172232.88 202240.52 237511.37 277630.00 326147.70 383220.86 350386.30
Other Revenue 14991.22 18345.09 23470.75 15483.23 27536.85 33947.98 41861.00 47376.00
Total Revenue 161688.22 190577.97 225711.27 252994.60 305166.85 360095.32 425082.26 497762.26
Expenditure Exp. on Core
Services 702760.46 241133.11 304950.52 374445.87 457247.71 770459.61 2483010.23 8459120.69
Other Exp. 495898.66 546044.20 561409.40 673412.08 618524.11 876607.26 1009325.52 1906858.29
Total Expenditure1198659.12 787177.31 866359.92 1047857.95 1075771.82 1647066.87 3492335.75 10365978.98

14.Manipur
Revenue Own Tax 18.10 34.01 83.37 82.28 96.82 82.69 116.50 223.91
Own Non-Tax 29.09 25.40 27.84 37.68 31.57 30.64 47.19 38.29
Own Revenue 47.19 59.41 111.21 119.96 128.39 113.33 163.69 262.20
Other Revenue 1399.11 71.49 47.04 27.98 61.90 69.08 116.69 126.84
Total Revenue 1446.30 130.90 158.25 147.94 190.29 182.41 280.38 389.04
Expenditure Exp. on Core
Services 12.42 10.96 5.80 6.58 10.21 14.44 13.92 16.23
Other Expenditure 189.49 167.57 148.42 163.00 236.98 240.83 310.12 266.96
Total Expenditure 201.91 178.53 154.22 169.58 247.19 255.27 324.04 283.19

15. Meghalaya
Revenue Own Tax 11.87 11.80 17.27 19.88 16.08 21.96 15.17 25.59
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 11.87 11.80 17.27 19.88 16.08 21.96 15.17 25.59
Other Revenue 188.15 286.96 272.23 297.48 214.92 351.27 670.30 498.60
Total Revenue 200.02 298.76 289.50 317.36 231.00 373.23 685.47 524.19
Expenditure Exp. on Core
Services 60.84 133.07 107.68 84.06 89.79 99.47 104.57 122.96
Other Expenditure 270.30 377.83 368.89 435.86 284.65 490.03 782.52 580.77
Total Expenditure 331.14 510.90 476.57 519.92 374.44 589.50 887.09 703.73

16.Mizoram ULBs do not exist.

17.Nagaland
Revenue Own Tax 0.46 0.56 0.59 0.00 0.63 0.74 0.00 0.00
Own Non-Tax 8.63 9.35 9.53 2.33 11.43 3.10 16.88 12.41
Own Revenue 9.09 9.91 10.12 2.33 12.06 3.84 16.88 12.41
Other Revenue 0.00 0.00 0.00 0.00 12.25 12.86 12.86 12.86
Total Revenue 9.09 9.91 10.12 2.33 24.31 16.70 29.74 25.27
Expenditure Exp. on Core
Services 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Expenditure 33.51 37.04 41.47 46.31 67.56 75.16 86.03 89.33
Total Expenditure 33.51 37.04 41.47 46.31 67.56 75.16 86.03 89.33
 248
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98

18. Orissa
Revenue Own Tax 2989.40 3704.46 4309.46 4573.63 5227.54 5894.72 6087.14 7244.19
Own Non-Tax 655.36 924.46 998.34 943.50 1271.08 1390.40 1304.57 1271.09
Own Revenue 3644.76 4628.92 5307.80 5517.13 6498.62 7285.12 7391.71 8515.28
Other Revenue 2236.87 2511.38 2665.28 2762.94 2693.89 2943.15 4086.77 3213.07
Total Revenue 5881.63 7140.30 7973.08 8280.07 9192.51 10228.27 11478.48 11728.35
Expenditure Exp. on Core
Services 1749.33 2250.75 2851.75 2511.85 2833.22 2869.68 3384.04 3972.02
Other Expenditure4779.39 6320.36 6445.85 7847.94 8677.96 9192.53 10140.60 9815.77
Total Expenditure 6528.72 8571.11 9297.60 10359.79 11511.18 12062.21 13524.64 13787.79
19.Punjab
Revenue Own Tax 11809.29 12593.51 13183.12 15988.52 33944.43 26589.03 29603.96 31790.87
Own Non-Tax 4693.43 4925.09 5172.96 5379.51 7397.69 7708.20 9113.00 8830.24
Own Revenue 16502.72 17518.60 18356.08 21368.03 41342.12 34297.23 38716.96 40621.11
Other Revenue 4245.90 4087.02 5885.75 6246.09 6487.92 5931.62 6505.19 6272.66
Total Revenue 20748.62 21605.62 24241.83 27614.12 47830.04 40228.85 45222.15 46893.77
Expenditure Exp. on Core
Services 4504.13 5428.18 5092.41 5595.77 4259.62 5308.41 4619.32 5257.95
Other Expenditure 12743.01 14165.08 15444.72 17762.72 19758.47 22450.46 26815.79 30681.94
Total Expenditure 17247.14 19593.26 20537.13 23358.49 24018.09 27758.87 31435.11 35939.89
20.Rajasthan
Revenue Own Tax 9505.49 10700.69 12547.14 14826.21 17329.20 23147.68 25573.93 29023.09
Own Non-Tax 2976.85 3352.65 3089.66 3702.13 4172.08 5733.45 7551.48 8997.33
Own Revenue 12482.34 14053.34 15636.80 18528.34 21501.28 28881.13 33125.41 38020.42
Other Revenue 4314.10 5272.10 5501.12 5224.24 6881.59 11003.51 11717.05 12984.09
Total Revenue 16796.44 19325.44 21137.92 23752.58 28382.87 39884.64 44842.46 51004.51
Expenditure Exp. on Core
Services 11092.26 12497.15 14648.11 16734.16 18734.51 24734.08 31382.49 34973.17
Other Expenditure 5020.13 5591.57 6383.54 7252.75 7957.45 9623.18 12280.29 13929.28
Total Expenditure 16112.39 18088.72 21031.65 23986.91 26691.96 34357.26 43662.78 48902.45

21.Sikkim ULBs do not exist.

22.Tamil Nadu
Revenue Own Tax 9775.31 11258.61 12697.18 16738.11 21516.87 28182.18 27145.54 33516.02
Own Non-Tax 8432.26 8656.80 8187.77 10156.64 14022.39 15407.01 20178.52 32362.61
Own Revenue 18207.57 19915.41 20884.95 26894.75 35539.26 43589.19 47324.06 65878.63
Other Revenue 14739.02 18365.92 20784.75 20866.09 24508.25 28882.34 39352.35 56630.60
Total Revenue 32946.59 38281.33 41669.70 47760.84 60047.51 72471.53 86676.41 122509.23
Expenditure Exp. on Core
Services 13739.14 16852.67 18294.61 22391.30 24391.71 29994.25 34737.92 52104.75
Other Expenditure 20990.65 24571.64 31538.69 38166.80 44191.46 44682.21 62710.29 73087.15
Total Expenditure 34729.79 41424.31 49833.30 60558.10 68583.17 74676.46 97448.21 125191.90

23.Tripura
Revenue Own Tax 20.17 19.04 21.43 20.03 27.12 29.92 43.91 51.61
Own Non-Tax 17.92 29.37 60.24 21.34 32.50 63.01 71.31 69.42
Own Revenue 38.09 48.41 81.67 41.37 59.62 92.93 115.22 121.03
Other Revenue 377.03 323.56 349.23 265.03 449.67 661.83 859.63 600.32
Total Revenue 415.12 371.97 430.90 306.40 509.29 754.76 974.85 721.35
Expenditure Exp. on Core
Services 154.09 188.73 231.88 113.66 147.36 196.63 254.63 243.17
Other Expenditure 401.62 490.00 379.32 340.21 492.15 528.26 1058.68 812.51
Total Expenditure 555.71 678.73 611.20 453.87 639.51 724.89 1313.31 1055.68
 249
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98

24.Uttar Pradesh
Revenue Own Tax 3322.74 4246.86 4443.75 5394.96 5442.42 5749.91 6151.30 6766.43
Own Non-Tax 8778.82 5957.32 6435.80 6976.22 7226.56 8674.77 9564.90 10466.39
Own Revenue 12101.56 10204.18 10879.55 12371.18 12668.98 14424.68 15716.20 17232.82
Other Revenue 20532.99 26413.49 28699.43 28622.46 31052.54 34314.82 41186.31 45454.61
Total Revenue 32634.55 36617.67 39578.98 40993.64 43721.52 48739.50 56902.51 62687.43
Expenditure Exp. on Core
Services 8323.41 7719.33 8658.49 9360.12 9603.13 7668.01 12483.79 13426.96
Other Expenditure 23944.37 27848.99 30780.38 34262.97 36045.99 37280.87 44282.40 47160.22
Total Expenditure 32267.78 35568.32 39438.87 43623.09 45649.12 44948.88 56766.19 60587.18

25.West Bengal
Revenue ** Own Tax 1746.00 2000.84 2620.61 3297.17 3224.04 INF INF INF
Own Non-Tax 1401.66 1523.58 1690.59 1948.97 2014.19 INF INF INF
Own Revenue 3147.66 3524.42 4311.20 5246.14 45953.16 50883.10 56301.40 62152.20
Other Revenue 11959.00 12113.00 13829.00 16690.00 18584.00 18323.00 27271.45 29827.32
Total Revenue 15106.66 15637.42 18140.20 21936.14 64537.16 69206.10 83572.85 91979.52
Expenditure# Exp. on Core
Services 4448.42 3731.58 4200.15 6422.11 5288.30 5905.41 8915.13 9801.29
Other Expenditure 17006.33 18776.54 19802.39 23738.92 25342.94 29046.51 33479.79 28310.26
Total Expenditure 21454.75 22508.12 24002.54 30161.03 30631.24 34951.92 42394.92 38111.55

Total (All States)

Revenue Own Tax 193460.31 229863.47 263890.53 317549.54 390065.79 445450.99 510084.68 589169.70
Own Non-Tax 80118.23 87922.75 95750.71 116632.11 131657.39 148445.95 174663.76 212725.32
Own Revenue 273578.51 317786.22 359641.23 435616.40 563234.29 640425.22 737375.24 759937.06
Other Revenue 119496.46 140159.36 156611.95 171787.04 206252.61 234373.97 297936.66 360813.76
Total Revenue 393074.97 457945.58 516253.18 605968.69 768690.72 873317.91 1032525.10 1217878.78
Expenditure Exp. on Core
Services 998774.89 738098.03 790955.90 1171744.00 1208273.46 1576966.62 4338827.36 10122360.89
Other
Expenditure 1440745.39 1688014.81 1716095.57 2395572.18 2877434.63 3137380.86 3582378.54 5008481.74
Total
Expenditure 2439520.27 2426112.84 2507051.47 3567316.18 4085708.09 4714347.48 7921205.90 15130842.63

Source: State Governments.

Core Services (water supply, street lighting, sanitation, roads and burials and burial grounds).
* Since large discrepancies were noticed in the figures for own revenue of ULBs furnished by the State Government, the own revenue figures of
the ULBs for the years 1990-91 to 1997-98 have been worked out on the basis of figures for the years 1990-91 and 1994-95 noted in the SFC
Report and applying thereto the annual growth rates indicated in the SFC Report.
# Excludes information in respect of Calcutta and Howrah Municipal Corporations as the same has not been furnished.
** Information in respect of Calcutta and Howrah Municipal Corporations available for own revenue ( without break-up of tax and non-tax) for the
years 1995-96, 1996-97 and 1997-98.
INF: Information not furnished.
 250
Annexure VIII.3B

Statement of Revenue and Expenditure of Nagar Panchayats

(Para 8.25)
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98

1.Andhra Pradesh
Revenue Own Tax Information not furnished . 240.17 243.69 328.93 305.81 317.95
Own Non-Tax 81.42 61.90 105.98 110.79 116.66
Own Revenue 321.59 305.59 434.91 416.60 434.61
Other Revenue 505.40 479.75 599.25 554.93 649.71
Total Revenue 826.99 785.34 1034.16 971.53 1084.32
Expenditure Exp. on Core Services 124.62 144.30 160.22 140.58 218.24
Other Expenditure 570.75 721.12 752.62 819.13 893.48
Total Expenditure 695.37 865.42 912.84 959.71 1111.72

2.Arunachal Pradesh Nagar Panchayats do not exist.

3.Assam
Revenue Own Tax 68.26 75.65 84.00 81.77 99.72 130.98 126.54 110.44
Own Non-Tax 124.00 124.13 161.82 171.35 193.81 169.30 134.34 157.35
Own Revenue 192.26 199.78 245.82 253.12 293.53 300.28 260.88 267.79
Other Revenue 23.60 14.75 21.14 20.53 16.36 184.99 292.27 401.36
Total Revenue 215.86 214.53 266.96 273.65 309.89 485.27 553.15 669.15
Expenditure Exp. on Core
Services 153.40 151.10 170.28 189.50 260.40 317.48 439.58 461.16
Other Expenditure 314.75 334.52 332.32 365.50 415.65 420.34 503.86 567.69
Total Expenditure 468.15 485.62 502.60 555.00 676.05 737.82 943.44 1028.85

4.Bihar
Revenue Own Tax Information not furnished .
Own Non-Tax
Own Revenue Information not furnished. 145.58 78.50 133.26 143.06 148.24
Other Revenue Information not furnished.
Total Revenue
Expenditure Exp. on Core Services
Other Expenditure
Total Expenditure

5.Goa Nagar Panchayats do not exist.

6.Gujarat Information included with Municipalities.

7.Haryana Nagar Panchayats do not exist.

8.Himachal Pradesh
Revenue Own Tax 53.37 59.45 61.49 66.83 73.52 82.20 86.64 205.41
Own Non-Tax 124.52 138.73 143.49 155.94 171.55 191.80 201.83 479.30
Own Revenue 177.89 198.18 204.98 222.77 245.07 274.00 288.47 684.71
Other Revenue 67.96 71.74 75.98 85.87 102.34 175.18 303.93 327.92
Total Revenue 245.85 269.92 280.96 308.64 347.41 449.18 592.40 1012.63
Expenditure Exp. on Core
Services 82.10 85.45 93.20 104.17 96.97 100.17 100.23 101.68
Other Expenditure 173.58 194.95 223.41 231.66 257.41 317.58 365.66 866.19
Total Expenditure 255.68 280.40 316.61 335.83 354.38 417.75 465.89 967.87

9.Jammu & Kashmir

Revenue Own Tax 29.08 31.43 47.97 34.60 79.15 91.25 151.61 138.53
Own Non-Tax 27.98 35.18 53.88 53.76 68.54 89.88 83.20 135.95
Own Revenue 57.06 66.61 101.85 88.36 147.69 181.13 234.81 274.48
Other Revenue 330.98 391.98 496.46 301.60 805.23 611.89 808.75 1437.99
Total Revenue 388.04 458.59 598.31 389.96 952.92 793.02 1043.56 1712.47
Expenditure Exp. on Core
Services 52.72 509.26 349.64 79.54 369.94 483.94 1188.68 1053.82
Other Expenditure 701.64 1304.90 1169.66 967.35 1612.45 1845.23 3123.87 3977.90
Total Expenditure 754.36 1814.16 1519.30 1046.89 1982.39 2329.17 4312.55 5031.72
 251
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
10.Karnataka
Revenue Own Tax 104.95 81.07 83.58 83.13 158.04 580.31 718.98 867.17
Own Non-Tax 37.72 31.75 48.47 51.67 100.34 159.92 211.79 190.90
Own Revenue 142.67 112.82 132.05 134.80 258.38 740.23 930.77 1058.07
Other Revenue 104.44 117.14 106.21 131.30 143.19 813.02 757.18 1165.94
Total Revenue 247.11 229.96 238.26 266.10 401.57 1553.25 1687.95 2224.01
Expenditure Exp. on Core
Services 80.44 104.80 89.10 113.06 188.35 588.63 828.17 987.74
Other Expenditure 259.97 156.80 230.72 267.51 424.27 1349.92 1931.59 2432.75
Total Expenditure 340.41 261.60 319.82 380.57 612.62 1938.55 2759.76 3420.49
11.Kerala Nagar Panchayats do not exist.

12.Madhya Pradesh
Revenue Own Tax 856.53 870.57 948.52 1026.72 2565.30 634.99 677.41 826.43
Own Non-Tax 121.62 131.50 138.01 158.00 162.30 169.77 225.07 266.77
Own Revenue 978.15 1002.07 1086.53 1184.72 2727.60 804.76 902.48 1093.20
Other Revenue 2086.89 2209.75 2379.83 2690.61 2940.32 5473.25 6736.17 6785.05
Total Revenue 3065.04 3211.82 3466.36 3875.33 5667.92 6278.01 7638.65 7878.25
Expenditure Exp. on Core
Services 1095.18 1279.15 1339.73 1445.71 2599.67 3146.77 3626.80 3572.10
Other Expenditure1670.86 1937.32 2137.87 2437.02 2863.35 3160.16 4444.07 4665.52
Total Expenditure 2766.04 3216.47 3477.60 3882.73 5463.02 6306.93 8070.87 8237.62

13.Maharashtra Nagar Panchayats do not exist.

14.Manipur
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.14 0.21 0.49 0.50 0.58 1.31 0.31 0.32
Own Revenue 0.14 0.21 0.49 0.50 0.58 1.31 0.31 0.32
Other Revenue 27.77 37.10 25.28 23.99 33.08 19.89 50.13 50.58
Total Revenue 27.91 37.31 25.77 24.49 33.66 21.20 50.44 50.90
Expenditure Exp. on Core Services 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Expenditure 31.68 39.17 27.27 26.84 38.22 20.36 32.13 31.46
Total Expenditure 31.68 39.17 27.27 26.84 38.22 20.36 32.13 31.46

15.Meghalaya Nagar Panchayats do not exist.

16.Mizoram Nagar Panchayats do not exist.
17.Nagaland
Revenue Own Tax 0.46 0.56 0.59 0.00 0.63 0.74
Own Non-Tax 8.63 9.35 9.53 2.33 11.43 3.10 16.88 12.41
Own Revenue 9.09 9.91 10.12 2.33 12.06 3.84 16.88 12.41
Other Revenue 0.00 0.00 0.00 0.00 12.25 12.86 12.86 12.86
Total Revenue 9.09 9.91 10.12 2.33 24.31 16.70 29.74 25.27
Expenditure Exp. on Core Services 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Other Expenditure 33.51 37.04 41.47 46.31 67.56 75.16 86.03 89.33
Total Expenditure 33.51 37.04 41.47 46.31 67.56 75.16 86.03 89.33
18.Orissa
Revenue Own Tax 731.49 973.99 1246.15 1052.01 1048.20 1094.23 1076.84 1452.51
Own Non-Tax 202.09 246.88 257.34 309.07 314.01 301.37 234.82 264.41
Own Revenue 933.58 1220.87 1503.49 1361.08 1362.21 1395.60 1311.66 1716.92
Other Revenue 436.16 487.87 614.66 743.43 793.73 868.13 1165.26 978.85
Total Revenue 1369.74 1708.74 2118.15 2104.51 2155.94 2263.73 2476.92 2695.77
Expenditure Exp. on Core
Services 585.26 732.56 846.60 801.60 842.56 902.27 991.77 1052.01
Other Expenditure 1220.26 1469.97 1848.26 1978.92 2067.46 2229.96 2651.00 2622.55
Total Expenditure 1805.52 2202.53 2694.86 2780.52 2910.02 3132.23 3642.77 3674.56
19.Punjab
Revenue Own Tax 331.54 387.86 419.06 473.70 542.70 621.08 765.46 879.90
Own Non-Tax 232.72 238.54 255.63 264.46 307.31 319.74 359.57 391.74
Own Revenue 564.26 626.40 674.69 738.16 850.01 940.82 1125.03 1271.64
Other Revenue 314.25 239.85 510.60 591.80 416.05 407.13 499.09 358.89
Total Revenue 878.51 866.25 1185.29 1329.96 1266.06 1347.95 1624.12 1630.53
Expenditure Exp. on Core Services 58.54 88.51 99.72 115.83 147.20 157.36 192.49 226.58
Other Expenditure 350.04 365.51 460.84 600.22 661.53 824.81 1022.62 1171.43
Total Expenditure 408.58 454.02 560.56 716.05 808.73 982.17 1215.11 1398.01
 252
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
20.Rajasthan
Revenue Own Tax 3414.42 3836.05 4825.05 5282.55 6314.52 8346.55 9164.93 10897.22
Own Non-Tax 1961.60 2164.95 1690.66 2260.93 2099.62 3012.52 3269.81 4059.97
Own Revenue 5376.02 6001.00 6515.71 7543.48 8414.14 11359.07 12434.74 14957.19
Other Revenue 2593.63 3174.05 3072.73 3213.52 3803.10 7969.85 7220.53 7685.88
Total Revenue 7969.65 9175.05 9588.44 10757.00 12217.24 19328.92 19655.27 22643.07
Expenditure Exp. on Core
Services 5149.30 5851.88 6962.24 7649.37 8416.52 12049.25 15872.03 17461.41
Other Expenditure1994.93 2267.00 2728.51 2968.15 3255.06 3976.91 4876.40 5579.31
Total Expenditure 7144.23 8118.88 9690.75 10617.52 11671.58 16026.16 20748.43 23040.72

21.Sikkim Nagar Panchayats do not exist.

22.Tamil Nadu
Revenue Own Tax 1801.71 2001.79 1838.99 3214.95 3034.11 3815.34 4033.67 4793.03
Own Non-Tax 360.47 399.97 446.78 478.50 661.94 2270.81 2815.13 3316.77
Own Revenue 2162.18 2401.76 2285.77 3693.45 3696.05 6086.15 6848.80 8109.80
Other Revenue 3577.60 3965.71 5281.30 5454.57 5977.82 8577.58 10876.15 24818.36
Total Revenue 5739.78 6367.47 7567.07 9148.02 9673.87 14663.73 17724.95 32928.16
Expenditure Exp. on Core
Services 2875.26 3183.60 3687.29 4382.67 4733.88 7321.20 9315.51 16477.47
Other Expenditure 2773.28 3090.85 3722.20 4579.61 5030.62 8482.84 10179.75 13045.60
Total Expenditure 5648.54 6274.45 7409.49 8962.28 9764.50 15804.04 19495.26 29523.07

23.Tripura
Revenue Own Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Non-Tax 0.03 0.04 0.07 0.13 0.13 0.17 0.22 0.25
Own Revenue 0.03 0.04 0.07 0.13 0.13 0.17 0.22 0.25
Other Revenue 1.84 2.20 1.33 1.16 3.24 2.89 7.30 4.43
Total Revenue 1.87 2.24 1.40 1.29 3.37 3.06 7.52 4.68
Expenditure Exp. on Core Services 38.00 30.00 35.60 32.20 38.55 46.55 48.50 56.40
Other Expenditure 300.95 277.96 198.66 183.69 376.53 342.26 747.22 535.36
Total Expenditure 338.95 307.96 234.26 215.89 415.08 388.81 795.72 591.76

24.Uttar Pradesh
Revenue Own Tax 163.94 187.40 186.44 290.91 271.52 363.94 452.12 497.33
Own Non-Tax 854.01 1005.88 949.41 1121.60 1362.65 1450.62 1734.10 1904.89
Own Revenue 1017.95 1193.28 1135.85 1412.51 1634.17 1814.56 2186.22 2402.22
Other Revenue 2037.83 1589.79 2487.07 1860.54 1891.87 2117.96 3845.51 4400.69
Total Revenue 3055.78 2783.07 3622.92 3273.05 3526.04 3932.52 6031.73 6802.91
Expenditure Exp. on Core
Services 929.11 1024.72 1202.03 1102.74 1114.52 969.76 1716.39 1855.07
Other Expenditure 2058.36 2217.83 2668.22 2610.99 2687.15 2911.12 3845.39 4229.94
Total Expenditure 2987.47 3242.55 3870.25 3713.73 3801.67 3880.88 5561.78 6085.01

25.West Bengal
Revenue Own Tax 1.65 1.85 2.10 2.55 6.04 8.40 8.50 8.70
Own Non-Tax 1.71 2.02 2.41 3.02 3.34 2.70 2.90 3.50
Own Revenue 3.36 3.87 4.51 5.57 9.38 11.10 11.40 12.20
Other Revenue 87.00 89.00 101.00 122.00 136.00 134.00 201.45 219.82
Total Revenue 90.36 92.87 105.51 127.57 145.38 145.10 212.85 232.02
Expenditure Exp. on Core Services 0.00 0.00 0.00 0.00 0.00 0.00 87.32 98.83
Other Expenditure 7.82 8.65 8.91 13.18 17.14 116.25 150.52 170.93
Total Expenditure 7.82 8.65 8.91 13.18 17.14 116.25 237.84 269.76
Total (All States)
Revenue Own Tax 7557.43 8507.67 9743.94 11849.89 14437.14 16098.94 17568.51 20994.62
Own Non-Tax 4057.24 4529.13 4157.99 5112.68 5519.45 8248.99 9400.76 11301.19
Own Revenue 11614.64 13036.80 13901.93 17108.15 20035.09 24481.19 27112.33 32444.05
Other Revenue 11689.95 12390.93 15173.59 15746.32 17554.33 27967.87 33331.51 49298.33
Total Revenue 23304.59 25427.73 29075.52 32708.89 37510.92 52315.80 60300.78 81594.14
Expenditure Exp. on Core
Services 11099.31 13041.03 14875.43 16141.01 18952.86 26243.60 34548.05 43622.51
Other Exp. 11891.63 13702.47 15798.32 17847.70 20495.52 26825.52 34779.24 40879.44
Total Expenditure 22990.94 26743.50 30673.75 33988.71 39448.38 53069.12 69327.29 84501.95
Source: State Governments.
Core Services (water supply, street lighting, sanitation, roads and burials and burial grounds).
 253
Annexure VIII.3C

Statement of Revenue and Expenditure of Municipalities

(Para 8.25)
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98

1.Andhra Pradesh
Revenue Own Tax Information not furnished . 6333.91 6831.55 8471.90 9117.48 8793.59
Own Non-Tax 1886.71 2658.32 3153.98 3826.44 6225.65
Own Revenue 8220.62 9489.87 11625.88 12943.92 15019.24
Other Revenue 11174.18 12341.85 13430.16 14808.78 17135.49
Total Revenue 19394.80 21831.72 25056.04 27752.70 32154.73
Expenditure Exp. on Core Services 3194.50 3845.89 4641.92 5296.22 5748.15
Other Expenditure 13938.79 17038.71 18229.71 21002.18 23440.13
Total Expenditure 17133.29 20884.60 22871.63 26298.40 29188.28

2.Arunachal Pradesh Municipalities do not exist.

3.Assam
Revenue Own Tax 69.98 82.81 139.16 131.49 170.15 223.63 220.26 178.04
Own Non-Tax 338.40 332.42 359.77 380.86 430.95 376.64 298.56 349.95
Own Revenue 408.38 415.23 498.93 512.35 601.10 600.27 518.82 527.99
Other Revenue 11.54 11.54 11.90 10.97 7.76 347.70 618.93 996.54
Total Revenue 419.92 426.77 510.83 523.32 608.86 947.97 1137.75 1524.53
Expenditure Exp. on Core
Services 196.51 214.37 251.73 341.50 429.96 593.53 762.16 814.81
Other Expenditure 319.76 353.24 392.99 468.17 590.27 464.83 752.83 768.39
Total Expenditure 516.27 567.61 644.72 809.67 1020.23 1058.36 1514.99 1583.20

4.Bihar
Revenue Own Tax Information not furnished.
Own Non-Tax
Own Revenue Information not furnished. 667.83 527.86 851.56 987.89 1094.67
Other Revenue Information not furnished.
Total Revenue
Expenditure Exp. on Core Services
Other Expenditure
Total Expenditure

5.Goa
Revenue Own Tax 141.46 170.18 187.05 184.15 239.45 262.70 329.53 442.92
Own Non-Tax 77.11 100.67 170.70 168.10 177.82 209.04 258.65 258.91
Own Revenue 218.57 270.85 357.75 352.25 417.27 471.74 588.18 701.83
Other Revenue 332.51 458.74 634.23 505.77 560.12 661.13 546.91 893.73
Total Revenue 551.08 729.59 991.98 858.02 977.39 1132.87 1135.09 1595.56
Expenditure Exp. on Core
Services 110.46 142.64 227.34 185.78 202.42 260.79 322.26 379.96
Other Expenditure 439.23 525.35 543.83 680.62 716.80 827.97 1022.05 1326.55
Total Expenditure 549.69 667.99 771.17 866.40 919.22 1088.76 1344.31 1706.51

6.Gujarat
Revenue Own Tax 5600.76 6470.57 6908.51 8145.76 10726.67 12793.74 12839.47 14196.78
Own Non-Tax 1716.99 1832.41 2085.46 2768.09 2561.87 3385.46 3369.35 4247.43
Own Revenue 7317.75 8302.98 8993.97 10913.85 13288.54 16179.20 16208.81 18444.22
Other Revenue 5723.89 5548.34 8893.54 7231.41 11070.18 9752.31 8894.56 15666.84
Total Revenue 13041.64 13851.32 17887.51 18145.26 24358.72 25931.51 25103.37 34111.06
Expenditure Exp. on Core
Services 5625.09 6760.46 7478.41 8194.50 9921.19 11020.56 13613.66 16160.71
Other Expenditure 8166.54 9765.58 10936.08 10955.64 13947.94 17199.65 19328.31 20800.68
Total Expenditure 13791.63 16526.04 18414.49 19150.14 23869.13 28220.21 32941.97 36961.39
 254
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
7.Haryana
Revenue Own Tax 2313.00 4198.00 3540.00 2875.00 3003.00 3648.00 3702.00 4205.00
Own Non-Tax 1134.00 2290.00 2683.00 2545.00 2980.00 2914.00 2508.00 3228.00
Own Revenue 3447.00 6488.00 6223.00 5420.00 5983.00 6562.00 6210.00 7433.00
Other Revenue 1624.00 2692.00 800.39 979.57 1329.76 2669.61 6177.00 3845.00
Total Revenue 5071.00 9180.00 7023.39 6399.57 7312.76 9231.61 12387.00 11278.00
Expenditure Exp. on Core
Services 5472.00 10263.69 10138.69 8872.08 6619.94 8192.23 13237.55 10007.60
Other Expenditure 10253.00 10400.76 10720.99 11433.09 11209.01 11150.70 14333.74 13294.69
Total Expenditure 15725.00 20664.45 20859.68 20305.17 17828.95 19342.93 27571.29 23302.29

8.Himachal Pradesh
Revenue Own Tax 168.84 173.36 179.52 189.96 229.84 239.85 358.97 402.22
Own Non-Tax 99.16 101.81 105.02 111.57 134.98 140.87 210.82 236.23
Own Revenue 268.00 275.17 284.54 301.53 364.82 380.72 569.79 638.45
Other Revenue 171.68 246.84 223.43 359.77 375.73 447.73 949.13 1037.39
Total Revenue 439.68 522.01 507.97 661.30 740.55 828.45 1518.92 1675.84
Expenditure Exp. on Core
Services 143.81 154.81 160.92 170.28 204.19 209.31 332.23 570.40
Other Expenditure 287.76 312.45 346.93 413.25 457.35 487.80 603.23 801.58
Total Expenditure 431.57 467.26 507.85 583.53 661.54 697.11 935.46 1371.98

9.Jammu & Kashmir

Revenue Own Tax Break-up of tax and non-tax not furnished.
Own Non-Tax
Own Revenue 23.39 46.29 38.00 40.69 38.35 43.99 45.80 48.00
Other Revenue 660.40 681.41 1127.75 1114.26 1159.80 1407.17 1690.90 1940.48
Total Revenue 683.79 727.70 1165.75 1154.95 1198.15 1451.16 1736.70 1988.48
Expenditure Exp. on Core
Services 75.21 348.94 106.37 91.70 81.38 173.73 99.83 141.87
Other Expenditure 1608.15 1105.48 1370.58 1413.24 1378.87 1700.92 1972.29 2331.75
Total Expenditure 1683.36 1454.42 1476.95 1504.94 1460.25 1874.65 2072.12 2473.62

10.Karnataka
Revenue Own Tax 2116.71 2470.56 2564.48 2736.50 3380.42 3445.51 5466.96 4960.70
Own Non-Tax 662.26 1289.13 1158.06 5127.20 2232.57 1863.38 1839.59 1891.09
Own Revenue 2778.97 3759.69 3722.54 7863.70 5612.99 5308.89 7306.55 6851.79
Other Revenue 2280.13 2773.13 2522.64 3159.51 3140.13 4340.92 4702.70 6869.60
Total Revenue 5059.10 6532.82 6245.18 11023.21 8753.12 9649.81 12009.25 13721.39
Expenditure Exp. on Core
Services 1942.89 2263.41 2442.05 2491.51 2670.74 4188.34 4265.25 6775.03
Other Expenditure 4366.49 5065.09 5112.91 6883.00 5874.65 7290.38 8874.97 6349.27
Total Expenditure 6309.38 7328.50 7554.96 9374.51 8545.39 11478.72 13140.22 13124.30
11.Kerala
Revenue Own Tax 2380.13 2680.70 2800.82 3287.41 3324.04 3651.35 4025.96 4434.28
Own Non-Tax 1044.02 1115.18 1370.51 1556.26 1842.26 2008.99 2395.80 2767.44
Own Revenue 3424.15 3795.88 4171.33 4843.67 5166.30 5660.34 6421.76 7201.72
Other Revenue 1868.85 2090.72 2150.05 2378.18 2915.43 5176.88 8787.97 10317.09
Total Revenue 5293.00 5886.60 6321.38 7221.85 8081.73 10837.22 15209.73 17518.81
Expenditure Exp. on Core
Services 1665.31 1898.87 2104.87 2399.13 2851.55 3241.23 3847.38 5181.88
Other Expenditure 4316.97 4746.54 5247.51 6112.49 6502.86 7126.02 10445.75 12616.09
Total Expenditure 5982.28 6645.41 7352.38 8511.62 9354.41 10367.25 14293.13 17797.97
12.Madhya Pradesh
Revenue Own Tax 1532.34 3198.50 1763.64 2081.81 2510.86 2062.65 2374.71 2867.97
Own Non-Tax 247.74 256.73 295.26 300.28 364.49 245.71 416.95 378.50
Own Revenue 1780.08 3455.23 2058.90 2382.09 2875.35 2308.36 2791.66 3246.47
Other Revenue 2895.67 3034.43 3440.89 3909.82 4260.51 5504.51 7758.14 8057.02
Total Revenue 4675.75 6489.66 5499.79 6291.91 7135.86 7812.87 10549.80 11303.49
Expenditure Exp. on Core
Services 2279.22 2847.76 3039.80 3499.02 3765.62 4996.88 4706.35 6588.81
Other Expenditure 2929.70 3345.38 3576.00 3528.17 4756.24 5596.05 6575.57 7491.72
Total Expenditure 5208.92 6193.14 6615.80 7027.19 8521.86 10592.93 11281.92 14080.53
 255
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
13.Maharashtra*
Revenue Own Tax 18343.00 21840.85 26006.42 30967.32 36779.00 43795.60 52152.24 62105.12
Own Non-Tax 1740.00 2165.02 2704.74 3393.23 4081.00 5165.10 6566.61 8386.18
Own Revenue 20083.00 24005.87 28711.16 34360.55 40860.00 48960.70 58718.86 70491.30
Other Revenue 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Total Revenue 20083.00 24005.87 28711.16 34360.55 40860.00 48960.70 58718.86 70491.30
Expenditure Exp. on Core
Services 99964.88 130623.57 161431.52 177823.26 165420.86 202486.77 238697.90 263315.94
Other Exp. 397383.81 427862.89 424681.37 524831.56 444749.38 682533.85 777404.55 1456705.33
Total Expenditure497348.69 558486.46 586112.89 702654.82 610170.24 885020.62 1016102.45 1720021.27

14.Manipur
Revenue Own Tax 18.10 34.01 83.37 82.28 96.82 82.69 116.50 223.91
Own Non-Tax 28.95 25.19 27.35 37.18 30.99 29.33 46.88 37.97
Own Revenue 47.05 59.20 110.72 119.46 127.81 112.02 163.38 261.88
Other Revenue 1371.34 34.39 21.76 3.99 28.82 49.19 66.56 76.26
Total Revenue 1418.39 93.59 132.48 123.45 156.63 161.21 229.94 338.14
Expenditure Exp. on Core
Services 12.42 10.96 5.80 6.58 10.21 14.44 13.92 16.23
Other Expenditure 157.81 128.40 121.15 136.16 198.76 220.47 277.99 235.50
Total Expenditure 170.23 139.36 126.95 142.74 208.97 234.91 291.91 251.73
15.Meghalaya
Revenue Own Tax 11.87 11.80 17.27 19.88 16.08 21.96 15.17 25.59
Own Non-Tax 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
Own Revenue 11.87 11.80 17.27 19.88 16.08 21.96 15.17 25.59
Other Revenue 188.15 286.96 272.23 297.48 214.92 351.27 670.30 498.60
Total Revenue 200.02 298.76 289.50 317.36 231.00 373.23 685.47 524.19
Expenditure Exp. on Core
Services 60.84 133.07 107.68 84.06 89.79 99.47 104.57 122.96
Other Expenditure 270.30 377.83 368.89 435.86 284.65 490.03 782.52 580.77
Total Expenditure 331.14 510.90 476.57 519.92 374.44 589.50 887.09 703.73
16.Mizoram Municipalities do not exist.
17.Nagaland Municipalities do not exist.
18.Orissa
Revenue Own Tax 1242.05 1450.51 1632.06 1955.53 2098.12 2348.31 2497.72 2834.42
Own Non-Tax 395.07 458.02 603.11 500.03 657.59 786.87 814.50 852.13
Own Revenue 1637.12 1908.53 2235.17 2455.56 2755.71 3135.18 3312.22 3686.55
Other Revenue 1277.48 1605.03 1673.46 1648.15 1517.51 1603.17 1815.27 1666.14
Total Revenue 2914.60 3513.56 3908.63 4103.71 4273.22 4738.35 5127.49 5352.69
Expenditure Exp. on Core
Services 747.50 897.60 1592.50 1083.61 1206.36 1199.28 1239.25 1439.57
Other Expenditure 2718.97 3699.11 3354.24 4296.20 4291.14 4702.94 4836.66 4802.19
Total Expenditure 3466.47 4596.71 4946.74 5379.81 5497.50 5902.22 6075.91 6241.76
19.Punjab
Revenue Own Tax 5178.80 5367.58 5659.75 7047.50 6630.52 11771.40 13509.65 14403.14
Own Non-Tax 2683.23 2891.09 3049.85 3212.14 4514.25 4663.09 4987.67 5293.82
Own Revenue 7862.03 8258.67 8709.60 10259.64 11144.77 16434.49 18497.32 19696.96
Other Revenue 2297.39 1945.16 3247.00 3394.47 3654.82 3280.46 3370.70 3369.97
Total Revenue 10159.42 10203.83 11956.60 13654.11 14799.59 19714.95 21868.02 23066.93
Expenditure Exp. on Core
Services 1607.62 1651.44 1873.03 2213.22 1364.82 1529.16 1608.30 1674.39
Other Expenditure 5271.48 5936.72 6423.16 7282.13 8027.22 8986.08 10978.22 12588.07
Total Expenditure 6879.10 7588.16 8296.19 9495.35 9392.04 10515.24 12586.52 14262.46
20.Rajasthan
Revenue Own Tax 2529.31 2960.90 3382.93 3929.22 4737.02 6219.26 6636.99 7626.77
Own Non-Tax 365.18 429.56 581.14 550.57 848.43 583.09 1129.86 1299.33
Own Revenue 2894.49 3390.46 3964.07 4479.79 5585.45 6802.35 7766.85 8926.10
Other Revenue 620.58 720.44 716.96 723.91 997.46 1577.70 2657.71 3413.17
Total Revenue 3515.07 4110.90 4681.03 5203.70 6582.91 8380.05 10424.56 12339.27
Expenditure Exp. on Core
Services 2494.89 2771.02 3212.67 3856.42 4239.43 5072.19 6505.22 7155.73
Other Expenditure 1058.94 1200.85 1277.01 1455.32 1717.85 2152.70 2677.43 2944.67
Total Expenditure 3553.83 3971.87 4489.68 5311.74 5957.28 7224.89 9182.65 10100.40
 256
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
21.Sikkim Municipalities do not exist.

22.Tamil Nadu
Revenue Own Tax 3767.08 3938.51 4457.09 4982.26 7529.28 12179.29 7941.53 9143.51
Own Non-Tax 3618.98 3532.35 2542.49 4307.21 4476.27 4696.01 6973.43 6137.27
Own Revenue 7386.06 7470.86 6999.58 9289.47 12005.55 16875.30 14914.96 15280.78
Other Revenue 4417.63 4869.87 5499.76 4590.73 6869.60 7098.75 9358.53 11296.90
Total Revenue 11803.69 12340.73 12499.34 13880.20 18875.15 23974.05 24273.49 26577.68
Expenditure Exp. on Core
Services 4031.29 5402.70 5702.69 7838.63 7733.46 8643.43 10276.69 13787.25
Other Expenditure 8915.44 11322.78 12806.76 12209.77 14077.04 13620.98 24425.20 25575.63
Total Expenditure 12946.73 16725.48 18509.45 20048.40 21810.50 22264.41 34701.89 39362.88

23.Tripura
Revenue Own Tax 20.17 19.04 21.43 20.03 27.12 29.92 43.91 51.61
Own Non-Tax 17.89 29.33 60.17 21.21 32.37 62.84 71.09 69.17
Own Revenue 38.06 48.37 81.60 41.24 59.49 92.76 115.00 120.78
Other Revenue 375.19 321.36 347.90 263.87 446.43 658.94 852.33 595.89
Total Revenue 413.25 369.73 429.50 305.11 505.92 751.70 967.33 716.67
Expenditure Exp. on Core
Services 116.09 158.73 196.28 81.46 108.81 150.08 206.13 186.77
Other Expenditure 100.67 212.04 180.66 156.52 115.62 186.00 311.46 277.15
Total Expenditure 216.76 370.77 376.94 237.98 224.43 336.08 517.59 463.92

24.Uttar Pradesh
Revenue Own Tax 1647.50 1966.60 2152.96 2538.14 2140.07 2305.96 2375.83 2613.41
Own Non-Tax 4198.41 3331.84 3407.44 3829.66 3244.59 3988.35 4086.68 4452.11
Own Revenue 5845.91 5298.44 5560.40 6367.80 5384.66 6294.31 6462.51 7065.52
Other Revenue 9068.42 13692.97 13673.80 14080.81 14242.92 15582.33 17518.44 20790.63
Total Revenue 14914.33 18991.41 19234.20 20448.61 19627.58 21876.64 23980.95 27856.15
Expenditure Exp. on Core
Services 4199.01 4036.09 4485.49 5485.52 4298.38 3535.34 5682.25 6113.22
Other Expenditure 10888.41 13304.66 14959.23 15421.63 15694.78 15911.56 17282.33 19010.58
Total Expenditure 15087.42 17340.75 19444.72 20907.15 19993.16 19446.90 22964.58 25123.80

25.West Bengal
Revenue Own Tax 1517.62 1715.26 2262.14 2865.20 3218.00 3550.00 3780.00 3920.00
Own Non-Tax 1292.02 1399.26 1550.75 1790.60 2010.85 2275.00 2670.00 3050.00
Own Revenue 2809.64 3114.52 3812.89 4655.80 5228.85 5825.00 6450.00 6970.00
Other Revenue 10465.00 10599.00 12101.00 14605.00 16263.00 16034.00 23887.00 26130.50
Total Revenue 13274.64 13713.52 15913.89 19260.80 21491.85 21859.00 30337.00 33100.50
Expenditure Exp. on Core
Services 3292.89 3731.58 4200.15 4701.12 5288.30 5905.41 6542.77 7157.09
Other Expenditure 15634.37 17978.47 18970.21 21685.78 24267.36 27704.79 30484.62 24808.07
Total Expenditure 18927.26 21710.05 23170.36 26386.90 29555.66 33610.20 37027.39 31965.16

Total (All States)

Revenue Own Tax 48598.72 58749.74 63758.60 80373.35 93688.01 117103.72 127504.88 143428.98
Own Non-Tax 19659.41 21580.01 22754.82 32485.90 33279.60 36547.75 42470.88 49161.18
Own Revenue 68258.13 80329.75 86513.42 112859.25 126967.61 153651.47 169975.76 192590.17
Other Revenue 45673.24 51658.62 57396.69 70472.54 81435.10 90017.92 115177.66 134645.25
Total Revenue 113931.37 131988.37 143910.11 183331.79 208402.71 243669.39 285153.42 327235.41
Expenditure Exp. on Core
Services 134037.93 174311.71 208757.99 232613.88 220353.30 266154.09 317359.89 353338.37
Other Exp. 475087.80 517643.62 521390.50 643737.39 575896.50 826583.43 954371.90 1636748.81
Total Expenditure 609125.73 691955.33 730148.49 876351.27 796249.80 1092737.52 1271731.79 1990087.18

Source: State Governments.

Core Services (water supply, street lighting, sanitation, roads and burials and burial grounds).
* Since large discrepancies were noticed in the figures for own revenue of Municipal Councils furnished by the State Government, the own revenue
figures of the Municipal Councils for the years 1990-91 to 1997-98 have been worked out on the basis of figures for the years 1990-91 and 1994-
95 noted in the SFC Report and applying thereto the annual growth rates indicated in the SFC Report.
 257
Annexure VIII.3D

Statement of Revenue and Expenditure of Municipal Corporations

(Para 8.25)
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98

1.Andhra Pradesh
Revenue Own Tax 2185.17 2924.66 3535.70 5486.92 5593.76 7443.08 8337.84 11718.20
Own Non-Tax 1191.23 1357.93 1522.20 2399.92 3038.74 3182.19 4842.81 7284.12
Own Revenue 3376.40 4282.59 5057.90 7886.84 8632.50 10625.27 13180.65 19002.32
Other Revenue 5033.39 4793.18 6761.97 7963.06 8145.15 8956.93 11000.76 12941.80
Total Revenue 8409.79 9075.77 11819.87 15849.90 16777.65 19582.20 24181.41 31944.12
Expenditure Exp. on Core
Services 214654.63 399403.78 380114.33 673356.65 619726.58 651294.54 1658044.68 1432920.43
Other Exp. 785679.37 958889.22 950261.67 1469852.35 1983378.42 1962228.46 2199712.32 2695478.57
Total Exp. 1000334.00 1358293.00 1330376.00 2143209.00 2603105.00 2613523.00 3857757.00 4128399.00

2.Arunachal Pradesh Municipal Corporations do not exist.

3.Assam
Revenue Own Tax 304.81 339.34 434.35 568.23 423.84 483.61 450.18 531.99
Own Non-Tax 318.64 363.27 230.10 469.65 477.88 723.45 1311.90 1034.40
Own Revenue 623.45 702.61 664.45 1037.88 901.72 1207.06 1762.08 1566.39
Other Revenue 1530.08 615.70 526.08 664.80 518.00 652.00 215.00 200.00
Total Revenue 2153.53 1318.31 1190.53 1702.68 1419.72 1859.06 1977.08 1766.39
Expenditure Exp. on Core
Services 583.39 734.23 495.31 658.09 242.88 198.04 324.09 746.25
Other Expenditure 1026.96 1087.42 1312.90 1181.67 1747.16 1729.23 1885.29 1980.17
Total Expenditure 1610.35 1821.65 1808.21 1839.76 1990.04 1927.27 2209.38 2726.42

4.Bihar
Revenue Own Tax Information not furnished.
Own Non-Tax
Own Revenue Information not furnished. 1289.17 717.68 1347.66 2644.14 2723.75
Other Revenue Information not furnished.
Total Revenue
Expenditure Exp. on Core Services
Other Expenditure
Total Expenditure

5.Goa Municipal Corporations do not exist.

6.Gujarat
Revenue Own Tax 17048.21 21280.57 26418.05 30016.53 37744.29 46685.61 54012.25 57893.79
Own Non-Tax 2123.53 2451.98 1919.54 2448.94 3186.16 3741.51 3678.41 4691.94
Own Revenue 19171.74 23732.55 28337.59 32465.47 40930.45 50427.12 57690.66 62585.73
Other Revenue 6545.73 8801.17 9389.56 12056.99 11705.31 8222.62 9117.27 22513.40
Total Revenue 25717.47 32533.72 37727.15 44522.46 52635.76 58649.74 66807.93 85099.13
Expenditure Exp. on Core
Services 7011.13 8617.50 9385.95 11130.63 11283.97 14772.63 19285.99 20766.38
Other Exp. 13928.99 18268.98 19599.41 21599.12 24343.02 25615.04 25743.96 37361.48
Total Expenditure 20940.12 26886.48 28985.36 32729.75 35626.99 40387.67 45029.95 58127.86

7.Haryana
Revenue Own Tax 1125.11 1211.65 1357.32 1446.42 1942.86 2170.99 2578.85 2496.74
Own Non-Tax 32.95 130.88 189.95 306.00 370.62 582.95 359.37 477.58
Own Revenue 1158.06 1342.53 1547.27 1752.42 2313.48 2753.94 2938.22 2974.32
Other Revenue 252.83 330.92 1562.79 2035.07 2074.98 1942.03 6364.08 3570.12
Total Revenue 1410.89 1673.45 3110.06 3787.49 4388.46 4695.97 9302.30 6544.44
Expenditure Exp. on Core
Services 1827.31 2478.31 3063.74 4223.30 5785.59 6292.32 9788.22 6445.40
Other Expenditure 919.21 1384.31 2964.66 7224.70 4598.00 2785.30 8426.48 4677.88
Total Expenditure 2746.52 3862.62 6028.40 11448.00 10383.59 9077.62 18214.70 11123.28
 258
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
8.Himachal Pradesh
Revenue Own Tax 119.18 154.50 169.27 189.69 119.11 191.98 184.02 211.10
Own Non-Tax 152.01 252.67 244.64 294.72 401.85 394.83 416.86 615.42
Own Revenue 271.19 407.17 413.91 484.41 520.96 586.81 600.88 826.52
Other Revenue 44.06 46.93 52.36 56.80 146.30 177.60 403.72 435.57
Total Revenue 315.25 454.10 466.27 541.21 667.26 764.41 1004.60 1262.09
Expenditure Exp. on Core
Services 104.42 114.79 126.41 149.08 186.32 301.18 410.76 428.55
Other Expenditure 226.52 245.64 252.96 290.11 310.72 440.96 431.17 687.76
Total Expenditure 330.94 360.43 379.37 439.19 497.04 742.14 841.93 1116.31

9.Jammu & Kashmir Municipal Corporations do not exist.

10.Karnataka
Revenue Own Tax 3933.90 4283.84 5357.88 5597.61 6048.52 6139.93 6932.82 7727.07
Own Non-Tax 258.35 273.60 292.61 302.21 347.63 358.84 561.47 601.90
Own Revenue 4192.25 4557.44 5650.49 5899.82 6396.15 6498.77 7494.29 8328.97
Other Revenue 4971.98 9113.29 4556.69 7600.33 12291.46 10937.15 11808.63 17403.17
Total Revenue 9164.23 13670.73 10207.18 13500.15 18687.61 17435.92 19302.92 25732.14
Expenditure Exp. on Core
Services 2189.15 2654.68 2917.35 3390.50 3938.92 4234.92 5452.87 7418.44
Other Expenditure 7801.96 8524.86 9780.89 11494.18 12168.01 13762.59 18104.37 20622.15
Total Expenditure 9991.11 11179.54 12698.24 14884.68 16106.93 17997.51 23557.24 28040.59

11.Kerala
Revenue Own Tax 1693.10 1958.92 1881.79 1989.97 2561.43 2760.36 3098.81 3439.06
Own Non-Tax 839.43 947.64 1031.13 1010.37 625.14 671.85 719.46 754.58
Own Revenue 2532.53 2906.56 2912.92 3000.34 3186.57 3432.21 3818.27 4193.64
Other Revenue 648.55 696.93 638.15 922.01 841.51 1008.74 2481.20 4396.54
Total Revenue 3181.08 3603.49 3551.07 3922.35 4028.08 4440.95 6299.47 8590.18
Expenditure Exp. on Core
Services 1069.92 1204.22 1434.57 1695.75 1794.70 1859.02 2628.59 3265.49
Other Expenditure 2294.64 2433.46 2630.19 3447.48 3632.67 3868.38 4917.66 6198.18
Total Expenditure 3364.56 3637.68 4064.76 5143.23 5427.37 5727.40 7546.25 9463.67

12.Madhya Pradesh
Revenue Own Tax 4821.56 5489.95 5391.05 6501.02 6153.43 2770.38 3808.88 5109.79
Own Non-Tax 3350.55 3815.05 3746.29 4517.55 4276.18 3069.82 4593.05 5371.83
Own Revenue 8172.11 9305.00 9137.34 11018.57 10429.61 5840.20 8401.93 10481.62
Other Revenue 7280.52 7582.43 8697.33 9403.00 10359.31 14395.75 18472.35 18781.03
Total Revenue 15452.63 16887.43 17834.67 20421.57 20788.92 20235.95 26874.28 29262.65
Expenditure Exp. on Core
Services 5516.10 5890.04 6345.80 7940.05 8426.99 8421.44 11149.83 12511.40
Other Exp. 11781.88 13271.98 14246.93 16424.63 16939.40 18840.53 25815.52 27314.09
Total Expenditure 17297.98 19162.02 20592.73 24364.68 25366.39 27261.97 36965.35 39825.49

13.Maharashtra
Revenue Own Tax 89252.00 105245.96 124106.03 146345.84 172239.00 203104.23 239500.51 282419.00
Own Non-Tax 37362.00 42981.05 49423.33 56804.99 64531.00 74082.41 85001.89 97475.96
Own Revenue 126614.00 148227.01 173529.36 203150.82 236770.00 277187.00 324502.00 279895.00
Other Revenue 14991.22 18345.09 23470.75 15483.23 27536.85 33947.98 41861.00 47376.00
Total Revenue 141605.22 166572.10 197000.11 218634.05 264306.85 311134.62 366363.40 427270.96
Expenditure Exp. on Core
Services 602795.58 110509.54 143519.00 196622.61 291826.85 567972.84 2244312.33 8195804.75
Other Exp. 98514.85 118181.31 136728.03 148580.52 173774.73 194073.41 231920.97 450152.96
Total Expenditure 701310.43 228690.85 280247.03 345203.13 465601.58 762046.25 2476233.30 8645957.71

14.Manipur Municipal Corporations do not exist.

15. Meghalaya Municipal Corporations do not exist.
16.Mizoram Municipal Corporations do not exist.
17.Nagaland Municipal Corporations do not exist.
 259
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
18.Orissa
Revenue Own Tax 1015.86 1279.96 1431.25 1566.09 2081.22 2452.18 2512.58 2957.26
Own Non-Tax 58.20 219.56 137.89 134.40 299.48 302.16 255.25 154.55
Own Revenue 1074.06 1499.52 1569.14 1700.49 2380.70 2754.34 2767.83 3111.81
Other Revenue 523.23 418.48 377.16 371.36 382.65 471.85 1106.24 568.08
Total Revenue 1597.29 1918.00 1946.30 2071.85 2763.35 3226.19 3874.07 3679.89
Expenditure Exp. on Core
Services 416.57 650.83 451.56 664.51 813.74 794.94 1182.38 1535.84
Other Expenditure 840.16 1121.04 1204.44 1534.95 2289.92 2232.82 2623.58 2335.63
Total Expenditure 1256.73 1771.87 1656.00 2199.46 3103.66 3027.76 3805.96 3871.47

19.Punjab
Revenue Own Tax 6298.95 6838.07 7104.31 8467.32 26771.21 14196.55 15328.85 16507.83
Own Non-Tax 1777.48 1795.46 1867.48 1902.91 2576.13 2725.37 3765.76 3144.68
Own Revenue 8076.43 8633.53 8971.79 10370.23 29347.34 16921.92 19094.61 19652.51
Other Revenue 1634.26 1902.01 2128.15 2259.82 2417.05 2244.03 2635.40 2543.80
Total Revenue 9710.69 10535.54 11099.94 12630.05 31764.39 19165.95 21730.01 22196.31
Expenditure Exp. on Core
Services 2837.97 3688.23 3119.66 3266.72 2747.60 3621.89 2818.53 3356.98
Other Exp. 7121.49 7862.85 8560.72 9880.37 11069.72 12639.57 14814.95 16922.44
Total Expenditure 9959.46 11551.08 11680.38 13147.09 13817.32 16261.46 17633.48 20279.42

20.Rajasthan
Revenue Own Tax 3561.76 3903.74 4339.16 5614.44 6277.66 8581.87 9772.01 10499.10
Own Non-Tax 650.07 758.14 817.86 890.63 1224.03 2137.84 3151.81 3638.03
Own Revenue 4211.83 4661.88 5157.02 6505.07 7501.69 10719.71 12923.82 14137.13
Other Revenue 1099.89 1377.61 1711.43 1286.81 2081.03 1455.96 1838.81 1885.04
Total Revenue 5311.72 6039.49 6868.45 7791.88 9582.72 12175.67 14762.63 16022.17
Expenditure Exp. on Core
Services 3448.07 3874.25 4473.20 5228.37 6078.56 7612.64 9005.24 10356.03
Other Expenditure 1966.26 2123.72 2378.02 2829.28 2984.54 3493.57 4726.46 5405.30
Total Expenditure 5414.33 5997.97 6851.22 8057.65 9063.10 11106.21 13731.70 15761.33

21.Sikkim Municipal Corporations do not exist.

22.Tamil Nadu
Revenue Own Tax 4206.52 5318.31 6401.10 8540.90 10953.48 12187.55 15170.34 19579.48
Own Non-Tax 4452.81 4724.48 5198.50 5370.93 8884.18 8440.19 10389.96 22908.57
Own Revenue 8659.33 10042.79 11599.60 13911.83 19837.66 20627.74 25560.30 42488.05
Other Revenue 6743.79 9530.34 10003.69 10820.79 11660.83 13206.01 19117.67 20515.34
Total Revenue 15403.12 19573.13 21603.29 24732.62 31498.49 33833.75 44677.97 63003.39
Expenditure Exp. on Core
Services 6832.59 8266.37 8904.63 10170.00 11924.37 14029.62 15145.72 21840.03
Other Exp. 9301.93 10158.01 15009.73 21377.42 25083.80 22578.39 28105.34 34465.92
Total Expenditure 16134.52 18424.38 23914.36 31547.42 37008.17 36608.01 43251.06 56305.95

23.Tripura Municipal Corporations do not exist.

24.Uttar Pradesh
Revenue Own Tax 1511.30 2092.86 2104.35 2565.91 3030.83 3080.01 3323.35 3655.69
Own Non-Tax 3726.40 1619.60 2078.95 2024.96 2619.32 3235.80 3744.12 4109.39
Own Revenue 5237.70 3712.46 4183.30 4590.87 5650.15 6315.81 7067.47 7765.08
Other Revenue 9426.74 11130.73 12538.56 12681.11 14917.75 16614.53 19822.36 20263.29
Total Revenue 14664.44 14843.19 16721.86 17271.98 20567.90 22930.34 26889.83 28028.37
Expenditure Exp. on Core
Services 3195.29 2658.52 2970.97 2771.86 4190.23 3162.91 5085.15 5458.67
Other Exp. 10997.60 12326.50 13152.93 16230.35 17664.06 18458.19 23154.68 23919.70
Total Expenditure 14192.89 14985.02 16123.90 19002.21 21854.29 21621.10 28239.83 29378.37
 260
(Rs. in lakhs)
State Item 1990-91 1991-92 1992-93 1993-94 1994-95 1995-96 1996-97 1997-98
25.West Bengal
Revenue ** Own Tax 226.73 283.73 356.37 429.42
Own Non-Tax 107.93 122.30 137.43 155.35
Own Revenue 334.66 406.03 493.80 584.77 40714.93 45047.00 49840.00 55170.00
Other Revenue 1407.00 1425.00 1627.00 1963.00 2185.00 2155.00 3183.00 3477.00
Total Revenue 1741.66 1831.03 2120.80 2547.77 42899.93 47202.00 53023.00 58647.00
Expenditure# Exp. on Core
Services 1155.53 0.00 0.00 1720.99 0.00 0.00 2285.04 2545.37
Other Exp. 1364.14 789.42 823.27 2039.96 1058.44 1225.47 2844.65 3331.26
Total Expenditure 2519.67 789.42 823.27 3760.95 1058.44 1225.47 5129.69 5876.63

Total (All States)

Revenue Tax Revenue 137304.16 162606.06 190387.98 225326.31 281940.64 312248.33 365011.29 424746.10
Non-Tax
Revenue 56401.58 61813.61 68837.90 79033.53 92858.34 103649.21 122792.12 152262.95
Own Revenue 193705.74 224419.67 259225.88 305649.00 416231.59 462292.56 540287.15 534902.84
Other Revenue 62133.27 76109.81 84041.67 85568.18 107263.18 116388.18 149427.49 176870.18
Total Revenue 255839.01 300529.48 343267.55 389928.01 522777.09 577332.72 687070.90 809049.23
Expenditure Core Services 853637.65 550745.29 567322.48 922989.11 968967.30 1284568.93 3986919.42 9725400.01
Other Services 953765.96 1156668.72 1178906.75 1733987.09 2281042.61 2283971.91 2593227.40 3330853.49
Total Exp. 1807403.61 1707414.01 1746229.23 2656976.20 3250009.91 3568540.84 6580146.82 13056253.50

Source: State Governments.

Core Services (water supply, street lighting, sanitation, roads and burials and burial grounds).
* Since large discrepancies were noticed in the figures for own revenue of Municipal Corporations furnished by the State Government, the own
revenue figures of the Municipal Corporations for the years 1990-91 to 1997-98 have been worked out on the basis of figures for the years 1990-
91 and 1994-95 noted in the SFC Report and applying thereto the annual growth rates indicated in the SFC Report.
# Excludes information in respect of Calcutta and Howrah Municipal Corporations as the same has not been furnished.
** Information in respect of Calcutta and Howrah Municipal Corporations available for own revenue (without break-up of tax and non-tax) for the
years 1994-95, 1995-96, 1996-97 and 1997-98.
 261
Annexure VIII.4

Share of States in allocation for panchayats

(Para 8.27)

Share in allocation for the Panchayats as per - State-wise allocation (per year)
Revenue efforts Of which, share for-
of Panchayats
Sl. State Proportion Proportion Distance w.r.t. w.r.t. Index Compo- Total for Normal Excluded
No. of Rural of Rural from Own GSDP of site the State areas areas
Population Area highest Revenue (Primary Decen- Index
(1991) (1991) PCI+0.5 of the Sector tralisation for
s.d. State excluding State’s
mining & share
quarrying)
Weight= Weight= Weight= Weight= Weight= Weight= (%) (Rs. in (Rs. in (Rs. in
40% 10% 20% 5% 5% 20% lakhs) lakhs) lakhs)
1 2 3 4 5 6 7 8 9 10 11 12

1 Andhra Pradesh 7.755 8.730 7.250 24.090 20.688 9.196 9.503 15204.83 14376.42 828.42

2 Arunachal Pradesh 0.120 2.709 0.110 0.000 0.000 0.036 0.348 556.85 556.85 0.00

3 Assam 3.178 2.510 3.538 1.626 0.830 2.827 2.918 4668.95 4502.93 166.02

4 Bihar 11.966 5.503 15.287 0.000 0.000 7.095 9.813 15700.76 13952.88 1747.87

5 Goa 0.110 0.107 0.091 0.088 0.510 0.065 0.116 185.45 185.45 0.00

6 Gujarat 4.317 6.175 3.750 3.644 6.130 3.839 4.351 6960.87 5687.60 1273.27

7 Haryana 1.979 1.399 0.933 3.050 4.317 1.760 1.839 2941.75 2941.75 0.00

8 Himachal Pradesh 0.753 1.792 0.756 0.116 0.096 0.893 0.821 1313.38 1271.26 42.12

9 Jammu & Kashmir 0.938 3.251 0.871 0.000 0.000 0.278 0.930 1488.14 1488.14 0.00

10 Karnataka 4.955 6.066 3.953 3.364 4.074 5.876 4.926 7882.35 7882.35 0.00

11 Kerala 3.416 1.148 3.017 11.531 12.980 4.051 4.120 6592.58 6592.58 0.00

12 Madhya Pradesh 8.109 14.088 8.455 7.163 6.371 9.616 8.943 14309.39 9971.46 4337.93

13 Maharashtra 7.719 9.752 6.455 7.950 12.544 9.153 8.209 13134.58 11883.97 1250.61

14 Manipur 0.212 0.718 0.201 0.000 0.000 0.189 0.235 375.43 204.05 171.38

15 Meghalaya # 0.230 0.721 0.274 0.884 0.590 0.137 0.320 512.16 0.00 512.16

16 Mizoram # 0.059 0.666 0.021 0.001 0.000 0.018 0.098 157.11 120.68 36.43

17 Nagaland # 0.160 0.532 0.172 0.000 0.000 0.047 0.161 257.33 257.33 0.00

18 Orissa 4.374 4.954 5.196 2.859 2.290 3.890 4.320 6911.76 4889.00 2022.76

19 Punjab 2.279 1.582 0.298 4.042 3.920 2.027 1.933 3092.71 3092.71 0.00

20 Rajasthan 5.413 10.913 5.225 5.691 5.337 6.419 6.137 9818.96 8893.57 925.39

21 Sikkim 0.059 0.230 0.063 0.000 0.000 0.035 0.066 105.85 105.85 0.00

22 Tamil Nadu 5.866 4.007 5.974 3.568 6.291 6.957 5.826 9322.36 9322.36 0.00

23 Tripura 0.372 0.334 0.413 0.035 0.011 0.442 0.356 569.19 352.94 216.25

24 Uttar Pradesh 17.785 9.342 19.963 15.629 10.071 15.817 16.489 26382.67 26382.67 0.00

25 West Bengal 7.874 2.771 7.732 4.667 2.950 9.338 7.222 11554.59 11554.59 0.00

Total 100.000 100.000 100.000 100.000 100.000 100.000 100.000 160000.00 146469.395 13530.605

# The entire States of Meghalaya, Mizoram and Nagaland are excluded from the provision of Part IX as per article 243 M(2).
 262
Annexure VIII.5

Share of States in allocation for municipalities

(Para 8.27)

Share in allocation for the ULBs as per - State-wise allocation (per year)
Revenue efforts Of which, share for-
of ULBs
Sl. State Proportion Proportion Distance w.r.t. w.r.t. Index Compo- Total for Normal Excluded
No. of Urban of Urban from Own GSDP of site the State areas areas
Population Area highest Revenue (net of Decen- Index
(1991) (1991) PCI+0.5 of the Primary tralisation for
s.d. State Sector) State’s
share

Weight= Weight= Weight= Weight= Weight= Weight= (%) (Rs. in (Rs. in (Rs. in
40% 10% 20% 5% 5% 20% lakhs) lakhs) lakhs)
1 2 3 4 5 6 7 8 9 10 11 12

1 Andhra Pradesh 8.604 8.087 8.978 7.538 7.319 7.219 8.233 3293.14 3293.14 0.00

2 Arunachal Pradesh 0.053 0.000 0.050 0.000 0.000 0.015 0.034 13.67 13.67 0.00

3 Assam 1.197 1.295 1.078 0.549 0.501 1.004 1.077 430.84 412.66 18.18

4 Bihar 5.461 5.855 6.032 1.226 0.924 3.055 4.695 1877.94 1520.97 356.96

5 Goa 0.231 0.602 0.178 0.032 0.067 0.194 0.232 92.73 92.73 0.00

6 Gujarat 6.853 8.034 6.334 6.164 7.132 5.750 6.626 2650.46 2626.46 24.00

7 Haryana 1.950 1.512 1.640 0.850 1.872 2.182 1.832 732.80 732.80 0.00

8 Himachal Pradesh 0.216 0.422 0.026 0.133 0.116 0.242 0.195 77.84 77.84 0.00

9 Jammu & Kashmir 0.885 1.372 0.920 0.102 0.073 0.495 0.783 313.16 313.16 0.00

10 Karnataka 6.690 6.678 7.053 2.896 4.382 5.613 6.241 2496.39 2496.39 0.00

11 Kerala 3.695 5.263 3.566 1.874 2.493 4.133 3.762 1504.91 1504.91 0.00

12 Madhya Pradesh 7.379 12.367 7.901 3.219 4.407 8.255 7.801 3120.22 2898.90 221.32

13 Maharashtra 14.692 9.740 12.861 29.384 32.669 16.436 15.813 6325.09 6270.83 54.26

14 Manipur 0.243 0.227 0.283 0.029 0.019 0.204 0.220 87.92 80.38 7.54

15 Meghalaya 0.159 0.241 0.145 0.006 0.004 0.089 0.135 53.98 3.59 50.39

16 Mizoram 0.153 0.771 0.184 0.000 0.000 0.086 0.192 76.89 73.58 3.31

17 Nagaland 0.100 0.230 0.074 0.004 0.002 0.056 0.089 35.72 35.72 0.00

18 Orissa 2.037 3.979 1.948 0.550 0.526 1.709 1.998 799.20 639.74 159.46

19 Punjab 2.883 2.254 2.629 2.048 4.918 2.419 2.736 1094.53 1094.53 0.00

20 Rajasthan 4.843 7.607 4.964 1.905 2.028 5.418 4.971 1988.32 1943.46 44.86

21 Sikkim 0.018 0.000 0.006 0.000 0.000 0.010 0.010 4.16 4.16 0.00

22 Tamil Nadu 9.177 9.659 8.907 11.808 12.133 10.267 9.668 3867.34 3867.34 0.00

23 Tripura 0.203 0.230 0.224 0.050 0.080 0.227 0.201 80.32 80.32 0.00

24 Uttar Pradesh 13.280 8.763 14.368 5.834 5.139 14.856 12.582 5032.64 5032.64 0.00

25 West Bengal 8.999 4.814 9.651 23.800 13.196 10.067 9.874 3949.78 3949.78 0.00

Total 100.000 100.000 100.000 100.000 100.000 100.000 100.000 40000.00 39059.73 940.27
 Annexure VIII.6

Population and Geographical Area of the Fifth Schedule Areas, Sixth Schedule Areas and Hills Districts (Manipur) Areas-1991
(Para 8.27)
Sl. Total for the State Fifth Schedule Areas Sixth Schedule/ Hills Districts Areas*
No. Name of the State. Population Area (Sq.km.) Population Area (Sq.km.) Population Area (Sq.km.)
Rural Urban Total Rural Urban Total Rural Urban Total Rural Urban Total Rural Urban Total Rural Urban Total
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

1 Andhra Pradesh 48620882 17887126 66508008 269874 5171 275045 2649045 0 2649045 31485 - 31485
2 Arunachal Pradesh 753930 110628 864558 83743 0 83743
3 Assam 19926527 2487795 22414322 77610 828 78438 708572 104952 813524 15267 55 15322
4 Bihar 75021453 11353012 86374465 170133 3744 173877 8351688 2158020 10509708 45505 811 46316
5 Goa 690041 479752 1169793 3317 385 3702
6 Gujarat 27063521 14246061 41309582 190887 5137 196024 4950409 129000 5079409 28681 748 29429
7 Haryana 12408904 4054744 16463648 43245 967 44212
8 Himachal Pradesh 4721681 449196 5170877 55403 270 55673 151433 0 151433 23655 - 23655
9 Jammu & Kashmir 5879300 1839400 7718700 100510 877 101387
10 Karnataka 31069413 13907788 44977201 187521 4270 191791
11 Kerala 21418224 7680294 29098518 35498 3365 38863

263
12 Madhya Pradesh 50842333 15338837 66181170 435538 7908 443446 15413000 1088000 16501000 149119 530 149649
13 Maharashtra 48395601 30541586 78937187 301485 6228 307713 4608000 262000 4870000 46302 123 46425
14 Manipur 1331504 505645 1837149 22182 145 22327 607818 43339 651157 20082 8 20090
15 Meghalaya 1444731 330047 1774778 22275 154 22429 1444731 308098 1752829 22275 151 22426
16 Mizoram 371810 317946 689756 20588 493 21081 86207 13669 99876 3904 53 3957
17 Nagaland 1001323 208223 1209546 16432 147 16579
18 Orissa 27424753 4234983 31659736 153163 2544 155707 8026000 845000 8871000 69018 596 69614
19 Punjab 14288744 5993225 20281969 48921 1441 50362
20 Rajasthan 33938877 10067113 44005990 337375 4864 342239 3198561 227119 3425680 18876 91 18967
21 Sikkim 369451 37006 406457 7096 0 7096
22 Tamil Nadu 36781354 19077592 55858946 123882 6176 130058
23 Tripura 2335484 421721 2757205 10339 147 10486 887300 887300 7133 7133
24 Uttar Pradesh 111506372 27605915 139112287 288808 5603 294411
25 West Bengal 49370364 18707601 68077965 85674 3078 88752
Total 626976577 207883236 834859813 3091499 63942 3155441 47348136 4709139 52057275 412640.9 2899 415540 3734628 470058 4204686 68661 267 68928

* In respect of Assam, Meghalaya, Mizoram and Tripura, Sixth Schedule Areas and in respect of Manipur, Hills Districts Areas.
Source: Census, 1991 and State Governments.
 264
Annexure VIII.7

Structure and Size of Rural Local Bodies in India

[Para 8.28.h]
(As on 1.4.1998)

Sl. No. State Rural Tiers of RLBs (including ADCs) Number

Population Area (Sq. kms.)

(As per 1991 census)

1 2 3 4 5 6
1 Andhra Pradesh 48620882 269873.64 1. Gram Panchayats 21784
2. Mandal Parishads 1093
3. Zilla Parishads 22
Total 22899
2 Arunachal Pradesh 753930 83743.00 1. Gram Panchayats * 2012
2. Anchal Samitis * 78
3. Zilla Parishads* 13
Total 2103
3 Assam 19926527 77609.59 1. Gaon Panchayats 2489
2. Anchalik Panchayats 202
3a. Zilla Parishads * 21
b. Autonomous District Councils 2
Total 2714
4 Bihar 75021453 170133.45 1. Gram Panchayats 12181
2. Panchayat Samitis 726
3. Zila Parishads 55
Total 12962
5 Goa 690041 3317.33 1. Panchayats 188
2. Zilla Panchayats * 2
Total 190
6 Gujarat 27063521 190886.64 1. Village Panchayats 13547
2. Taluka Panchayats 184
3. District Panchayats 19
Total 13750
7 Haryana 12408904 43245.27 1. Gram Panchayats 5958
2. Panchayat Samitis 111
3. Zila Parishads 16
Total 6085
8 Himachal Pradesh 4721681 55403.18 1. Gram Panchayats 2922
2. Panchayat Samitis 72
3. Zila Parishads 12
Total 3006
9 Jammu & Kashmir # 5879300 100510.00 1. Halqa Panchayats 2683
Total 2683
10 Karnataka 31069413 187520.85 1. Grama Panchayats 5673
2. Taluk Panchayats 175
3. Zilla Panchayats 27
Total 5875
11 Kerala 21418224 35498.20 1. Village Panchayats 990
2. Block Panchayats 152
3. District Panchayats 14
Total 1156
12 Madhya Pradesh 50842333 435538.33 1. Gram Panchayats 31126
2. Janapad Panchayats 459
3. Zila Panchayats 45
Total 31630
 265

1 2 3 4 5 6

13 Maharashtra 48395601 301485.09 1. Village Panchayats 27611

2. Panchayat Samitis 319
3. Zilla Parishads 29
Total 27959
14 Manipur 1331504 22181.67 1a. Gram Panchayats 166
b. Village Authorities/Councils
(in Hill Areas ADCs) 2028
2a. Zilla Parishads 4
b. Hill Areas Autonomous
District Councils 6
Total 2204
15 Meghalaya 1444731 22275.18 1. Village Durbars/Councils/Committees 5629
2. Autonomous District Councils 3
Total 5632
16 Mizoram 371810 20588.00 1a. Village Councils (in non-ADC areas) 504
b. Village Councils (in ADC areas) 219
2a. Zilla Panchayats* 6
b. Autonomous District Councils 3
Total 732
17 Nagaland 1001323 16431.76 1. Village Councils 1200
Total 1200
18 Orissa 27424753 153162.78 1. Grama Panchayats 5255
2. Panchayat Samitis 314
3. Zilla Parishads 30
Total 5599
19 Punjab 14288744 48921.20 1. Gram Panchayats 11591
2. Panchayat Samitis 138
3. Zila Parishads 17
Total 11746
20 Rajasthan 33938877 337374.75 1. Panchayats 9184
2. Panchayat Samitis 237
3. Zila Parishads 32
Total 9453
21 Sikkim 369451 7096.00 1a. Gram Panchayats 157
b. Dzumsas (Traditional Institutions) 2
2. Zilla Panchayats 4
Total 163
22 Tamil Nadu 36781354 123882.41 1. Village Panchayats 12593
2. Panchayat Union Councils 385
3. District Panchayats 28
Total 13006
23 Tripura 2335484 10339.19 1a. Gram Panchayats 530
b. Villages (similar to Gram
Panchayats) in Tripura
Tribal Areas Autonomous
District Council 432
2a. Panchayat Samitis 16
b. Block Advisory Committees
(similar to Panchayat Samitis)
in Tripura Tribal Areas
Autonomous District Council 25
3a. Zilla Parishads 3
b. Autonomous District Council 1
Total 1007
 266

1 2 3 4 5 6

24 Uttar Pradesh 111506372 288807.90 1. Gram Panchayats 58620

2. Kshettra Panchayats 904
3. Zila Panchayats 83
Total 59607
25 West Bengal 49370364 85674.39 1. Gram Panchayats 3314
2. Panchayat Samitis 340
3a. Zilla Parishads 16
b.Mahakuma Parishad 1
c. Darjeeling Gorkha Hill Council 1
Total 3672
Total 624158713 3032204.86 Total No. of Village level Panchayats 232278
Total No. of Village Councils
( in ADC areas) 8310
Total No. of Intermediate level
Panchayats 5905
Total No. of Block Advisory
Committees (in ADC areas) 25
Total No. of District level Panchayats 499
Total No. of ADCs 16
Total 247033

* Proposed to be set-up.
Source: State Governments, SFC Reports and Census 1991.
# The area and population figures of Jammu and Kashmir for 1991 have been projected on the basis of growth rate of population from the 1971
Census to 1981 Census and exclude the areas under unlawful occupation of Pakistan and China.
 267
Annexure VIII.8

Structure and Size of Urban Local Bodies in India

[Para 8.28.h]
(As on 1.4.1998)

Sl. No. State Urban Levels of urban local bodies Number

Population Area (Sq. kms.)

(As per 1991 census)

1 Andhra Pradesh 17887126 5171.36 Municipal Corporations 7

Municipalities 94
Nagar Panchayats 15
Total 116
2 Arunachal Pradesh 110628 0.00 ULBs do not exist.
3 Assam 2487795 828.41 Municipal Corporations 1
Municipalities 28
Town Panchayats 50
Total 79
4 Bihar 11353012 3743.55 Municipal Corporations 6
Municipalities 70
Notified Area Committees 94
Total 170
5 Goa 479752 384.67 Municipalities 14
6 Gujarat 14246061 5137.36 Municipal Corporations 6
Municipalities 85
Nagar Panchayats 58
Total 149
7 Haryana 4054744 966.73 Municipal Corporations 1
Municipalities 81
Total 82
8 Himachal Pradesh 449196 269.82 Municipal Corporations 1
Municipal Councils 19
Nagar Panchayats 28
Total 48
9 Jammu & Kashmir # 1839400 877.00 Municipalities 2
Town Area Committees 67
Total 69
10 Karnataka 13907788 4270.15 Municipal Corporations 6
City & Town Municipal Councils 121
Town Panchayats 88
Total 215
11 Kerala 7680294 3364.80 Municipal Corporations 3
Municipalities 55
Total 58
12 Madhya Pradesh 15338837 7907.67 Municipal Corporations 18
Municipalities 103
Nagar Panchayats 283
Total 404
13 Maharashtra 30541586 6227.91 Municipal Corporations 15
Municipal Councils 229
Total 244
14 Manipur 505645 145.33 Municipal Councils 7
Nagar Panchayats 21
Total 28
 268

1 2 3 4 5 6

15 Meghalaya 330047 153.82 Municipalities 6

16 Mizoram 317946 493.00 Municipal Councils* 2
Town Panchayats* 4
17 Nagaland 208223 147.24 Town Committees 9
18 Orissa 4234983 2544.22 Municipal Corporations 2
Municipalities 30
Notified Area Councils 70
Total 102
19 Punjab 5993225 1440.80 Municipal Corporations 4
Municipal Councils 96
Nagar Panchayats 37
Total 137
20 Rajasthan 10067113 4864.25 Municipal Corporations 3
Municipal Councils 11
Municipal Boards 169
Total 183
21 Sikkim 37006 0.00 ULBs do not exist.
22 Tamil Nadu 19077592 6175.59 Municipal Corporations 6
Municipalities 102
Town Panchayats 636
Total 744
23 Tripura 421721 146.81 Municipality 1
Nagar Panchayats 12
Total 13
24 Uttar Pradesh 27605915 5603.10 Municipal Corporations 11
Municipalities 226
Nagar Panchayats 447
Total 684
25 West Bengal 18707601 3077.61 Municipal Corporations 6
Municipalities 112
Notified Area Authorities 4
Total 122
Total 207883236 63941.20 Total No. of Municipal Corporations 96
Total No. of Municipalities 1494
Total No. of Nagar Panchayats 2092
Total No. of All ULBs 3682

* Proposed to be set-up.
Source: State Governments, SFC Reports and Census 1991.
# The area and population figures of Jammu and Kashmir for 1991 have been projected on the basis of growth rate of population from the
1971 Census to 1981 Census and exclude the areas under unlawful occupation of Pakistan and China.
 269
Annexure VIII.9A
(Para 8.29)

Government of India
Ministry of Urban Affairs and Employment
Department of Urban Development

D.O.No.N-11025/31/96-UCD New Delhi-110011

B.S. Minhas 9.9.1998
Joint Secretary (WA)
Tele.3018255

Dear Shri Srivastava,

This case relates to taxation of Central Government Properties. As per Article 285(1) of the Constitution, the
property of the Union shall, save in so far as Parliament may by law otherwise provide, be exempt from all taxes imposed
by a State or by any authority within a State. However, such properties are subject to payment of Service Charges as per
four Orders of Government of India issued by the Ministry of Finance on 10th May 1954, 29th March 1967, 28th May 1976
and 26th August 1986. As per these orders Central Government makes payment to Urban Local Bodies in respect of their
properties for both direct services such as water and electric supplies, scavenging, etc. and general services such as
street lighting, town drainage, approach roads connecting the Central Government Properties etc. The rate of service
charges ranges from 331/3 %to 75% of the normal rate of Properties Tax applicable to Private Properties depending upon
the quantum of services availed of by the Central Government Properties from the Urban Local Bodies.

2. The Central Council of Local Government and Urban Development in its 25th Meeting held on 7th May, 1994 at
New Delhi resolved that the Ministry of Urban Affairs & Employment may constitute a Working Group, consisting of
representatives of concerned Union Ministries, some State Governments and Municipalities with a view to examine the
issues relating to taxation of Central Government Properties and make its recommendations for consideration of the
Government. Accordingly, a Working Group was constituted under the Chairmanship of Shri D.M. Sukthankar, former
Secretary in this Ministry. The Group came to a general consensus that the payment of Service Charges to Municipal
Bodies currently paid by Central Government Properties be regulated by a Law to be enacted by the Parliament with a
view to ending the numerous and long pending court disputes. There was, however, disagreement as to whether such
properties should pay “Taxes” or “Service Charges”, although all the Members from States and Municipal Corporations
favoured taxation.

3. With a view to enact a Central Legislation regulating payment of Service Charges in respect of Central Government
Properties, a proposal was prepared by this Ministry and circulated to the Ministry of Finance, Department of Expenditure.
Vide its letter No.42(1)PF.1/79 dated 1.9.1998 (copy enclosed), Ministry of Finance (Department of Expenditure) have
intimated that the Eleventh Finance Commission has been constituted by the Government of India. As per one of the
Terms of Reference of the Commission, it is required to make recommendations, besides other matters relating to (a) the
measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats in the
State on the basis of recommendations made by the Finance Commission of the State; (b) the measures needed to
augment the Consolidated Fund of a State to supplement the resources of the Municipalities in the State on the basis of
the recommendations made by the Finance Commission of the State.

4. As Eleventh Finance Commission would be taking into account the various measures needed for augmenting the
Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities and also the existing
powers of the Panchayats and Municipalities to raise financial resources including those by way of raising additional taxes,
 270
the Ministry of Finance, Department of Expenditure is of the view that recommendation of the Eleventh Finance Commission
may be awaited before enacting any laws to regulate payment of Service Charges by Central Government Properties to
the Urban Local Bodies.

5. In view of the position stated above the Eleventh Finance Commission is requested to take into consideration the
issue relating to levy of Service Charges/ Taxation of Central Government Properties while making its recommendation
on devolution of resources to States/Municipalities.

With regards,

Yours sincerely,

Sd/-
(B.S. Minhas)

Shri T.N. Srivastava,

Member Secretary,
Finance Commission,
9th & 10th Floor,
Bank of Baroda Building,
16- Sansad Marg,
New Delhi.

Copy to: Secretary In-charge, Local Self Government of all the States/UTs for information and necessary action.
 271
Annexure VIII.9B
(Para 8.29)

URGENT

A.K. Pradhan
Joint Secretary(PF.I)

No.42(1)PF. I/79 Government of India

Ministry of Finance
Department of Expenditure
New Delhi, 1.9.98

Dear Shri Minhas,

I am directed to refer to your D.O. No. N-11025/31/96-UCD dated 25.6.98 and subsequent reminder dated
18.8.98 seeking comments of this Department on the draft note for Cabinet wherein it has been proposed to enact a law
under Article 285(1) of the Constitution to regulate payment of service charges on Central Government properties to
Urban Local Bodies.

You are aware that the GOI have since constituted the Eleventh Finance Commission vide notification dated
3.7.98. A copy of the notification is enclosed for your information. As can be observed from the Terms of Reference of the
Eleventh Finance Commission, the Commission is also required to make the recommendations, besides other matters,
relating to (a) the measures needed to augment the Consolidated Fund of a State to supplement the resources of the
Panchayats in the State on the basis of recommendations made by the Finance Commission of the State; (b) the measures
needed to augment the Consolidated Fund of a State to supplement the resources of the Municipalities in the State on the
basis of the recommendations made by the Finance Commission of the State.

In this regard, I would like to draw your attention to para 3 (c) and (d) and para 6 (b) (ii) of the notification. As
Eleventh Finance Commission would be taking into account the various measures needed for augmenting the Consolidated
Fund of a State to supplement the resources of the Panchayats and Municipalities and also the existing powers of the
Panchayats and Municipalities to raise financial resources including those by way of raising additional taxes, this Ministry
is of the view that we may await the recommendation of the Eleventh Finance Commission before enacting any laws to
regulate payment of service charges by Central Government properties to the Urban Local Bodies.

This has the approval of Finance Minister.

With regards,

Yours sincerely,

Sd/-
(A.K. Pradhan)

Shri B.S. Minhas,

Joint Secretary,
Ministry of Urban Development
Nirman Bhawan, New Delhi.
 272
Annexure VIII.10A
(Para 8.32)
No.14(1)-P/52-I
Government of India
Ministry of Finance
(Department of Economic Affairs)

New Delhi, the 10th May, 1954

From
Shri C.S. Krishna Moorthi, IAS
Deputy Secretary to the Government of India

To
The Chief Secretaries to the Governments
Of all Part “A” & “B” States
(Except Jammu & Kashmir)

Subject: Payment of service charges to local bodies in respect of Central Government Properties.

Sir,

Under Clause (1) of Article 285 of the Constitution, the properties of the Government of India are exempt from all
taxes imposed by local authorities in the States. It has been represented to the Government of India that notwithstanding
this Article, the Government should agree at least to the payment of charges for services rendered by local authorities.
The Government of India have given careful consideration to such representations in the light of the recommendations
made by the Local Finance Enquiry Committee in regard to taxes on Central Government properties. They have decided
that payment should be made with effect from April 1, 1954 to local bodies for “service charges” in respect of Central
Government properties on the following basis:

i) The Central Government will make payment in respect of their properties for specific services rendered by
local authorities; but such payment of such service charges shall be treated not as payment of taxes but of
compensation payable in quasi-contract. Specific services shall include not only direct services such as
street lighting, town drainage, approach roads connecting the Central Government properties, etc. But
such items as educational, medical or public health facilities will be excluded.

ii) For large and compact blocks of their properties the Central Government will not pay for such specific
services as they themselves arrange.

iii) As regards assessment, no difficulty should arise in respect of items like metered water or electricity
etc., or where services like drainage and scavenging etc., are charged for separately. But where some or
all such specific services are not charged for separately but are part of a consolidated house or property
tax, a suitable percentage of such consolidated tax, representing the element of specific services, will be
paid by the Government. The State Government concerned may kindly fix this percentage on behalf of
the Central Government, for each local body concerned and intimate such percentages to the Ministry of
W.H. & S., who will arrange to intimate them to all other Ministries of the Government of India and through
them to all the Central Government offices concerned. Similarly, the valuation of the Central Government
property may be done by the agency which undertakes the valuation of the State Government property
and any references regarding changes in Railway properties to the Ministry of W.H. & S.; in other cases
 273
(where any question of principle is involved, the Ministry of Railways will act in consultation with the
Ministry of W.H. & S).

iv) A Ministry of the Government of India may also enter into separate contract with any local authority for the
supply of water and electricity or scavenging or any other services.

v) The above arrangement will be subject to review, either in case the Taxation Enquiry Commission suggests
any modification or at the end of ten years, to see whether any payment due to local bodies has been denied
by the Centre or whether the Central Government has accepted a large liability than is warranted.

vi) Properties which are already paying service or property taxes under clause (2) of Article 285 of the Constitution
will not come within the purview of these orders, nor will properties of Central Government industrial
undertakings constituted into private limited companies under the Indian Companies Act.

vii) These arrangements do not affect the legal rights conferred under the appropriate laws on any property
held by the Central Government within the jurisdiction of local bodies.

I am to request that the decision of the Government of India conveyed in this letter may kindly be intimated to the
local authorities within your State.

Yours faithfully,

Sd/-
(C.S. Krishna Moorthi)
Deputy Secretary to the Government of India

No.14(1)-P/52-1

Copy forwarded to:

(1) All Ministries of the Government of India.

(2) All Divisions in the Department of Revenue & Expenditure and Economic Affairs, including Administration Branch.

(3) The Comptroller & Auditor General and all State Accountant Generals with the request that they may please
intimate the decision to all the authorities under them.

(4) The Taxation Enquiry Commission/The Planning Commission for information.

2. It may be added for the information of the Ministries etc., that Central Government industrial undertakings constituted
into private limited companies under the Indian Companies Act do not enjoy exemption from local taxation under Article
285(1) of the Constitution. Such companies or corporations will have to pay all the usual local taxes. Similarly, Article 285
has no application to Part “C” States and consequently the liability of the Central Government or the State Government in
Part “C” States to pay local taxes in respect of Central Government properties will be governed by the provisions of the
particular law under which the taxes are levied.

By Order etc.

Sd/-
(C.S. Krishna Moorthi)
Deputy Secretary to the Government of India
 274
Annexure VIII.10B
(Para 8.32)

No.4(7)-P/65
Government of India
Ministry of Finance
(Department of Coordination)

New Delhi, the 29th March, 1967

From
Shri J. Murli,
Under Secretary to the Government of India

To
The Chief Secretaries of all the State Governments

Subject: Payment of service charges to local bodies in respect of Central Government Properties.

Sir,

I am directed to refer to this Ministry’s letter No.14(1)-P/52-I dated 10th May, 1954 and the Ministry of Works,
Housing and Supply letter No.Cont.23(13)/59 dated 4th August, 1961 on the subject cited above.

2. The procedure for arriving at the quantum of service charges payable to the local bodies has been further examined
by the Government of India and it has now been decided that the service charges should be calculated in the following
manner:

i) In respect of isolated Central Government properties where all services are availed of by the Central
Government in the same manner as in respect of private properties, the Central Government will pay
service charges equivalent to 75% of the property tax realised from private individuals.

ii) In the case of large and compact colonies which are self-sufficient with regard to services or where some of
the services are being provided by the Central Government Departments themselves, the service charges
will be calculated in the following manner:

(a) In the case of colonies which do not directly avail of civic services within the area and are self-sufficient
in all respects, the payment of service charges will be restricted to 331/3% of the normal rate of property
tax applicable to private properties.

(b) In respect of colonies where only a partial use of the services is made, service charges will be paid as
50% of the normal property tax rate.

(c) In respect of colonies where all the services normally provided by the municipal body to the residents
of other areas within its limits are being availed of, service charges will be paid as 75% of the property
tax rate realised from private individuals.

iii) The net rateable value/annual for the purposes of these instructions shall be 9% of the Capital Value of the
property concerned, both in respect of residential and non-residential properties. The Capital Value shall
 275
include the cost of acquiring or constructing the building including the cost of site, its preparation and any
other capital expenditure incurred after acquisition or construction or when this is not known, the present
value of the building including the value of site, as borne on CPWD records or those of the Department
concerned.

iv) The existing arrangements arrived at between the Railway authorities or any Central Government
Departments and local bodies in respect of property tax/service charges including the arrangements
envisaged regarding Central Government properties in Calcutta and as regards the properties in Delhi will
not be disturbed by this decision.

3. I am to request that the decision of the Government of India conveyed in this letter may kindly be intimated to the
local authorities within your State.

Yours faithfully,

Sd/-
(J. Murli)
Under Secretary to the Government of India

No.4(7)-P/65

Copy forwarded for information to:

1. All Ministries/Departments of the Central Government.

2. Comptroller and Auditor General of India, New Delhi.

 276
Annexure VIII.10C
(Para 8.32)

No.4(2)/PFI/74
Government of India
Ministry of Finance
Department of Expenditure
Plan Finance-I Division

New Delhi, 28th May,1976

To

The Chief Secretaries of all States

Sir,

Subject : Payment of Services Charges to local bodies in respect of Central Government Properties.

I am directed to refer to this Ministry’s letters No.14(1) P/52-I dated 10th May, 1954 and No. 4(7)-P/65 dated 29th
March,1967 regarding payment of service charges to Local Bodies in respect of Central Government properties.

2. The payment of service charges in respect of Central Government properties should ordinarily be regulated
according to the instructions contained in these letters. But it has been brought to the notice of the Government of India
that there have been instances where the amount payable to the Local Bodies by private parties / State Governments in
respect of similar properties are less than the service charges payable for Central Government Properties on the basis of
aforementioned circulars. It is, therefore, clarified that in such cases, the service charges payable in respect of Central
Government properties should be limited to the amounts payable by private parties /State Governments in respect of
similar properties under the rates levied by the local body concerned.

Yours faithfully,

Sd/-
(A.V. Ganesan)
Director
Copy forwarded for information to:

1 All Ministries/ Departments of the Government of India.

2 Comptroller and Auditor General of India , New Delhi.

 277
Annexure VIII.10D
(Para 8.32)

No.4(2)/PFI/74
Government of India
Ministry of Finance
Department of Expenditure
Plan Finance-I Division

New Delhi, 26th August, 1986

To

The Chief Secretaries of all States

Sir,

Subject : Payment of Services Charges to local bodies in respect of Central Government Properties.

Sir,

Under Clause (1) of Article 285 of the Constitution, the properties of the Government of India are exempt from all
taxes, imposed by the local authorities in the States. Notwithstanding this Article, Government of India, in response to the
representations received in the light of the recommendations of the Local Finance Enquiry Committee in regard to taxes
of Central Government properties, decided that payments should be made w.e.f. 1.4.1954 to local bodies for “Service
Charges” in respect of Central Government properties. The basis of payment of service charges was laid down in this
Ministry ( Department of Economic Affairs ) letter No.14(1)-P/52-I dated 10.5.1954 addressed to the Chief Secretaries of
all the State Government with copies to all the Ministries of the Government of India and others concerned. A copy of the
above letter is enclosed for ready reference.

2 As may be seen from sub-para(iii) 1 of the above letter, no difficulty was envisaged in respect of items like
metered water or electricity etc., or where services like drainage, scavenging etc., are charged for separately. But where
some or all such specific services are not charged for separately, but are part of a consolidated house or property tax, a
suitable percentage of such consolidated tax representing the element of specific services would be paid by the Government.
The State Government concerned was to fix this percentage on behalf of the Government of India for each local body
concerned and intimate the same to the then Ministry of Works and Housing and Supply for further intimation to all the
Ministries of the Government of India/Central Government offices.

3 However, the procedure as indicated above was found to be not workable and after review, further instructions
were issued in this Ministry, Department of Coordination letter No.4(7)P/65 dated 29.3.1967, a copy of which is also
enclosed for ready reference. This letter was in clarification of the procedure relating to assessment of service charges as
contained in para (iii) of this Ministry’s letter dated 10.5.1954.

4 As may be seen from para 2 of the letter dated 29.3.1967,where service charges form part of the consolidated
property tax, the procedure for arriving at the quantum of service charges payable to the local bodies by Central Government
Departments was laid down in the form of percentages of the normal rate or property tax applicable to private properties,
depending upon the extent of utilisation of the services.
 278

5. References have been received by this Ministry seeking clarification whether the instructions contained in
this Ministry’s letter dated 29.3.1967 are wholly in supersession of those contained in this Ministry’s letter dated 10.5.1954.
It is clarified that this Ministry’s letter dated 29.3.1967 only explains the revised procedure for arriving at the quantum of
service charges payable to the Local Bodies in modification of the procedure indicated in para (iii) of the letter of 10.5.1954
for simplifying the manner of calculating the amount of service charges and does not supersede it. In other words, the
remaining instructions contained in this Ministry’s letter of 10.5.1954 continued to hold good.

6. The position as it stands now is that wherever services rendered by local bodies in respect of Central Government
properties are measured like metered water supply or electricity etc., or where services like drainage and scavenging
etc., are charged for separately, they will be paid for accordingly. The percentage specified in the letter dated 29.3.1967
are applicable in cases where such charges are not specifically metered or charged for separately but form part of the
consolidated property tax.

7. Reference is also invited to para (iv) of para 2 of this Ministry’s letter of 29.3.1967 as this Ministry’s letter No.4(2)-
PF/74 dated 28.5.1976 (copy enclosed for ready reference), according to which (a) existing arrangements arrived at
between the Railway Authorities/Central Government Departments and local bodies in respect of property tax/ service
charges including arrangements regarding Central Government properties in Calcutta and Delhi will not be disturbed by
the instructions contained in this Ministry’s letter of 29.3.1967, and (b) the payment of service charges in respect of
Central Government properties should be limited to the amounts payable by private parties / State Governments, in
respect of similar properties under the rates levied by the local body concerned.

8. It is requested that these clarifications may kindly be conveyed to the local authorities in your State.

Yours faithfully,

Sd/-
(V. Swaminathan)
Joint Director
Copy to:

1. All Ministries/ Departments of Government of India with the request that they may bring this to the notice of all
Divisions and Offices under them.

2. Comptroller and Auditor General of India , New Delhi.

3. All State Accountant Generals.

 279
Annexure IX.1
Calamity Relief Fund during 2000-2005
(Para 9.8)

(Rs. in lakhs)

Sl. No. STATE 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 TOTAL

2000-2005
1 2 3 4 5 6 7

1 Andhra Pradesh 19806 20796 21836 22928 24074 109440

2 Arunachal Pradesh 1202 1262 1325 1392 1461 6643
3 Assam 10149 10657 11189 11749 12336 56081
4 Bihar 12366 12984 13633 14315 15030 68328
5 Goa 124 130 137 144 151 685
6 Gujarat 16140 16947 17794 18684 19618 89184
7 Haryana 8130 8537 8964 9412 9883 44926
8 Himachal Pradesh 4349 4566 4794 5034 5286 24029
9 Jammu & Kashmir 3490 3665 3848 4040 4242 19285
10 Karnataka 7457 7830 8221 8632 9064 41204
11 Kerala 6724 7061 7414 7784 8173 37156
12 Madhya Pradesh 9010 9461 9934 10430 10952 49786
13 Maharashtra 15720 16506 17332 18198 19108 86864
14 Manipur 287 301 316 332 349 1586
15 Meghalaya 394 414 434 456 479 2177
16 Mizoram 297 312 328 344 361 1642
17 Nagaland 196 206 216 227 238 1083
18 Orissa 10947 11494 12069 12672 13306 60488
19 Punjab 12272 12885 13530 14206 14917 67810
20 Rajasthan 20700 21735 22822 23963 25161 114381
21 Sikkim 691 725 762 800 840 3817
22 Tamil Nadu 10264 10777 11316 11882 12476 56714
23 Tripura 520 546 573 602 632 2873
24 Uttar Pradesh 17864 18757 19695 20680 21714 98711
25 West Bengal 10110 10616 11147 11704 12289 55866

Total 199210 209170 219629 230610 242141 1100759

 280
Annexure IX.2
Calamity Relief Fund during 2000-2005
(Centre’s Share)
(Para 9.8)
(Rs. in lakhs)

Sl. No. STATE 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 TOTAL

2000-2005
1 2 3 4 5 6 7

1 Andhra Pradesh 14854 15597 16377 17196 18056 82080

2 Arunachal Pradesh 902 947 994 1044 1096 4983
3 Assam 7612 7992 8392 8812 9252 42060
4 Bihar 9274 9738 10225 10736 11273 51246
5 Goa 93 98 103 108 113 515
6 Gujarat 12105 12710 13346 14013 14714 66888
7 Haryana 6098 6403 6723 7059 7412 33695
8 Himachal Pradesh 3261 3424 3596 3775 3964 18020
9 Jammu & Kashmir 2618 2748 2886 3030 3182 14464
10 Karnataka 5593 5872 6166 6474 6798 30903
11 Kerala 5043 5295 5560 5838 6130 27866
12 Madhya Pradesh 6758 7095 7450 7823 8214 37340
13 Maharashtra 11790 12380 12999 13649 14331 65149
14 Manipur 215 226 237 249 262 1189
15 Meghalaya 295 310 326 342 359 1632
16 Mizoram 223 234 246 258 271 1232
17 Nagaland 147 154 162 170 179 812
18 Orissa 8210 8621 9052 9504 9979 45366
19 Punjab 9204 9664 10147 10655 11187 50857
20 Rajasthan 15525 16301 17116 17972 18871 85785
21 Sikkim 518 544 571 600 630 2863
22 Tamil Nadu 7698 8083 8487 8911 9357 42536
23 Tripura 390 410 430 451 474 2155
24 Uttar Pradesh 13398 14068 14771 15510 16286 74033
25 West Bengal 7583 7962 8360 8778 9217 41900

Total 149407 156876 164722 172957 181607 825569

 281
Annexure IX.3
Calamity Relief Fund during 2000-2005
(States’ Share)
(Para 9.8)
(Rs. in lakhs)
Sl. No. STATE 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 TOTAL
2000-2005
1 2 3 4 5 6 7

1 Andhra Pradesh 4951 5199 5459 5732 6019 27360

2 Arunachal Pradesh 301 316 331 348 365 1661
3 Assam 2537 2664 2797 2937 3084 14020
4 Bihar 3091 3246 3408 3579 3758 17082
5 Goa 31 33 34 36 38 171
6 Gujarat 4035 4237 4449 4671 4905 22296
7 Haryana 2033 2134 2241 2353 2471 11231
8 Himachal Pradesh 1087 1141 1199 1258 1321 6007
9 Jammu & Kashmir 873 916 962 1010 1061 4821
10 Karnataka 1864 1957 2055 2158 2266 10301
11 Kerala 1681 1765 1853 1946 2043 9289
12 Madhya Pradesh 2253 2365 2483 2608 2738 12447
13 Maharashtra 3930 4127 4333 4550 4777 21716
14 Manipur 72 75 79 83 87 396
15 Meghalaya 98 103 109 114 120 544
16 Mizoram 74 78 82 86 90 411
17 Nagaland 49 51 54 57 60 271
18 Orissa 2737 2874 3017 3168 3326 15122
19 Punjab 3068 3221 3382 3552 3729 16952
20 Rajasthan 5175 5434 5705 5991 6290 28595
21 Sikkim 173 181 190 200 210 954
22 Tamil Nadu 2566 2694 2829 2970 3119 14179
23 Tripura 130 137 143 150 158 718
24 Uttar Pradesh 4466 4689 4924 5170 5429 24678
25 West Bengal 2528 2654 2787 2926 3072 13967

Total 49802 52293 54907 57653 60535 275190

 282
Annexure XI.1
Composition of State Government Debt as on March 31, 1999
(Para 11.5)
(Rs. in lakhs)

State Central Market Loans W&M Provident Reserve Total Total

Loans Loans & from Adv. Funds, Funds & Debt Debt*
Bonds Banks, etc. from RBI etc. Deposits

Andhra Pradesh 1394127 603836 118817 21984 251750 439139 2829653 2368530
Arunachal Pradesh 34992 5170 8302 555 16261 1614 66894 64725
Assam 429163 155793 8874 8458 68183 70098 740569 662013
Bihar 1337490 552236 -12712 0 637434 168196 2682644 2514448
Goa 113032 21315 7678 0 29130 13804 184959 171155
Gujarat 1397564 254628 55774 0 210886 556884 2475736 1918852
Haryana 490898 126858 46093 1841 283764 70439 1019893 947613
Himachal Pradesh 269724 48239 34813 85263 146780 57018 641837 499556
Jammu & Kashmir 342019 57658 17247 110823 108008 37420 673175 524932
Karnataka 901535 284094 60892 0 294414 320721 1861656 1540935
Kerala 564814 341922 88133 12381 562778 166185 1736213 1557647
Madhya Pradesh 923034 340525 59541 19254 584437 269072 2195863 1907537
Maharashtra 2306223 374296 65095 0 371973 1167349 4284936 3117587
Manipur 33490 20203 12126 41093 17966 18130 143008 83785
Meghalaya 31512 23876 4213 0 11798 19761 91160 71399
Mizoram 32352 9419 13889 8298 22066 10226 96250 77726
Nagaland 31968 37767 15699 19483 33807 2483 141207 119241
Orissa 676799 367452 38857 30433 392130 143539 1649210 1475238
Punjab 1305698 170551 143889 100591 366948 82898 2170575 1987086
Rajasthan 993377 422964 66522 88499 539428 306208 2416998 2022291
Sikkim 18725 13991 3075 0 14576 1490 51857 50367
Tamil Nadu 1084566 417511 86079 0 370033 347621 2305810 1958189
Tripura 54818 27043 12476 0 45285 5106 144728 139622
Uttar Pradesh 2973512 1044884 62649 57063 724302 1410013 6272423 4805347
West Bengal 2159279 437030 48038 0 236371 317457 3198175 2880718

Total 19900711 6159261 1066059 606019 6340508 6002871 40075429 33466539

Notes: 1. Minus figure of Loans from Banks etc. for Bihar is under consideration.

2. * Excluding W&M Advance from RBI (from J&K Bank in respect of J&K State) and Reserve Funds/Deposits.
(Total debt minus reserve funds and deposits minus W & M advances from RBI).
 283
Annexure XI.2
Composition of State Government Debt as on March 31, 2000
(Para 11.5)
(Rs. in lakhs)

State Central Market Loans W&M Provident Reserve Total Total

Loans Loans & from Adv. Funds, Funds & Debt Debt*
Bonds Banks, etc. from RBI etc. Deposits

Andhra Pradesh 1605641 703706 172113 21984 285750 458740 3247934 2767210
Arunachal Pradesh 40919 5792 21968 0 19347 1614 89640 88026
Assam 459044 188848 22076 8458 108183 68852 855461 778151
Bihar 1601754 618450 16865 0 790275 178241 3205585 3027344
Goa 124174 25315 11877 0 33920 18700 213986 195286
Gujarat 1641025 300705 85319 0 240379 612944 2880372 2267428
Haryana 613022 146188 56112 1841 328791 73839 1219793 1144113
Himachal Pradesh 314157 61348 52967 85263 179280 76814 769829 607752
Jammu & Kashmir 362996 66519 32743 110823 132907 3035 709023 595165
Karnataka 1075114 364054 83212 0 364414 319805 2206599 1886794
Kerala 655614 392922 122078 12381 658380 177793 2019168 1828994
Madhya Pradesh 1098965 401686 77439 19254 642334 259100 2498778 2220424
Maharashtra 2733340 444185 115340 0 456070 1406692 5155627 3748935
Manipur 40579 22444 15746 41093 28016 16037 163915 106785
Meghalaya 35859 30876 10761 0 14798 20811 113105 92294
Mizoram 35460 12416 16390 8298 26923 10176 109663 91189
Nagaland 35241 46402 18503 16883 37987 583 155599 138133
Orissa 822411 418923 54866 30433 472131 150390 1949154 1768331
Punjab 1448800 204924 168224 100591 457426 80120 2460085 2279374
Rajasthan 1222210 501901 177646 88499 651689 313927 2955872 2553446
Sikkim 22129 18581 6946 0 15460 949 64065 63116
Tamil Nadu 1237732 477735 118896 0 426709 371773 2632845 2261072
Tripura 65717 33043 17953 0 54061 5106 175880 170774
Uttar Pradesh 3522543 1187165 120521 57063 863594 1442287 7193173 5693823
West Bengal 2855202 497871 132836 0 297171 539456 4322536 3783080

Total 23669648 7171999 1729397 602864 7585995 6607784 47367687 40157039

Note : * Excluding W&M Advance From RBI (from J&K Bank in respect of J&K State) and Reserve Funds/ Deposits.
(Total debt minus reserve funds and deposits minus W & M advances from RBI).
 284
Annexure XI.3
Outstanding Long Term Debt of the State Governments
(as on March 31)
(Para 11.7)
(Rs. in crores)

1979 1984 1989 1991

Amount % Amount % Amount % Amount %

1. Internal Debt (a+b) 3348 17.82 5960 15.93 12598 15.61 18157 16.55
(a) Market Loans 2572 13.69 4236 11.32 10839 13.43 15669 14.28
(b) Loans from Banks etc. 776 4.13 1724 4.61 1759 2.18 2488 2.27

2. Loans from Centre 13463 71.67 27059 72.34 55648 68.93 72938 66.46

3. Provident Funds etc. 1974 10.51 4387 11.73 12486 15.46 18647 16.99

Total 18785 100.00 37406 100.00 80732 100.00 109742 100.00

1995 1998 1999 2000(B.E.)

Amount % Amount % Amount % Amount %

1. Internal Debt (a+b) 34658 18.95 58692 21.09 72254 21.59 89014 22.17
(a) Market Loans 31200 17.06 50944 18.30 61593 18.40 71720 17.86
(b) Loans from Banks etc. 3458 1.89 7748 2.78 10661 3.19 17294 4.31

2. Loans from Centre 115238 63.01 168653 60.60 199007 59.46 236696 58.94

3. Provident Funds etc. 32991 18.04 50979 18.32 63405 18.95 75860 18.89

Total 182887 100.00 278324 100.00 334666 100.00 401570 100.00

Notes: 1. 1978-79 and 1983-84 figures as given in the Second Report of the Ninth Finance Commission and 1988-89 and 1990-91 as given in
the report of the Tenth Finance Commission.

2. Outstanding Long Term Debt include Internal Debt (MH 6003) (excluding W & M advances), Loans from Centre (MH 6004) and
Provident Funds, Insurance Funds (MH 8005, 8011 i.e. Total ‘ I ‘ ) .
 285

Annexure XI.4
Repayments of Central Loans During 2000-2005 @
(Para 11.8)
(Rs. in lakhs)
State State Drought Others Central Centrally Total Small Moder- Housing Others Total Total
Plan Loans Sector Sponsored Plan Savings nisation of IAS Non- Loans
Schemes Loans of Police Officers Plan

Andhra Pradesh 280166 173 0 0 9506 289845 91923 178 420 26 92547 382392

Arunachal Pradesh 14854 0 0 473 124 15451 979 298 0 0 1277 16728

Assam 84631 0 0 5661 850 91142 49037 120 33 414 49604 140746

Bihar 224327 0 0 630 1102 226059 114481 245 155 68 114949 341008

Goa 16493 0 0 17 118 16628 5083 31 0 0 5114 21742

Gujarat * 131395 0 13 2490 1917 135815 199788 122 154 170 200234 336049

Haryana 57321 0 0 432 866 58619 58592 70 70 0 58732 117351

Himachal Pradesh 14935 1 0 23 2157 17116 40063 57 92 0 40212 57328

Jammu & Kashmir 91440 0 0 297 335 92072 21305 127 28 0 21460 113532

Karnataka 133201 0 942 260 4221 138624 103140 164 40 601 103945 242569

Kerala 109814 125 0 542 4262 114743 51229 121 40 47 51437 166180

Madhya Pradesh 176370 378 0 1755 4422 182925 69231 284 112 7 69634 252559

Maharashtra 216702 0 0 402 3569 220673 290767 211 115 0 291093 511766

Manipur 7468 0 192 107 221 7988 1478 290 49 0 1817 9805

Meghalaya 6027 0 208 9 445 6689 2700 37 45 233 3015 9704

Mizoram 4685 0 0 291 232 5208 965 69 35 1 1070 6278

Nagaland 8070 0 82 223 199 8574 1447 105 82 0 1634 10208

Orissa 143672 0 0 2634 5191 151497 40643 129 63 0 40835 192332

Punjab 254616 0 0 104 2762 257482 100269 120 280 34116 134785 392267

Rajasthan 150013 308 6 216 4566 155109 91598 689 57 1359 93703 248812

Sikkim 4375 0 0 0 514 4889 995 16 28 0 1039 5928

Tamil Nadu 223920 325 0 528 2373 227146 83920 281 285 0 84486 311632

Tripura 7827 0 0 12 398 8237 5186 383 31 481 6081 14318

Uttar Pradesh 476667 0 0 443 13112 490222 282051 298 331 31 282711 772933

West Bengal 169533 0 0 153 2266 171952 284628 190 2481 3510 290809 462761

Total 3008522 1310 1443 17702 65728 3094705 1991498 4635 5026 41064 2042223 5136928

Notes: @ Relating to the loans received from the Centre and outstanding as on March 31, 1999.

* Outstanding balances of drought loans advanced to Gujarat have been partly written off and partly consolidated which have
been included in State Plan Loans.

Source: States’ Forecast.

 286
Annexure XI.5
Debt as percentage of GSDP
(Para 11.9)

State 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000

(B.E.)

Andhra Pradesh 19.08 18.46 18.70 18.54 19.18 20.29 20.95

Arunachal Pradesh 31.78 37.28 36.01 41.77 39.42 40.23 48.00
Assam 27.26 25.72 27.02 27.21 23.85 23.23 24.12
Bihar 32.43 32.12 34.85 32.50 32.30 33.14 35.31
Goa 42.47 39.65 35.44 31.20 32.57 34.21 34.54
Gujarat 18.33 15.96 16.16 15.93 16.78 18.13 18.95
Haryana 18.94 17.92 19.24 17.65 19.24 21.14 22.58
Himachal Pradesh 38.37 38.21 45.19 42.48 44.34 55.87 58.59
Jammu & Kashmir 57.38 55.19 48.83 51.31 50.04 47.98 47.15
Karnataka 16.32 16.63 16.44 16.27 16.58 17.48 18.94
Kerala 26.32 26.66 24.87 24.10 25.18 27.13 28.16
Madhya Pradesh 17.70 17.57 17.46 17.27 17.56 18.63 19.17
Maharashtra 11.99 11.79 10.83 11.56 12.29 13.08 13.92
Manipur 34.01 32.25 32.91 30.12 39.02 44.66 46.80
Meghalaya 19.34 22.12 20.53 21.87 20.87 23.35 26.71
Mizoram 45.49 47.75 47.04 56.31 50.46 58.39 59.76
Nagaland 39.21 39.36 44.41 45.55 48.58 50.92 50.36
Orissa 33.16 32.25 33.28 38.75 35.24 37.79 39.95
Punjab 33.59 33.60 33.80 32.33 32.29 34.58 34.89
Rajasthan 25.35 23.45 24.60 24.21 25.42 28.85 31.95
Sikkim 52.09 52.03 52.22 52.02 51.33 64.24 71.24
Tamil Nadu 15.82 15.72 15.51 14.88 15.45 16.41 16.77
Tripura 36.94 32.46 35.04 32.20 34.15 37.18 40.25
Uttar Pradesh 26.39 25.98 26.08 24.43 26.06 27.97 29.28
West Bengal 20.15 20.43 20.50 21.47 22.88 26.19 30.44

Total (All States) 21.54 21.01 20.89 20.71 21.39 22.98 24.33

Notes: 1. Debt includes Internal Debt, Loans and advances from the Central Government, Provident funds and Insurance funds.

2. GSDP figures are on the basis of information received from the CSO. These are for new series from 1993-94 to 1996-97 and thereafter
EFC estimates.
 287
Annexure XI.6
Share of each State in total Debt of All States as on 31st March
(Para No. 11.10)
(Per cent)

State 1993 1994 1995 1996 1997 1998 1999 2000 Growth Rate
(B.E.) (1993-2000)

Andhra Pradesh 6.59 6.98 6.99 7.11 7.03 7.04 7.06 6.86 0.42
Arunachal Pradesh 0.15 0.15 0.17 0.18 0.18 0.18 0.17 0.19 2.96
Assam 2.92 2.57 2.51 2.61 2.32 2.08 1.85 1.81 -6.53
Bihar 8.14 8.03 7.69 7.47 7.18 7.03 6.69 6.77 -2.95
Goa 0.63 0.60 0.54 0.51 0.49 0.47 0.46 0.45 -4.81
Gujarat 6.28 6.17 5.97 5.97 5.93 6.09 6.18 6.08 -0.20
Haryana 2.31 2.38 2.32 2.45 2.42 2.44 2.54 2.58 1.48
Himachal Pradesh 1.10 1.08 1.18 1.31 1.29 1.31 1.60 1.62 6.10
Jammu & Kashmir 2.53 2.42 2.10 1.92 1.91 1.87 1.68 1.50 -6.71
Karnataka 4.48 4.73 4.78 4.67 4.70 4.72 4.65 4.66 0.19
Kerala 4.00 4.10 4.25 4.28 4.30 4.37 4.33 4.26 0.96
Madhya Pradesh 5.84 5.83 5.60 5.57 5.55 5.43 5.48 5.27 -1.33
Maharashtra 9.97 10.13 10.00 10.08 10.42 10.60 10.69 10.88 1.30
Manipur 0.32 0.31 0.28 0.27 0.29 0.35 0.36 0.35 2.55
Meghalaya 0.18 0.20 0.22 0.21 0.20 0.21 0.23 0.24 3.05
Mizoram 0.18 0.21 0.21 0.22 0.26 0.24 0.24 0.23 3.58
Nagaland 0.35 0.32 0.32 0.34 0.33 0.36 0.35 0.33 0.43
Orissa 4.04 4.14 4.08 4.15 4.17 4.14 4.12 4.11 0.17
Punjab 5.70 5.82 5.75 5.63 5.43 5.40 5.42 5.19 -1.46
Rajasthan 5.18 5.41 5.46 5.66 5.84 5.82 6.03 6.24 2.49
Sikkim 0.12 0.12 0.12 0.11 0.11 0.11 0.13 0.14 1.46
Tamil Nadu 6.02 6.18 6.16 6.00 5.96 5.85 5.75 5.56 -1.28
Tripura 0.41 0.41 0.39 0.38 0.36 0.36 0.36 0.37 -1.96
Uttar Pradesh 15.74 14.72 15.91 15.77 15.97 15.96 15.65 15.19 0.09
West Bengal 6.82 6.99 7.00 7.13 7.36 7.57 7.98 9.12 3.59

TOTAL 100 100 100 100 100 100 100 100

Note : Absolute Figures of Outstanding Debt include Internal Debt , Loans from Centre, Provident Funds, Insurance Funds and Reserve Funds
and Deposits.
 288
Annexure XI.7
Rates of Interest on Central Loans(Other than
Small Savings Loans): Plan and Non Plan
(Para 11.10)

Type of Loans per cent per annum

State Plan Loans

(a) Pre-1979 Consolidated State Plan Loans 4.75
(b) Loans advanced during 1979-84 consolidated for terms 6-6.75
ranging from 15 to 30 years
(c) As per NFC recommendations, State Plan Loans advanced 9.00
during 1984-89 and outstanding as at the end of 1989-90,
consolidated for 15 years.
Other Plan and non-plan loans given to States from
(i) 1.6.84 to 31.5.85 7.50
(ii) 1.6.85 to 31.5.86 8.00
(iii) 1.6.86 to 31.5.87 8.75
(iv) 1.6.87 to 31.5.88 9.25
(v) 1.6.88 to 31.5.90 9.75
(vi) 1.6.90 to 31.5.91 10.25
(vii) 1.6.91 to 31.5.92 10.75
(viii) 1.6.92 to 31.5.93 11.75
(ix) 1.6.93 to 31.5.95 12.00
(x) 1.6.95 to 31.5.98 13.00
(xi) 1.6.98 to date 12.50

Annexure XI.8
Rates of Interest on Loans to States against Small Savings Collections
(Para 11.10)

Date of Loan Per cent per annum

1.8.74 to 31.5.81 6.25

1.6.81 to 31.5.82 7.25
1.6.82 to 31.5.83 7.75
1.6.83 to 31.5.84 8.75
1.6.84 to 31.5.85 9.75
1.6.85 to 31.5.86 10.25
1.6.86 to 31.5.89 12.00
1.6.89 to 31.5.91 13.00
1.6.91 to 31.5.92 13.50
1.6.92 to 31.5.93 14.50
1.6.93 to 1.9.93 15.00
2.9.93 to 31.12.98 14.50
1.1.99 to 31.3.99 14.00
1.4.99 to 14.1.2000 13.50
15.1.2000 to date 12.50
 289
Annexure XI.9
Interest as percentage of Total Revenue Receipts*
(Para 11.12)

State 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 1999-2000 Avg.

(1996-99)
Andhra Pradesh 12.42 14.30 15.48 16.43 15.56 18.54 17.27 16.84

Arunachal Pradesh 4.15 5.47 5.50 6.58 7.21 7.72 8.36 7.17

Assam 14.80 19.92 14.45 14.52 14.77 11.55 17.00 13.62

Bihar 17.45 25.28 22.59 23.10 21.75 25.95 22.29 23.60

Goa 14.76 13.00 15.03 15.05 15.39 17.20 18.77 15.88

Gujarat 14.88 15.26 15.54 16.65 16.94 17.75 19.94 17.11

Haryana 15.97 14.67 15.76 19.39 19.53 20.32 22.54 19.75

Himachal Pradesh 14.36 17.07 16.36 15.78 17.22 21.65 24.06 18.22
Jammu and Kashmir 18.28 20.36 11.05 6.54 17.56 14.74 16.07 12.95

Karnataka 11.39 12.55 12.30 12.60 13.18 14.46 15.12 13.41

Kerala 17.81 17.84 17.34 18.27 18.34 20.41 17.67 19.01

Madhya Pradesh 12.28 14.36 13.38 13.74 14.75 16.17 16.30 14.89

Maharashtra 11.66 11.69 12.44 12.73 14.32 16.92 21.00 14.66

Manipur 12.12 9.10 8.52 8.18 9.31 10.25 10.33 9.24

Meghalaya 6.66 8.48 7.42 7.76 8.74 8.34 12.21 8.28

Mizoram 4.62 5.87 5.70 7.42 9.91 9.68 13.66 9.00

Nagaland 9.41 11.05 11.68 10.60 13.16 13.77 14.61 12.51

Orissa 21.28 22.00 23.88 25.18 27.89 32.60 27.70 28.56

Punjab 32.03 33.32 31.46 29.43 30.22 40.35 32.67 33.33

Rajasthan 16.34 17.55 18.55 20.76 22.74 26.16 26.39 23.22

Sikkim 9.93 11.20 8.56 9.16 10.27 11.72 12.84 10.38

Tamil Nadu 11.88 11.85 12.23 12.36 13.01 14.93 15.21 13.43

Tripura 10.59 10.22 9.46 10.71 11.09 11.08 12.45 10.96

Uttar Pradesh 18.68 24.64 22.41 25.34 26.69 31.74 28.49 27.92

West Bengal 19.75 19.36 21.94 23.62 26.74 31.49 35.95 27.28

All States 15.28 17.10 16.72 17.52 18.59 21.09 21.46 19.07

* Excludes receipts from lotteries.

 290

Annexure XI.10
Statement Showing Amounts of Debt Reliefs Sanctioned to Various
State Governments in Pursuance of TFC Recommendations
(Para 11.20)
(Rs. in lakhs)

State 1995-96 1996-97 1997-98 1998-99 1999-2000 Total 1995-2000

GDR SDR GDR SDR GDR SDR GDR SDR GDR SDR GDR SDR

Andhra Pradesh 0.00 1307.42 0.00 0.00 0.00 0.00 0.00 0.00 0.00 1307.42 0.00

Arunachal Pradesh 24.01 45.61 27.66 0.00 31.44 0.81 35.96 0.00 40.38 46.42 159.45

Assam 246.33 0.00 293.69 0.00 323.85 427.42 360.94 685.79 400.11 1113.21 1624.92

Bihar 592.90 1126.51 789.48 0.00 943.22 0.00 1067.08 1724.15 1209.77 2850.66 4602.45

Goa 0.00 106.18 0.00 148.56 0.00 0.00 0.00 0.00 0.00 254.74 0.00

Gujarat 0.00 865.11 0.00 1340.01 0.00 0.00 0.00 0.00 0.00 2205.12 0.00

Haryana 0.00 177.47 0.00 0.00 0.00 0.00 0.00 0.00 0.00 177.47 0.00

Himachal Pradesh 67.58 128.40 96.58 0.00 118.86 0.00 143.58 0.00 172.59 128.40 599.19

Jammu & Kashmir 216.34 0.00 242.38 460.52 259.56 493.16 283.26 0.00 314.66 953.68 1316.20

Karnataka 0.00 722.25 0.00 0.00 0.00 576.06 0.00 0.00 0.00 1298.31 0.00

Kerala 0.00 356.53 0.00 259.46 0.00 285.50 0.00 0.00 0.00 901.49 0.00

Madhya Pradesh 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Maharashtra 0.00 605.57 0.00 1900.41 0.00 0.00 0.00 0.00 0.00 2505.98 0.00

Manipur 17.38 33.01 20.53 0.00 22.97 0.00 25.61 0.00 28.28 33.01 114.77

Meghalaya 22.14 0.00 27.47 52.20 31.35 59.55 35.21 66.91 40.82 178.66 156.99

Mizoram 19.11 0.00 21.95 0.00 24.44 0.00 26.76 0.00 28.96 0.00 121.22

Nagaland 23.54 3.58 27.08 0.00 33.95 0.00 36.95 7.38 41.90 10.96 163.42

Orissa 304.22 0.00 385.67 0.00 452.83 0.00 531.23 0.00 612.58 0.00 2286.53

Punjab * 0.00 11.03 0.00 1423.63 0.00 1064.01 0.00 0.00 0.00 2498.67 0.00

Rajasthan 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Sikkim 14.39 0.00 16.74 0.00 18.48 0.00 20.38 0.00 22.16 0.00 92.15

Tamil Nadu 0.00 1085.85 0.00 1348.87 0.00 1685.74 0.00 0.00 0.00 4120.46 0.00

Tripura 30.05 0.00 39.43 12.47 46.48 88.31 53.24 101.15 59.37 201.93 228.57

Uttar Pradesh 1266.44 4.81 1707.39 0.00 2114.91 0.00 2488.44 0.00 2839.26 4.81 10416.44

West Bengal 0.00 0.00 0.00 375.38 0.00 0.00 0.00 0.00 0.00 375.38 0.00

All States Total 2844.43 6579.33 3696.05 7321.51 4422.34 4680.56 5108.64 2585.38 5810.84 21166.78 21882.30

Notes: GDR : General debt relief linked to fiscal performance.

SDR : Specific relief to States with high fiscal stress etc.

Under the scheme linked to the utilisation of the proceeds of disinvestment in the State Public Enterprises for retiring Central
loans, relief of Rs. 1038.91 lakh was given during 1996-97 to the Government of Tamil Nadu, only.

* This does not include relief of Rs. 495.22 crore on repayment of Special Term Loans to Punjab as per the recommendations of TFC.
 291
Annexure XI.11
Profile of Amounts of Fresh Loans received from the Centre
during 1994-99 and Outstanding as on March 31, 1999
(Para 11.22)
(Rs. in lakhs)
State Plan Drought Others Central Centrally Total Small Moder- Housing Others Total Total
Loans Loans Sector Sponsored Plan Savings nisation of IAS Non- Loans
Schemes Loans of Police Officers Plan

Andhra Pradesh 595279 0 0 0 21351 616630 246498 296 1186 53 248033 864663

Arunachal Pradesh 17973 0 0 347 104 18424 2153 537 0 0 2690 21114

Assam 53088 0 0 9960 1625 64673 135406 314 25 876 136621 201294

Bihar 353156 0 0 1334 516 355006 280868 608 127 0 281603 636609

Goa 22642 0 0 8 164 22814 18290 62 0 0 18352 41166

Gujarat 270294 0 0 11156 3599 285049 576076 282 175 100 576633 861682

Haryana 131414 0 0 3106 745 135265 192528 147 70 0 192745 328010

Himachal Pradesh 25071 0 0 18 2050 27139 175123 131 131 0 175385 202524

Jammu & Kashmir 103146 0 0 433 645 104224 65317 431 22 0 65770 169994

Karnataka 271374 0 0 2028 10793 284195 290268 356 48 300 290972 575167

Kerala 181335 0 0 404 9419 191158 153454 256 47 0 153757 344915

Madhya Pradesh 328166 0 0 6308 7744 342218 224880 752 166 316 226114 568332

Maharashtra 542107 0 0 1338 11096 554541 887153 405 136 0 887694 1442235

Manipur 17433 0 188 420 314 18355 4512 760 49 0 5321 23676

Meghalaya 11570 0 331 14 424 12339 4572 109 43 301 5025 17364

Mizoram 11521 0 0 491 239 12251 1610 202 5 79 1896 14147

Nagaland 13969 0 98 336 205 14608 1608 437 136 0 2181 16789

Orissa 317347 0 0 6991 9476 333814 107187 302 52 0 107541 441355

Punjab 262299 0 0 35 7868 270202 373433 294 522 61 374310 644512

Rajasthan 282549 0 0 23 9336 291908 324673 1239 57 4571 330540 622448

Sikkim 9336 0 0 0 510 9846 1799 33 38 0 1870 11716

Tamil Nadu 431343 0 0 1926 3746 437015 208560 795 555 207 210117 647132

Tripura 13292 0 0 27 679 13998 11876 677 36 1007 13596 27594

Uttar Pradesh 817033 0 0 449 26230 843712 952829 665 433 0 953927 1797639

West Bengal 427883 0 0 543 2397 430823 1048862 477 138 2477 1051954 1482777

Total 5510620 0 617 47695 131276 5690208 6289535 10566 4197 10348 6314646 12004854

Source: States’ Forecast.

 292
Annexure XI.12
@
Repayments of Central Loans during 2000-2005
(Para 11.22)
(Rs. in lakhs)
State Plan Drought Others Central Centrally Total Small Moder- Housing Others Total Total
Loans Loans Sector Sponsored Plan Savings nisation of IAS Non- Loans
Schemes Loans of Police Officers Plan

Andhra Pradesh 130932 0 0 0 6794 137726 37772 91 375 26 38264 175990

Arunachal Pradesh 4520 0 0 87 40 4647 284 279 0 0 563 5210
Assam 12048 0 0 1423 453 13924 21557 64 12 280 21913 35837
Bihar 83813 0 0 325 180 84318 34682 131 100 0 34913 119231
Goa 4702 0 0 2 52 4756 1791 14 0 0 1805 6561
Gujarat 56069 0 0 2348 979 59396 72604 63 109 0 72776 132172
Haryana 26660 0 0 412 295 27367 23511 31 46 0 23588 50955
Himachal Pradesh 5595 0 0 4 546 6145 22095 29 74 0 22198 28343
Jammu & Kashmir 23586 0 0 173 186 23945 8670 90 15 0 8775 32720
Karnataka 60025 0 272 53 3328 63678 43223 78 29 150 43480 107158
Kerala 41547 0 0 99 3165 44811 23329 55 29 0 23413 68224
Madhya Pradesh 71555 0 0 1505 2129 75189 27471 164 95 0 27730 102919
Maharashtra 117630 0 0 317 2101 120048 86957 89 79 0 87125 207173
Manipur 3854 0 54 100 84 4092 521 276 31 0 828 4920
Meghalaya 2586 0 78 6 136 2806 594 23 25 232 874 3680
Mizoram 2584 0 0 121 106 2811 211 45 34 0 290 3101
Nagaland 3305 0 29 170 67 3571 191 93 73 0 357 3928
Orissa 67955 0 0 2299 2517 72771 15181 65 32 0 15278 88049
Punjab 63463 0 0 0 2046 65509 45974 61 270 0 46305 111814
Rajasthan 61210 0 0 10 2362 63582 43873 551 35 731 45190 108772
Sikkim 2098 0 0 0 290 2388 235 7 21 0 263 2651
Tamil Nadu 99975 0 0 458 958 101391 32088 172 252 0 32512 133903
Tripura 3059 0 0 7 270 3336 1341 362 22 260 1985 5321
Uttar Pradesh 182300 0 0 249 10886 193435 125723 145 257 0 126125 319560
West Bengal 89273 0 0 140 508 89921 132800 105 85 558 133548 223469
Total 1220344 0 433 10308 40478 1271563 802678 3083 2100 2237 810098 2081661

Note: @ Relating to the loans received from the Centre during 1994-99 and as outstanding on March 31, 1999.
Source: States’ Forecast.

Annexure XI.13
Schedule of Repayment of Principal and Interest of
Special Term Loans of Punjab from 2000-2001 to 2004-2005
(Para 11.28)
(Rs. in crores)
Year Principal Interest Total
2000-2001 362.17 389.77 751.94
2001-2002 362.15 353.37 715.52
2002-2003 362.17 317.13 679.30
2003-2004 362.16 280.72 642.88
2004-2005 362.19 244.32 606.51

Total (2000-05) 1810.84 1585.31 3396.15

Source: Information received from the State government.

 293
Appendix 1.1
(Para 1.3)
INTERM REPORT
I The Background

1. The Eleventh Finance Commission was constituted by a Presidential Order of July 3, 1998 with mandate to give
its report by December 31, 1999. As in the past, matters on which the Commission was required to make recommendations
were set out in the Terms of Reference (ToR).
2. The ToR of this Commission have several distinguishing features. In addition to the task of deciding the share of
the States in the divisible Union taxes, and their inter se allocation, and formulating principles to govern the determination
of grants-in-aid to States in need, the Commission has been asked to recommend measures for augmenting the
Consolidated Funds of the States to supplement the resources of their local bodies, viz., Panchayats and Municipalities.
The Commission is also required to review the finances of the Union and the States and suggest ways and means by
which the governments, collectively and severally, can bring about a restructuring of the public finances so as to restore
budgetary balance and maintain macro-economic stability. Furthermore, in making its recommendations, the Commission
is required to have regard to, inter alia, the needs of the States for meeting not only non-Plan revenue expenditures but
current expenditures under the Plans as well. Another notable new feature of theToR of this Commission is the requirement
to suggest suitable corrective measures for ensuring long-term sustainability of the country’s public debt, while making an
assessment of the debt position of the States as on March 31, 1999.
3. While the ToR were thus considerably wider than in the past, requiring an in-depth study of government finances
at all levels, the time available to the Commission for carrying out its exercises and consultations was rather inadequate.
That apart, the Commission’s work, particularly the process of consultation with the States, got disrupted because of the
mid-term general elections held in September-October 1999. Faced with this situation, the Commission asked for an
extension of the time allowed to it originally. In response, a Presidential Order dated December 20, 1999 extended the
time for submission of the Commission’s report till June 30,2000. However, in order that the formulation of budgets of the
governments at the Centre and the States is not handicapped, the Commission has been asked to make an Interim
Report available by January 15, 2000 for enabling provisional arrangements to be made for devolution of Central taxes
and grants-in-aid to the States for the financial year 2000-01. Copies of relevant orders are enclosed.
4. In taking a view on what would be the appropriate share of the States in the Centre’s revenues by way of tax
devolution and grants-in-aid, the Commission reviewed the current state of finances of the Centre and the States, based
on information furnished by the governments concerned. The picture that emerged is a cause of deep concern. While the
Centre is facing a large fiscal deficit, the predominant component being deficit on revenue account, the position of the
States is no better. The States’ revenue deficits have risen to unprecedented levels in the last two years, pushing up the
already high fiscal deficits further, even as capital expenditures have undergone compression.
5. Escalation of deficits in the government budgets in recent years is the outcome of a sharp rise in current expenditures
on the one hand and marked deceleration in the growth of revenue receipts on the other. These trends are evident
uniformly across States and also at the Centre. In the case of the States, a major factor underlying the alarming deterioration
of fiscal situation has been the impact of revision of emoluments of employees in the wake of the Central Pay Commission
recommendations. This has accentuated the burden of interest payments and pensions which have been growing persistently
at a rapid rate. In the case of the Centre, apart from the pay revision of employees, the pressures on the budget have
emanated from several other directions. There has been an urgent need to supplement the allocation for defence in view
of the new security threats to the country. The interest burden too has been growing relentlessly. This is the background in
which the Commission has had to deliberate on what could be the appropriate share of the States in Central revenues.
6. The Commission has also to take note of the increasing role of the Municipal bodies and the Panchayati Raj
Institutions consequent to the 73rd and the 74th amendments to the Constitution. While this has added a new dimension
to the system of democratic governance in the country, it has also brought new demands on the State governments to fulfil
the expectations raised by the constitutional amendments. The conforming legislations have been passed by nearly all
States by now. The States were expected to devolve functions on the local bodies with necessary funds and powers to
raise revenues on their own. As mandated by the Constitution, State Finance Commissions were also set up in most
States and many of them have submitted their reports. In the course of interaction with the States, it has been the
endeavour of the Commission to ascertain the actual position regarding devolution of funds, functions and functionaries to
the local bodies. It was found that necessary follow-up measures to implement the legislations are yet to come into effect
in many States. Given this reality, assessing the requirements of the States to enable them to supplement the resources
of their local bodies has been a difficult task. One important reason is that the ground covered by the SFCs has varied
widely from State to State and in several States, their recommendations are yet to be acted upon fully. Moreover, the fiscal
capacity of the local bodies also differs widely across States and across local bodies within the States. Estimating the

293
 294
requirements of the States on account of the needs of local bodies will require more detailed examination. Hence, for the
present, the Commission would like to propose some ad hoc assistance to the States for helping the local bodies.
II Approach and Recommendations
7. Given the large resource gaps of both the Centre and the States, before proceeding to decide what proportion of
the Central revenues could be transferred to the States during the year 2000-01, the Commission had to make a reason
able estimate of the revenues and expenditures of the governments at all levels. The recommendations made in this report
are based on our provisional assessment of the availability of resources and the fiscal needs of the Centre and the States
for the year 2000-01 in the light of information furnished by the governments, past trends, and certain yardsticks.
8. In making this assessment the Commission has taken into account the requirements of the Centre and the States
for meeting their committed expenditure liabilities as also the expenditures which they may have to undertake, inter-a@ to
meet, in the case of the Centre, the enhanced security needs of the country and, in the case of the States, to augment the
level of some of the basic public services particularly health, education, sanitation, water supply and maintenance of
infrastructure like roads. The Commission has made every effort to see that legitimate requirements of the governments
are met. At the same time, in order that federal revenues are shared in an equitable and efficient manner, for estimating
revenues and expenditures, our aim has been to rely, as far as possible, on certain objective norms. These will be elaborated
in our final report. The scheme of transfers envisaged by us is designed also to introduce incentives for fiscal discipline
and encourage resource-raising effort at all levels.
9. It should be noted that the allocation of revenues between the Centre and the States will depend also on the
adjustment path that may be envisaged for fiscal correction to address the task of restructuring of government finances for
achieving fiscal balance and maintaining macro-economic stability. The recommendations put forward in this Interim
Report are designed to move the government budgets towards such adjustment and to achieve fiscal balance in the
medium term. At the same time, it is our endeavour to see that essential public services whether in the Centre, State or
local bodies are taken care of.
10. Under its ToR, the Commission is required to determine the share of the States in the net proceeds of income tax
and Union excise duties, and specify the share of each State therein. It may be recalled that the Tenth Finance Commission
(TFC) had recommended that the present scheme of tax sharing be replaced by an alternative scheme of devolution
whereby a specified share of Central taxes, excluding surcharges, would be devolved on the States. The emphasis was on
pooling of revenues from all Union taxes. The recommended share of the States was 29 per cent. The TFC had envisaged
this proportion to remain valid for fifteen years to start with. The scheme required an amendment to the Constitution. We
understand that a consensus has been reached between the Centre and the States on the proposal for pooling, leaving
however, the proportion to be devolved to the States open to review by the Finance Commission periodically. The Commission
is cognizant of the fact that as of now despite the consensus on pooling, the required amendment has not come about.
Accordingly, the Commission has proceeded to determine the States’ share in the divisible Central taxes on the basis of
existing provisions of the Constitution. However, while making our recommendations regarding the States’ share in income
tax and Union excise duties, we have taken care to see that the quantum of devolution conforms broadly to 29 per cent of
the gross tax revenue of the Centre excluding surcharges.
11. By virtue of article 270 of the Constitution, the Centre’s income tax revenue is to be shared with the States after
setting apart a share representing the amount of the net proceeds of the tax attributable to the Union Territories. The TFC
had determined the share of Union Territories at 0.927 per cent on the basis of population as of 1971. The Commission
recommends that for the year 2000-01, the same proportion be continued as the share of Union Territories.
12. The TFC had recommended that 77.5 per cent of the net proceeds of the income tax after allowing for the share
of the Union Territories be devolved to the States. Based on an assessment of the likely revenue position of the Union and
the States, and their expenditure liabilities, the Commission recommends that this share be raised to 80 per cent for the
year 2000-01.
13. On the same consideration as mentioned in the preceding paragraph, we further recommend that the share of
States in the net proceeds of Union excise duties be raised to 52 per cent, compared to 47.5 per cent recommended by
the TFC.
14. For the distribution of the sharable proceeds of income tax and Union excise duties among the States as proposed
above, the Commission would like to propose a transitional arrangement. We suggest that pending finalisation of our
report, each State be given the share as recommended by the TFC as their shares of revenue from income tax and Union
excise duties. Necessary adjustments may be made in the light of final report.
15. By a tax rental arrangement with the States entered into in 1957, the Central government levies and collects
additional excise duty in lieu of sales tax on sugar, tobacco and textiles. The net proceeds of these additional excises, after
setting apart a share for the Union Territories, are to be distributed among the States on the basis of criteria that may be
recommended by the Finance Commission. As a provisional arrangement, we recommend that for the financial year
2000-01 the relative shares of Union Territories and individual States in the net proceeds of additional excise duties be
continued at the same percentage levels as were prescribed by the TFC. Again, necessary adjustments may require to be
made after we submit our final report.
 295
16. Para 7(b) of the ToR requires the Commission to make recommendations regarding grants to be made to States
in lieu of tax on railway passenger fares, which used to be levied under the Railway Passenger Fares Act of 1957, since
repealed. The TFC recommended that 10.7 per cent of the collections of fares from non-suburban journeys be designated
as the share of the States to be given as grants in lieu of tax on railway passenger fares. We recommend that this
percentage be continued on the basis of collection of fares from non-suburban journey in the year 1999-2000 unless any
change is thought necessary in our final report. As for the infer-se shares of the States in this grant, pending the determination
of the exact amount to be devolved on this account, it is recommended that, provisionally, each State be allocated an
amount 50 per cent more than what was recommended by the TFC. This will also be subject to the Commission’s final
report.
17. We expect that the enhanced proportions of income tax and Union excise duties along with the proceeds of
additional excise duties levied in lieu of sales tax, and grants in lieu of railway passenger fare tax will provide the States
with about 29 per cent of the Centre’s tax revenues, excluding surcharges.
18. For bridging the gap between revenue and expenditure of the States the Constitution envisages, in addition to
devolution of a portion of designated Central taxes, the provision of appropriate grants-in-aid to States which face deficit
in their revenue budget even after devolution. Para 3(b) of our ToR enjoins on us to determine the principles that should
govern the grants-in-aid to States which are in need of assistance, and also specify the sums to be paid to each State on
this account.
19. The transfers recommended by the TFC did not envisage any revenue deficit grants to the States in the year
1999-2000 in the expectation that revenue deficits would disappear from their budgets with better revenue effort and
expenditure management. As already noted, this has not materialised. On the contrary, there has been steady deterioration.
In order to ascertain whether any State would require grants-in-aid of revenues to meet their budget gap after taking into
account the enhanced devolution of income tax and Union excise duties, the Commission looked into the forecast of
revenues and expenditures furnished by the States as well as those of the Centre to make a preliminary assessment of
their finances. The assessment was made on the basis of past trends as well as certain norms considered desirable for
equity and efficiency. The memoranda received from many of the State governments also urge us to follow the normative
approach in our assessment of the revenue gaps of the States. As mentioned in paragraph 8, we are still in the process of
evolving these norms. On a preliminary assessment we find that a sum of Rs.11,000 crore will need to be provided as
grants-in-aid to States facing a revenue gap in their non-Plan account after devolution of their share in Central taxes. Firm
figures of the amount of grants-in-aid and State-wise allocation will be specified in our final report.
20. The amount of grants-in-aid recommended in the preceding paragraph should serve to meet the non-Plan revenue
gaps of the States. Para 5(iii) of ToR requires us to take into consideration their requirements for meeting revenue
expenditures on the Plan account as well. An allied consideration mentioned in theToR is the need for generating surplus
for capital investment and reducing fiscal deficit. Currently, Plan revenue expenditures are expected to be met primarily
out of the balance from current revenues (i.e., excess of revenue receipts including tax devolution and grants-in-aid over
non-Plan revenue expenditure), and the revenue components of the assistance for State Plans flowing from Centre.
Because of shortfall in revenue in the face of burgeoning non-Plan revenue expenditures, the balance from current revenues
in most States has turned negative. Even with Plan grants, the revenue budget is in deficit in all but a few States which
implies that a large part of the Plan expenditures and, in some States, even a good part of non-Plan revenue expenditures
is met out of borrowings. This has created a vicious circle of borrowing leading to mounting interest burden, adding in turn
to the deficit in revenue account. Restructuring of government finances to restore the fiscal balance will require measures
to get out of this vicious circle. The task may call for a radical change in the system of budgeting for the Plans and their
financing. It will be our endeavour to suggest a scheme of restructuring in the final report to meet this objective. For the
present, the magnitude of revenue transfers from the Centre has been worked out within a macro\ framework with a
tentative programme of fiscal correction in the medium term. The programme we have in mind is designed to reverse the
trend of growing revenue deficit of the Centre and the States as percentage of GDP in 2000-01 itself. In this scenario, the
amount of transfers that can be made by the Centre to the States by way of assistance for the State Plans and centrally
sponsored schemes (CSS) going directly to the State Budgets works out to Rs.l8,600 crore. The respective components
of assistance for the State Plans and for expenditures of the States on CSS has to be determined keeping this in perspective.
21. Exercises for approval of the annual Plans of the States for 2000-01 by the Planning Commission are expected to
commence shortly. In the absence of any indication of what would be the size of total Plan outlay of the States or their
revenue components, we are not in a position to anticipate what will be the ultimate revenue gap of the States. Our
prognostication of the deficit scenario in 2000-01 is based on the assumption that Plan revenue expenditures of the States
will not exceed what would be available by way of Plan grants including grants for CSS as contemplated by us and the
balance from current revenues in the States where it is in surplus. Plan revenue expenditure in excess of the amounts so
available will necessitate borrowings over and above what is implicit in the tentative adjustment path we have in view.
22. In terms of para 10 of theToR, the Commission is required to review the present scheme of Calamity Relief Fund
and make appropriate recommendations thereon. Currently, funds for calamity relief are supposed to be maintained in the
States in the form of States’ Calamity Relief Fund and at the Centre as National Calamity Relief Fund. The Commission is
now in the process of evolving an alternative scheme for funding calamity relief operations. Keeping in view the average
 296
expenditure of the States on natural calamities in the last twelve years and the need for augmenting them further, we
recommend that the provision for the States’ Calamity Relief Fund for the year 2000-01 be enhanced to Rs.2000 crore as
against Rs.1384.60 crore in 1999-2000 determined by the TFC for the year. The Centre’s share in this was fixed by the
TFC at 75 per cent. We recommend that unless changed in our final report, this proportion may be maintained for the
Centre’s contribution to this Fund. Accordingly, it is proposed that an amount of Rs.1500 crore be provided in the Central
budget by way of Centre’s share in the Calamity Relief Fund of the States. Sums may provisionally be released to the
States out of this amount in the same relative proportions as obtaining in the year 1999-2000.
23. As mentioned in paragraph 2, this Commission is required to recommend measures for the augmentation of the
Consolidated Fund of the States to supplement the resources of the Panchayats and the Municipalities on the basis of the
Report of the State Finance Commissions. A review of the reports of the State Finance Commissions, wherever these
have been constituted and their reports are available, is still on. We are still in the process of obtaining information
regarding the status of follow-up of these reports. The Commission is yet to formulate its approach in this regard. In the
interim, we propose that the grants recommended by the TFC for the local bodies be enhanced by 50 per cent for each
State. This will add up to about Rs.2018 crore. This amount may be divided between rural and urban local bodies in the
ratio of 80 to 20. We are proposing this grant in order that the local bodies can improve on their core functions like road
maintenance, water supply, sanitation and street lighting and raise the levels of services provided by them currently,
subject to conditions prescribed by TFC till our final report. The respective bodies should draw up suitable schemes for
utilisation of these grants. No part of these funds should be used for additional expenditure on salaries and wages.
24. It has been the practice of recent Finance Commissions to make recommendations for grants to upgrade certain
services such as police, jails, judiciary, education, health etc. and grants for addressing special problems. Our ToR also
enjoin us to make recommendation for upgradation grants. All States have made representations for substantially higher
grants for upgradation of their administrative and other services. Pending further examination of these representations for
the year 2000-01, we recommend that a provision of Rs.2,000 crore be made for upgradation grants to the States to be
released against proposals, which will be specified by us in the final report after necessary scrutiny, Our endeavour would
be to ensure that such grants for upgradation are focussed on a few substantial projects rather than be spread thinly over
too many items.
III Highlights and Concluding Observations
25. Although the package of transfers of Central revenues to the States recommended in this report for the year
2000-01 is provisional, it has been drawn up keeping in view the acute fiscal stress that is being felt at all levels of
government in the country and the need for a workable plan that can bring the fist into balance in the medium term while
enlarging the availability of funds for investment, It would be unrealistic to expect full fiscal correction to come about in one
year. The macro-framework we have in mind envisages correction towards sustainable levels of deficit and debt over a
period of five years. The adjustment path will be spelled out in the final report. However, a beginning must be made in the
coming fiscal year itself. We expect that our recommendations will serve to meet in the first instance the non-Plan revenue
expenditures of all States. Additionally, we have also provided for a revenue grant from the Centre for assisting the State
Plans in implementing their Plan projects along with those under CSS.
26. Even with Plan grants and surpluses in the non-Plan revenue account of some States, there may be a deficit in
the overall revenue account of the States taken together. In other words, a part of the Plan revenue expenditure will need
to be met out of borrowing. It may not be possible to eliminate the deficit in the short run. However, it is necessary to
recognise that the level of revenue deficit as obtaining at present cannot be sustained and must be brought down substantially.
Depending on the size of the revenue component of the Plan outlay, with the transfers recommended in this report we
expect the combined revenue deficits of the Centre and the States to come down by about 1 per cent of GDP in 2000-01
reversing the recent trends.
27. In making an assessment of the revenue requirements of the States and what can reasonably be expected to flow
from the Centre, the Commission has laid particular emphasis on the need to inculcate fiscal discipline among governments.
For this purpose, the Commission has adopted a two-fold strategy. In the first instance we have attempted to estimate the
revenues and expenditures of the governments normatively wherever such norms can be readily applied. In addition,
while deciding the infer-se shares of the States in the Union taxes, we are considering some new factors for the devolution
formula in the form of incentives and measures for fiscal self-reliance.
28. The Commission also took earnest note of the needs of the local bodies. Although it has not been possible for us
to make detailed recommendations in this regard, the grants meant for local bodies have been enhanced by 50 per cent
straightaway in recognition of their new role under the Constitution.
29. The package of transfers recommended by us for 2000-01 is as follows:
i) The share of States in the net proceeds of income tax be fixed at 80 per cent.
ii) The States’ share of net proceeds of Union excise duties be fixed at 52 per cent.
iii) The share of the States in the net proceeds of additional excise duties be continued at the same percentage
levels as were recommended by the TFC.
iv) Each State be allocated an amount 50 per cent more than what was recommended by the TFC as grant in
 297
lieu of tax on railway passenger fares.
v) An amount of Rs.11,000 crore be provided in the Central budget for grants-in-aid to States facing revenue
deficit after devolution.
vi) The aggregate size of State Calamity Relief Funds be enlarged to Rs.2,000 crore and an amount of Rs.l,500
crore be provided in the Central budget as Centre’s share. Sums may provisionally be released to the States
out of this amount in the same proportions as obtaining in the year 1999-2000.
vii) Grants for local bodies be fixed at Rs.2,018 crore. This amount may be divided between rural and urban local
bodies in the ratios of 80 : 20. Assistance on this account may be provided to the States by scaling up the
yearly grants recommended by the TFC for local bodies by 50 per cent. These grants are meant specifically
for improving the content and quality of the core services of the local bodies.
viii) An amount of Rs.2,000 crore be earmarked in the Central Budget towards upgradation and special purpose
grants to the States.
30. Our recommendations are meant to take effect from the financial year 2000-01 as mandated in the Presidential
Order of December 20,1999. We would like to reiterate that these will be subject to such changes as might be considered
necessary in the final report.

Sd.l-
[A.M. Khusro]
Chairman

Sd.l- Sd./- Sd.l-

[N.C. Jain] [J.C. Jetli] [Amaresh Bagchi]
Member Member Member

Sd.l-
[TN. Srivastava]
Member-Secretary

New Delhi
January 15, 2000
 298
Appendix III.1
(Para 3.14)
Finances of Centre and States: Base and Reform Scenarios
a. Restructuring Central Finances: Dimensions of Adjustment
1. In the Centre’s base scenario, revenues and most components of expenditure grow by their historical drives. We
take the 1999-00 revised estimates as the base figures and apply the trend growth rates (TGRs) calculated over the
period 1987-88 to 1998-99 on these base figures to arrive at projections in the base scenario. The details are given in
Table AIII.l. In this scenario, Centre’s gross tax revenues rise to a level of about 9.24 per cent of GDP while the non-tax
revenues actually fall from a level of 2.75 per cent to 2.3 per cent of GDP
2. On the expenditure side, major expenditure categories are projected on the basis of their TGR. However, interest
payments are projected by applying the effective interest rate on outstanding debt at the end of the previous financial year.
Outstanding debt is projected forward by an estimate of fiscal deficit, which is the resultant of the excess of total expenditure
over non-debt revenue and capital receipts. Fiscal deficit of the Centre in the base run rises from 5.64 per cent of GDP in
1999-00 to above 6 per cent by 2004-05. This level is accompanied by a fall in capital expenditure from 2.62 per cent of
GDP to 2.11 per cent, if it grows at the historical rate of around 8 per cent. As a result of the rise in fiscal deficit, outstanding
debt remains roughly at about 53 per cent of GDP which is almost the same level as at present. However, revenue deficit
is as high as 4.57 per cent of GDP
3 The unacceptable features of this base scenario, therefore, are a high revenue deficit, a high fiscal deficit, and a
low level of capital expenditure relative to GDP This scenario needs to be corrected in order to generate higher fiscal
transfers to States, higher capital expenditure at the Centre accompanied by a higher plan expenditure. This could be
brought about by additional revenue mobilisation both through tax and non-tax sources and curtailment of non-plan
revenue expenditure. The relevant ways and means for bringing about these changes have already been spelt out. The
proposed changes are incorporated in the reform scenario, and the results relating to these are given in Table AIII.2. In this
scenario, gross tax revenues of the Centre increase to nearly 10.3 per cent of GDP and non-tax revenues to 3 per cent of
GDP thereby giving an overall increase in Central revenue receipts of the- order of 1.73 per cent of GDP as compared to
the corresponding level in 1999-00. On the expenditure side, revenue expenditure falls to 11.47 per cent of GDP whereas
capital expenditure increases to 4 per cent of GDP This leads to a sustainable fiscal deficit of 4.5 per cent of GDP and a
fall of roughly 5 percentage points in the debt-GDP ratio of the Centre. Potential fiscal transfers to the States rise by about
one per cent of GDP whereas the revenue deficit falls to 1 per cent of GDP
4 In the reform scenario, as compared to the base line scenario, there is a compression of revenue expenditure of
2.14 percentage points by the year 2004-05, while capital expenditure has been augmented by 1.89 percentage points in
the case of Central finances. Both fiscal and primary deficits are reduced with an increasing margin of reduction in
successive years.
b. Restructuring of State Finances: Dimensions of Adjustment
5. The impact of reforms on State finances are also considered by constructing a base scenario and a reform
scenario. In the case of States, for various items of revenue and expenditure, the trend growth rates have been estimated
over the period 1987-88 to 1998-99. Figures for the base year 1999-00 are derived by applying the TGR on the corresponding
1998-99 figures except for interest payment which is obtained by applying the effective interest rate on the outstanding
debt of the previous year. From this point onwards, two routes are taken, one for the base scenario, and the other for the
reform scenario. In the case of the base scenario, projections are done by continuing to use the TGRs for the years 2000-
01 to 2004-05. The respective TGRs alongwith the projections are given in Table AIII.3.
6. The main features of the base scenario are an increase in the revenue deficit from 2.96 per cent to 3.27 per cent
and an increase in the fiscal deficit from 4.71 per cent to 4.84 per cent. The outstanding debt-GDP ratio also shows an
increase from 25.07 per cent of GDP to 32.21 per cent of GDP On the other hand, capital expenditure as a proportion of
GDP falls from 2.06 per cent to 1.92 per cent. These are all undesirable features which result from continuation of historical
drives of revenues as well as expenditures.
7 In the reform scenario we go by targets of tax and non-tax revenues as percentage to GDP fixed for 2004-05 and
the change is distributed over the intervening years. In the reform scenario, tax-GDP ratio increases by 1 .15 percentage
points and non-tax revenue increases by 0.5 percentage points of GDP. This would lead to an increase in the own tax and
non-tax GDP ratios from 5.29 to 6.44 and 1.03 to 1.53 respectively. Identified subsidies have been put to zero from the first
year onwards. Interest payment has been derived by applying an effective interest rate on outstanding debt at the beginning
of the period. Given the high effective rate of interest in the base year, a decrease of 10 basis points is allowed in each
successive year. Restructuring within revenue expenditure is in favour of priority education (elementary education), priority
healthcare (primary health), water supply & sanitation & roads and bridges, which are all stated to grow according to
targets defined for 2004-05. In the reform scenario, both fiscal and revenue deficits are targeted to decline from 4.71 to 2.5
per cent of GDP and from 2.96 to zero respectively in the terminal year of projection. In the reform scenario, capital
expenditure (net of repayment) increases from 2.06 to 2.85 per cent of GDP The details are given in Table AIII.4.
 299
Table AIII.1 : Central Government : Fiscal Profile 2000-01 to 2004-05
(Rs. in crores)
Base Scenario Gr.Rt./Parameters 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Corporation tax 20.06 29915 35916 43121 51771 62156 74624

Income tax 18.74 26684 31685 37622 44673 53044 62985
Customs 10.93 47800 53025 58820 65249 72381 80292
Union Excise Duties & Service Tax 10.90 63000 69867 77483 85928 95294 105681
Addl. Exc. Duties (net Proceeds) 10.90 3037 3368 3736 4143 4594 5095
Other Taxes 15.27 2580 2974 3428 3952 4555 5251
Gross Tax Revenue 169979 193466 220474 251572 287430 328833
Surcharges and Cesses 11316 13029 15021 17343 20050 23213
Cost of Collection 7.00 2026 2168 2320 2482 2656 2842
Taxes of UTs 12.21 325 365 409 459 515 578
Shareable Tax Revenue 177905 202724 231288 264209 302201
States’ Share in Shareable Pool 29.50 43510 52482 59803 68230 77942 89149
Centre’ Net Tax Revenue 126469 140984 160670 183342 209489 239684
Non Tax Revenue 9.09 53035 57856 63115 68852 75111 81938
Gross Revenue Receipts 223014 251322 283589 320424 362541 410772
Rev. Rec. Excl. Tax. Dev. 179504 198840 223785 252194 284599 321622
Potential Fiscal Transfer (as % of Gr. Rev. Rec) 0.346 0.375 0.375 0.375 0.375 0.375
Potential Fiscal Transfer 94246 106346 120159 135953 154039
Interest Payments 9.83 91425 101266 114475 129355 146103 164938
Pensions 20.34 14304 17213 20715 24928 29998 36100
Defence Services 11.63 35873 40045 44702 49901 55705 62183
Other General Services 15.41 12516 14445 16671 19240 22204 25626
Social Services 13.51 6900 7832 8890 10091 11455 13002
Subsidies 10.20 25692 28313 31200 34383 37890 41755
Economic Services 12.06 6885 7715 8646 9688 10857 12166
Fin. Comm. & Oth.Non-Plan Grants 9.25 6582 17676 19311 21097 23049 25181
Exp. of UTs (without legislature) 13.00 1140 1288 1456 1645 1859 2100
Other Non-Plan Expenditure 11.97 3587 4016 4497 5035 5638 6313
Total Non Plan Rev. Exp. 204904 239810 270563 305364 344758 389364
Total Plan Rev. Exp. 14.58 48132 55150 63190 72404 82960 95056
Total Revenue Exp. 253036 294959 333753 377768 427718 484420
Revenue Deficit 73532 96119 109968 125573 143119 162798
Potential Plan Grants to States 20794 23578 26780 30469 34726
Cap. Expenditure (net of rep.) 8.18 50702 54849 59336 64190 69441 75121
Total Expenditure 303738 349809 393089 441957 497159 559541
Capital Receipts 124234 150969 169304 189763 212559 237918
Recovery of Loans 6.98 12736 13625 14576 15593 16682 17846
Non -debt Cap. Rec. 12.92 2600 2936 3315 3744 4227 4773
Fiscal Deficit 108898 134408 151413 170426 191650 215299
Primary Deficit 17473 33142 36938 41071 45547 50361
Disinvestment for retiring debt
Outstanding debt 891506 1030444 1164852 1316265 1486691 1678341 1893640
As % of GDP
Total Expenditure 15.72 16.02 15.94 15.86 15.78 15.72
Rev. Expenditure 13.10 13.51 13.53 13.55 13.58 13.61
Cap Exp (net of rep.) 2.62 2.51 2.41 2.30 2.20 2.11
Tax Rev (gross) 8.80 8.86 8.94 9.03 9.13 9.24
Non tax Rev. 2.75 2.65 2.56 2.47 2.38 2.30
Fiscal Deficit 5.64 6.16 6.14 6.11 6.08 6.05
Rev Deficit 3.81 4.40 4.46 4.51 4.54 4.57
Primary Deficit 0.90 1.52 1.50 1.47 1.45 1.41
Outstanding debt 53.34 53.36 53.36 53.34 53.28 53.20
GDP 13.00 1931819 2182956 2466740 2787417 3149781 3559252
Debt Sustainability Condition* 1.02 0.02 0.00 -0.02 -0.05 -0.08

Source (Basic Data): Budget Documents

*Note:(+) indicates that debt-GDP/GSDP ratio would keep growing until the sign is reversed.
 300
Table AIII.2 : Central Government : Fiscal Profile 2000-01 to 2004-05
(Rs. in crores)
Base Scenario Gr.Rt./Parameters 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Corporation tax 0.195 29915 37978 45384 54233 64809 77447

Income tax 0.1885 26684 31590 37545 44622 53033 63030
Customs 0.143 47800 53572 61233 69989 79998 91437
Union Excise Duties & Service Tax 0.156 63000 73452 84911 98157 113469 131170
Addl. Exc. Duties (net Proceeds) 0.156 3037 3387 3915 4526 5232 6048
Other Taxes 0.156 2580 1634 1889 2184 2524 2918
Gross Tax Revenue 169979 198226 230961 269185 313833 366002
Surcharges and Cesses 11316 12463 14602 17113 20062 23526
Cost of Collection 0.07 2026 2181 2334 2497 2672 2859
Taxes of UTs 0.156 325 329 380 440 508 588
Shareable Tax Revenue 183253 213645 249135 290591 339030
States’ Share in Shareable Pool 0.2950 43510 54060 63025 73495 85724 100014
Centre’ Net Tax Revenue 126469 144166 167935 195690 228109 265988
Non Tax Revenue 53035 57464 67201 78499 91599 106778
Gross Revenue Receipts 223014 255690 298162 347684 405432 472780
Rev. Rec. Excl. Tax. Dev. 179504 201630 235137 274189 319707 372766
Potential Fiscal Transfer (as % of Gr. Rev. Rec) 0.346 0.375 0.375 0.375 0.375 0.375
Potential Fiscal Transfer 77255 95884 111811 130381 152037 177292
Interest Payments 0.0983 91425 101266 112201 124181 137291 151620
Pensions 0.100 14304 15843 17427 19170 21087 23196
Defence Services 0.100 35873 40661 44727 49200 54120 59532
Other General Services 12516 13260 14056 14900 15797 16749
Social Services 6900 6187 6991 7910 8960 10161
Subsidies 25692 22800 22800 22800 22800 22800
Economic Services 6885 7183 7844 8571 9371 10252
Fin. Comm. & Oth. Non-Plan Grants 0.050 6582 17676 18560 19488 20462 21485
Exp. of UTs (without legislature) 0.130 1140 1185 1339 1513 1710 1932
Other Non-Plan Expenditure 0.050 3587 2707 2842 2984 3134 3290
Total Non Plan Rev. Exp. 204904 228768 248788 270718 294732 321018
Total Plan Rev. Exp 48132 50287 58133 66840 76528 87340
Total Revenue Exp. 253036 279055 306921 337558 371260 408358
Revenue Deficit 73532 77425 71785 63369 51552 35593
Potential Plan Grants to States 20842 26403 32980 40742 49888
Cap. Expenditure (net of rep.) 50702 57389 78313 96161 117327 142370
Total Expenditure 303738 336444 385234 433719 488586 550728
Capital Receipts 124234 134814 146435 158995 172545 187133
Recovery of Loans 0.0733 12736 13539 14531 15597 16740 17967
Non-debt Cap. Rec. 2600 9000 9000 9000 9000 9000
Fiscal Deficit 124234 112275 122904 134399 146805 160166
Primary Deficit 17473 11009 10702 10217 9514 8548
Disinvestment for retiring debt 1000 1000 1000 1000 1000
Outstanding debt 891506 1330444 1141719 1263623 1397022 1542827 1701993
As % of GDP
Total Expenditure 15.72 15.41 15.62 15.56 15.51 15.47
Rev Expenditure 13.10 12.78 12.44 12.11 11.79 11.47
Cap Exp (net of rep.) 2.62 2.90 3.17 3.45 3.72 4.00
Tax Rev (gross) 8.80 9.08 9.36 9.66 9.96 10.28
Non tax Rev. 2.75 2.63 2.72 2.82 2.91 3.00
Fiscal Deficit 5.64 5.14 4.98 4.82 4.66 4.50
Rev Deficit 3.81 3.55 2.91 2.27 1.64 1.00
Primary Deficit 0.90 0.50 0.43 0.37 0.30 0.24
Outstanding debt 53.34 52.30 51.23 50.12 48.98 47.82
GDP 0.13 1931819 2182956 2466740 2787417 3149781 3559252
Debt Sustainability Condition 1.02 -0.96 -1.00 -1.04 -1.07 -1.10

Source (basic Data) : Budget Documents.

Note : As in Table A III. 1.
 301
Table A1113 : State Governments: Fiscal Profile 2000-01 to 2004-05
(Rs. in crores)

Base Scenario Gr. Rate 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Own Tax Revenues 14.79 85912 102168 117278 134624 154535 177390 203626
Share in Central Taxes 39844 44789 54574 63602 74140 86444 100814
Non-Tax Revenues 12.02 14172 19973 22367 25052 28065 31444 35237
Grants 23069 33501 41310 48209 56241 65593 76478
Potential Fiscal Transfers 62913 78290 95884 111811 130381 152037 177292
Revenue Receipts (Excl. C.Entries) 162996 200430 235529 271487 312980 360872 416155
General Services 18.12 76184 97987 114216 135972 161455 191322 226355
Interest Payment* 11.03 35422 44397 53429 64208 76634 90949 107439
Pension 22,15 16174 22188 27103 33106 40439 49397 60338
Police 15.40 11973 14494 16726 19302 22274 25705 29663
Election 24.45 272 1120 1394 1735 2160 2688 3345
Other General Services 10.29 12343 15787 15564 17620 19948 22584 25570
Social Services 81346 99012 112887 128709 146752 167326 190788
Education 14.40 44722 56826 64943 74220 84822 96939 110788
Priority Education 14.57 22406 25525 29244 33505 38386 43979 50387
Other Education 14.05 22316 31302 35699 40715 46436 52960 60401
Medical & Public Health 13.36 10515 12482 14132 15999 18114 20509 23219
Priority Health 12.94 3175 3376 3813 4307 4864 5493 6204
Other Health 13.32 7339 9106 10318 11693 13250 15015 17015
Family Welfare 12.43 1948 2326 2615 2940 3306 3717 4179
Water Supply & Sanitation 13.92 5320 5563 6338 7220 8225 9370 10674
Other Social Services 13.96 18841 21814 24859 28330 32285 36791 41928
Economic Services 47368 56038 63306 71594 81058 91880 104273
Irrigation 10.37 5051 6314 6969 7691 8489 9369 10341
Roads and Bridges 13.22 4685 4244 4805 5440 6159 6974 7895
Power 8.62 257 208 226 246 267 290 315
Transport 9.10 70 183 199 218 237 259 283
Others (Excl. Subsidies) 11.19 28336 34795 38688 43018 47831 53184 59135
Identified Subsidies 20.64 8969 10294 12418 14982 18074 21804 26305
Contra Entries 9808 9339
C & A to Local Bodies 19.32 3452 4555 5435 6485 7737 9232 11016
Revenue Exp (Excl. C Entries 208350 257591 295844 342760 397002 459760 532432
Recovery of Loans and Adv. 16.26 3256 5900 6860 7975 9272 10780 12532
Other Capital Receipts 509 0 0 0 0 0 0
Capital Receipts 15.87 3765 5900 6860 7975 9272 10780 12532
Capital Outlay 12.73 22797 28131 31712 35749 40300 45431 51214
Loans and Advances 8.30 10093 11600 12563 13606 14735 15958 17283
Repayment of Loans and Adv. 12.76 22292 17130 19315 21780 24559 27693 31227
Capital Exp. (Net of Rep.) 11.51 32890 39732 44276 49356 55036 61389 68497
Capital Expenditure 55181 56862 63591 71136 79595 89082 99724
Revenue Deficit 45355 57161 60315 71273 84022 98888 116276
Fiscal Deficit 74479 90993 97731 112653 129785 149497 172241
Primary Deficit 39057 46595 44302 48445 53151 58548 64802
Outstanding Debt 400754 484393 582124 694777 824562 974060 1146300
GDP 1762609 1931819 2182956 2466740 2787417 3149781 3559252
As a per cent of GDP
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Own Tax Revenue 4.87 5.29 5.37 5.46 5.54 5.63 5.72
Total Tax Revenue 7.13 7.61 7.87 8.04 8.20 8.38 8.55
Non-Tax Revenue 0.80 1.03 1.02 1.02 1.01 1.00 0.99
 302

1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Revenue Receipts 9,25 10.38 10.79 11.01 11.23 11.46 11.69

Priority Education 1,27 1.32 1.34 1.36 1.38 1.4 1.42
Priority Health 0.18 0.17 0.17 0.17 0.17 0.17 0.17
Roads and Bridges 0.27 0.22 0.22 0.22 0.22 0.22 0.22
Water Supply & Sanitation 0.3 0.29 0.29 0.29 0.3 0.3 0.3
Total Priority Expenditure 2.02 2 2.02 2.05 2.07 2.09 2.11
Revenue Expenditure 11.82 13.33 13.55 13.9 14.24 14.6 14.96
Capital Expenditure 3.13 2.94 2.91 2.88 2.86 2.83 2.8
Cap. Exp. (Net of Rep.) 1.87 2.06 2.03 2 1.97 1.95 1.92
Revenue Deficit 2.57 2.96 2.76 2.89 3.01 3.14 3.27
Fiscal Deficit 4.23 4.71 4.48 4.57 4.66 4.75 4.84
Primary Deficit 2.22 2.41 2.03 1.96 1.91 1.86 1.82
Outstanding Debt 22.74 25.07 26.67 28.17 29.58 30.92 32.21
Debt Sustainability Condition** 1.82 1.97 1.56 1.47 1.39 1.32 1.26

Note: Priority Expenditures are defined as follows:

1. Priority Education consists of elementary education (head 2202-01 of Finance Accounts)
2. Priority Health consists of Rural Primary Health & Control of diseases (head 2210-03)+ (2210-06-101) of Finance Accounts
3. Roads & Bridges (head 3054 of Finance Accounts)
4. Water supply & sanitation (head 2215 of Finance Accounts)
5. Base year outstanding debt includes reserve funds & deposits
* Effective Rate of Interest
** As indicated on Note under Table A Ill. 1.
Source (Basic Data): Finance Accounts of State Governments & State Budget Documents.

Table AIII.4: State Governments: Fiscal Profile 2000-01 to 2004-05

(Rs. in crores)

Reform Scenario 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Own Tax Revenues 85912 102168 120098 141175 165952 195076 229312
Share in Central Taxes 39844 44789 54574 63602 74140 86444 100814
Non-Tax Revenues 14172 19973 24752 30436 37181 45164 54594
Grants 23069 33501 41310 48209 56241 65593 76478
Potential Fiscal Transfers 62913 78290 95884 111811 130381 152037 177292
Contra Entries
Revenue Receipts (Excl C.Entries) 162996 200430 240734 283423 333513 392277 461198
General Services 76184 97987 111861 122589 134170 146697 160263
Interest Payment 35422 44397 53178 62829 72424 81825 90861
Pension 16174 22188 24407 26848 29533 324~6 35735
Police 11973 14494 15943 17538 19291 21221 23343
Election 272 1120 1232 1356 1491 1640 1804
Other General Services 12343 15787 17100 14019 11430 9526 8520
Social Services 81346 99012 114592 132732 153842 178395 206947
Education 44722 56826 65460 75466 87060 100488 116041
Priority Education 22406 25525 30715 36823 44000 52420 62287
Other Education 22316 31302 34745 38643 43060 48068 53754
Medical & Public Health 10515 12482 15124 18268 22001 26423 31654
Priority Health 3175 3376 5017 7027 9475 12440 16017
Other Health 7339 9106 10107 11241 12526 13983 15637
Family Welfare 1948 2326 2582 2872 3200 3572 3995
 303

Reform Scenario 1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05

Water Supply & Sanitation 5320 5563 7212 9196 11573 14413 17796
Other Social Services 18841 21814 24214 26930 30009 33499 37461
Economic Services 47368 56038 60521 65411 70755 76592 82972
Irrigation 5051 6314 6969 7691 8489 9369 10341
Roads and Bridges 4685 4244 6456 9172 12484 16503 21356
Power 257 208 226 246 267 290 315
Transport 70 183 199 218 237 259 283
Others (Excl. Subsidies) 28336 34795 46670 48084 49277 50171 50678
Identified Subsidies 8969 10294 0 0 0 0 0
Contra Entries 9808 9339
C & A to Local Bodies 3452 4555 5435 6485 7737 9232 11016
Rev Exp. (Excl C. Entries) 208350 257591 292408 327216 366504 410917 461198
Recovery of Loans and Adv. 3256 5900 6860 7975 9272 10780 12532
Other Capital Receipts 509 0 0 0 0 0 0
Capital Receipts 3765 5900 6860 7975 9272 10780 12532
Capital Outlay 22797 28131 28932 36978 46600 58068 71698
Loans and Advances 10093 11600 12563 13606 14735 15958 17283
Repayment of Loans and Adv. 22292 17130 19315 21780 24559 27693 31227
Capital Exp. (Net.Rep.) 32890 39732 48355 58559 70607 84806 101514
Capital Expenditure 55181 56862 60810 72364 85894 101720 120208
Revenue Deficit 45355 57161 51674 43793 32991 18640 0
Fiscal Deficit 74479 90993 93169 94377 94326 92667 88981
Primary Deficit 39057 46595 39990 31548 21902 10842 -1880
Outstanding Debt 400754 484393 577562 671939 766265 858932 947913
GDP 1762609 1931819 2182956 2466740 2787417 3149781 3559252

As a per cent of GDP

Own Tax Revenue 4.87 5.29 5.50 5.72 5.95 6.19 6.44
Total Tax Revenue 7.13 7.61 8.00 8.30 8.61 8.94 9.28
Non-Tax Revenue 0.80 1.03 1.13 1.23 1.33 1.43 1.53
Revenue Receipts 9.25 10.38 11.03 11.49 11.96 12.45 12.96
Priority Education 1.27 1.32 1.41 1.49 1.58 1.66 1.75
Priority Health 0.18 0.17 0.23 0.28 0.34 0.39 0.45
Roads and Bridges 0.27 0.22 0.30 0.37 0.45 0.52 0.60
Water Supply & Sanitation 0.30 0.29 0.33 0.37 0.42 0.46 0.50
Total Priority Expenditure 2.02 3.23 2.26 2.52 2.78 3.04 3.30
Revenue Expenditure 11.82 13.33 13.40 13.27 13.15 13.05 12.96
Capital Expenditure 3.13 2.94 2.79 2.93 3.08 3.23 3.38
Cap. Exp.(Net of Rep.) 1.87 2.06 2.22 2.37 2.53 2.69 2.85
Revenue Deficit 2.57 2.96 2.37 1.78 1.18 0.59 0.00
Fiscal Deficit 4.23 4.71 4.27 3.83 3.38 2.94 2.50
Primary Deficit 2.22 2.41 1.83 1.28 0.79 0.34 -0.05
Outstanding Debt 22.74 25.07 26.46 27.24 27.49 27.27 26.63
Debt Sustainability Condition 1.82 1.97 1.37 0.80 0.31 -0.13 -0.52

Note: Priority Expenditures are defined as follows:

1 . Priority Education consists of elementary education (head 2202-01 of Finance Accounts)
2. Priority Health consists of Rural Primary Health & Control of diseases (head 2210-03)+ (2210-06-101) of Finance Accounts
3. Roads & Bridges (head 3054 of Finance Accounts)
4. Water supply & sanitation (head 2215 of Finance Accounts)
5. Base year outstanding debt includes reserve funds & deposits
* Effective Rate of Interest
Source (Basic Data): Finance Accounts of State Governments & State Budget Documents
 304
Table AIII.5: Determining Sustainability of Fiscal Deficits of States

State Debt/GSDP Effective Gr Rate of Fiscal Deficit Primary Deficit Excess of

Ratio Interest Rate GSDP to GSDP to GSDP Primary
Average TGR Ratio Ratio Deficit over
Sustainability
Condition
*

1998-99 1996-97 1993-94 1998-99 1998-99

to 1998-99 to 1996-97

Andhra Pradesh 0.203 0.108 0.168 0.047 0.025 0.015

Arunachal Pradesh 0.402 0.120 0.108 0.034 -0.010 -0.005
Assam 0.232 0.086 0.107 0.012 -0.006 -0.011
BOar 0.331 0.103 0.118 0.049 0.017 0.012
Goa 0.342 0.085 0.196 0.051 0.024 -0.008
Gujarat 0.181 0.111 0.182 0.051 0.031 0.020
Haryana 0.211 0.120 0.186 0.048 0.027 0.015
Himachal Pradesh 0.559 0.104 0.175 0.154 0.108 0.074
Jammu & Kashmir 0.480 0.100 0.121 0.079 0.029 0.020
Karnataka 0.175 0.104 0.160 0.034 0.017 0.008
Kerala 0.271 0.103 0.204 0.049 0.025 0.003
Madhp Pradesh 0.186 0.102 0.148 0.039 0.022 0.014
Maharashtra 0.131 0.100 0.173 0.030 0.015 0.007
Manipur 0.447 0.091 0.162 0.038 0.006 -0.021
Meghalaya 0.234 0.104 0.104 0.048 0.026 0.026
Mizoram 0.584 0.090 0.180 0.064 0.016 -0.028
Nagaland 0.509 0.112 0.124 0.068 0.018 0.013
Orissa 0.378 0.107 0.105 0.074 0.036 0.037
Punjab 0.346 0.122 0.144 0.062 0.024 0.017
Rajasthan 0.289 0.113 0.201 0.067 0.038 0.017
Sikkim 0.642 0.129 0.134 0.186 0.119 0.116
Tamil Nadu 0.164 0.104 0.170 0.039 0.022 0.012
Tripura 0.372 0.117 0.165 0.031 -0.006 -0.021
Uttar Pradesh 0.280 0.103 0.171 0.065 0.034 0.018
West Bengal 0.262 0.114 0.152 0.063 0.037 0.028

Source (Basic Data): Finance Accounts of State Governments, and CSO.

* As indicated in Table A 111.1.
 305
Appendix VII.1
(Para 7.17)
A scheme proposed by Shri N.C. Jain, Member, Finance Commission,
on clearance of the backlog of pending cases
1. Paragraph 5(v) of the Presidential Order ordains upon us a duty to take into account the requirements of the
States for upgradation of services in non-developmental and social sectors and services. We identified judicial administration
as one of such subjects. The details of it are in paragraph 7.16 of this report.
2. The backlog of the cases, i.e. the cases pending since long, is too heavy. As per the information obtained from the
Department of Justice, Government of India, and also the State Governments, the balance of cases pending in the district
and subordinate courts in the recent years has been as under: -
31.12.1995 2.13 crores
31.12.1996 1.95 crores
31.12.1997 1.96 crores
31.12.1998 1.92 crores
3. State-wise details of pending cases are indicated in Appendix-VII.1 .A. This statement also discloses that at
present the number of courts in all the 25 States is 12,378, and during 1998, the average institution of cases per court was
1 ,017, while the average disposal per court was 994, though the average disposal rate per court from 1995 to 1998 was
1048. We are also informed that the pendency of criminal cases in the magisterial courts has decreased by about 2,15,485,
though in the sessions courts, it has increased by 44,291 cases (Source: Ministry of Law & Justice, GOI, letter to the
Registrar, Supreme Court of India on 31 .1.2000).
4. The demand made to us by the States for upgradation of judicial administration, including establishment of new
courts, sums up to Rs.4,870 crore, as may be seen in Appendix-VII.1 .B. This is too large an amount to be met out of the
upgradation grant that this Commission has at its disposal. It also goes without saying that the creation of these new
courts would require very large recurring and non-recurring expenditure. Therefore, we should evolve a scheme whereby
a smaller fund would serve the larger purpose of clearing the backlog substantially by the end of 2004-05. Besides, it
should be manageable within the limited amount that we can afford as upgradation grants for the judicial administration.
Since multiple demands for multiple sectors were to be considered by us, we could manage to provide Rs.502.90 crore
only for upgradation of judicial administration. My scheme, explained below, may satisfy the need even within this amount.

The Scheme
5. The Scheme is that instead of employing new judges, retired sessions judges and additional sessions judges be
appointed as ad hoc judges specifically for disposing of the pending sessions cases.
6. It can also be made clear that the tenure of such new appointees as ad hoc sessions judges may be limited to a
period of two years so that the later retirees may also get accommodated subsequently. Moreover, a fixed tenure of two
years would be an impetus to them to dispose of the cases early and not to linger on with an expectancy of extended
tenure. Some definite guidelines for the disposal of the cases may be given to them, e.g., 14 sessions trial cases to be
disposed of in a month. If 5 judges are appointed in a district (of course, looking to the size of the district and the pendency
of the cases) and they dispose of 14 sessions cases in a month, each judge will then be disposing of 168 cases in a year
and 5 judges. 840 cases. In 600 districts (this is a round figure, though the districts are 571), the total disposal will be 5 lakh
cases per year and in 4 years time, i.e. 2001-05, approximately two million cases will be disposed of. The experiment may
later be carried forward for the disposal of other criminal (other than Sessions) and civil cases also, for which the disposal
rate may be 20 to 25 per month.
7. I have got some figures worked out to concretize my proposal in the monetary frame and I am thankful to all those
who assisted me in that respect. It is appended as Appendix-VII.1 .C. According to my estimates, if 5 courts, on an
average, are established in a district for disposal of the pending sessions cases only, nearly 2 million pending cases will be
disposed of in 4 years time, i.e. during 2001-05, for which the recurring cost would be Rs.87 crore per year and non
recurring, Rs.138 crore.
8. Quite interestingly, this would also entail enormous saving of expenses over the under-trials languishing in jails.
The total number of under-trials, as on 31.12.1998, was 1,88,241. The average of the last five years brings this figure
down to a little over 1,80,000 under-trials. The average cost per under-trial per day is Rs.55, covering diet, medicine,
clothing, with extra provision for sanitation and water, correctional programmes and transportation to the courts and back.
The information available in Appendix-VII.1 .A indicate that there are States where pendency is very large and those
where it is medium to low. However, even if the disposal of cases becomes faster, it can be expected that one-third of the
under-trials will always be there in prisons pending appeals etc. This figure works out to 60,000 under-trials. In other
words, if the trial of cases is expeditiously taken up and disposed, the presence of 1,20,000 under-trials would not be
 306
necessary. In a year, the saving would be to the tune of Rs.20,000 per under-trial, which, for 1,20,000 under-trials, comes
to Rs.240 crore. Thus, if the ad hoc session judges were asked to take up trial of the under-trials on a priority basis, the
overall saving would be of approximately Rs. 240 crore per year. We have pointed out earlier that the recurring expenditure
of providing 5 sessions court in each district of the country will come to approximately Rs.87 crore per year. The Government
will, therefore, be saving Rs.153 crore every year. Further, there will be savings on behalf of the under-trials too, who have
to engage lawyers to plead their cases. There will also be savings on account of public prosecutors who have to remain
involved at every appearance. There will be some administrative savings too, as the requirement of manpower for running
the prisons will come down, Above all, the fundamental rights of a citizen for a speedy trial will be met.
9. Appendix-VII.1 .C deals only with the sessions cases but there are other magisterial and criminal cases too.
Some retired senior Civil Judges or even Additional District Judges may be appointed on ad hoc basis for disposal of
those pending cases. Their cost may be borne by the State Governments from out of the savings on account of the
released under-trials.
10. During my tenure as Advocate General in Madhya Pradesh, I had suggested that a district level body may be
constituted for scrutinizing cases of such under-trials who are languishing in jails for more than the period for which they
may be convicted ultimately. This scheme is working satisfactorily in the State and several thousand cases have been
disposed of in this manner by releasing the incumbents.
11. It is true that a year’s time may be required to work out the modalities to be settled by the Law Ministry for
amendment of the laws, making rules for the appointment of the ad hoc judges, their selection, appointment and for the
construction of the court rooms etc. But, safely enough, this exercise can be completed by 31.3.2001. And if a beginning
is made immediately, concrete results should be attainable by 2005 and most of the backlog may be cleared in about 8 to
10 years time.
12. Some reconsideration may perhaps be required about the provision of cars for the ad hoc judges. It has been
suggested that one staff car can serve 5 ad hoc judges in a district. It may be seen whether one staff car can conveniently
serve five judges or more cars may be necessary. If the number of cars are required to be increased, the extra cost would
not be very much and some adjustments may be made in my calculations.
13. The above proposal is only a tentative outline. The scheme can be further viewed, reviewed and refined. I shall
always be available for any work entrusted to me for this purpose.

Sd/-
(N C Jain)
Member (EFC)
29.6.2000
 307
Appendix VII.1A
State-wise details of civil and criminal cases instituted, disposed and balance,
in 1998 and average rate of disposal during 1995-98

Sl. State Opening Institution Disposal Closing No. of Institution Disposal Cases Average
No. Balance Balance Courts$ per per pending Disposal
as on as on 31 st court Court per Court Rate per
1 st January December Court
(1995-98)

1 2 3 4 5 6 7 8 9 10 11

1 Andhra Pradesh 1057328 1011221 766377 1302172 672 1505 1140 1938 1553

2 Arunachal Pradesh$ 1845 835 831 1849 48 17 17 39 15

3 Assam 179920 103802 96923 186799 221 470 439 845 547

4 Bihar 1207205 347773 331788 1223190 1648 211 201 742 200

5 Goa 44846 22694 24241 43299 44 516 551 984 532

6 Gujarat 3026278 1655283 1681231 3000330 640 2586 2627 4688 2918

7 Haryana** 400665 280824 264721 416768 266 1056 995 1567 820

8 Himachal Pradesh 130129 153983 147669 136443 94 1638 1571 1452 1422

9 Jammu & Kashmir* 124808 125264 128231 121841 162 773 792 752 697

10 Karnataka 1248040 801686 795071 1254655 632 1268 1258 1985 1151

11 Kerala 539710 861733 799747 601696 382 2256 2094 1575 1872

12 Madhya Pradesh 1456259 911544 920950 1446853 988 923 932 1464 977

13 Maharashtra 3071277 1723509 1839683 2955103 1250 1379 1472 2364 1795

14 Manipur 7600 3215 2819 7996 30 107 94 267 329

15 Meghalaya* 2154 1313 1238 2229 8 164 155 279 155

16 Mizoram 2282 8198 6748 3732 53 155 127 70 87

17 Nagaland 762 1324 426 1660 22 60 19 75 19

18 Orissa 619806 214479 186620 647665 457 469 408 1417 533

19 Punjab** 325471 364256 339299 350428 301 1210 1127 1164 933

20 Rajasthan 864291 539082 528308 875065 761 708 694 1150 693

21 Sikkim 2703 3295 4218 1780 12 275 352 148 270

22 Tamil Nadu 839340 1382320 1393563 828097 602 2296 2315 1376 2292

23 Tripura 19320 26413 26880 18853 73 362 368 258 337

24 Uttar Pradesh 3178827 2064151 1998627 3244351 2239 922 893 1449 790

25 West Bengal 1313280 624758 626520 1311518 773 808 811 1697 492

Total 18938010 12587875 12308709 19217176 12378 1017 994 1553 1048

Source: Department of Justice, GO] and State Governments.

* Figures relates to 1997.
** Figures relates to 1996.
$No. of Judicial Officers (sanctioned posts), as in September, 1999 (Source: Report of the Judicial Pay Commission, 1999).
For Arunachal Pradesh. figures are as given by the State Government.
 Annexure VII.1.B

Proposals of States submitted to EFC for Upgradation of Judicial Administration during 2000-05

(Rs.in lakhs)
States Buildings Establishment of New Courts Record Library Court Office Computers Furniture/ Salaries Vehicles Training Toilet Modernisatiion Miscellaneous Total
Residential Non- High Court District & Rooms Lockups Aids Furnishing facilities/ & Re-organisation
Residential Subordinate amenities
Courts

1 Andhra Pradesh 16748 438 100 979 398 530 522 425 20140

2 Arunachal Pradesh 146 45 191

3 Assam 4600 600 47 91 1281 6619

4 Bihar 1912 21492 47 18 125 275 45 4 23918

5 Goa 320 15 15 25 375

6 Gujarat 0

7 Haryana 7248 20270 559 559 10081 210 38927

8 Himachal Pradesh 3516 1074 1723 180 90 245 16 6844

9 Jammu & Kashmir 250 312 51 20 4 235 872

10 Karnataka 608 3664 535 636 5443

308

11 Kerala 3414 8000 5560 50 905 8470 400 4669 31468

12 Madhya Pradesh 350 193 165 65785 340 498 946 950 1800 1163 2550 74740

13 Maharashtra 110000 110000

14 Manipur 27 845 100 972

15 Meghalaya 468 481 949

16 Mizoram 262 30 15 22 11 82 422

17 Nagaland 350 1030 609 1989

18 Orissa 440 2030 1360 324 96 43 123 4416

19 Punjab 0
20 Rajasthan 1442 12201 256 13899

21 Sikkim 720 100 200 5 4 2 1 8 8 100 1148

22 Tamil Nadu 3500 405 4258 71 8234

23 Tripura 250 200 450

24 Uttar Pradesh 22033 29121 47097 1984 31000 239 2500 1027 135001

25 West Bengal 0

Total-All States 43028 63595 40590 254294 669 1931 998 3396 37009 2275 20808 919 1350 2110 4908 9137 487017
 309
Appendix VII.1 .C
(Para 7.17)
Requirement for an additional Sessions Court
Staff:
1) One Additional Sessions Judge
2) One Peshkar/Ahalmat
3) One Stenographer
4) One Peon

Building:
1) Court hall- 400 sq. ft.
2) Office room for the judge including toilet -240 sq. ft.
3) Office room for peshkar/ahalmat and stenographer - 168 sq. ft.
Total - 808 sq. ft.

Cost calculations:
The salaries and allowances of the judges and the supporting staff vary from State to State. However, on an average, it
may be assumed that the average expenditure per month on this account for a judge would be Rs.19,000, for a peshkar/
ahalmat, Rs.8500, for a stenographer, Rs.5,500 and for a peon, Rs.3,500. The total comes to Rs.36,500 per month. However,
since we are suggesting re-employment, the actual cost will be half that of a regular incumbent as the Government will not
have to pay pension etc. Thus the monthly cost will be approximately Rs.l8,000, which works out to Rs.2.16 lakh per year.
The present cost of construction works out to around Rs.500 per sq. ft. The total cost for 808 sq. ft. comes to approxi-
mately Rs.4 lakh. This will be a one-time expenditure. Since we are contemplating providing 5 courts in each district, one
car with a driver can provide the necessary support. A car costs Rs.3 lakh. The driver will cost approximately Rs.3,550 per
month. However, since he will be a re-employed person after retirement, the actual cost will be Rs. 1,775 per month or
Rs.21,300 per year.

Recurring cost:
Salaries and allowances for the judge, peshkar/ahalmat, stenographer and the peon will be Rs.2.16 lakh per year, and
for the driver will be Rs.21,300 per year. In addition, 10 per cent of the basic pay as House Rent Allowance -approximately
Rs.45,000 per year, may be required. The cost of fuel/maintenance for the car will be Rs.30,000 per year and that of
stationery, registers etc., Rs.20,000 per year. The total recurring cost thus works out to Rs.3.32 lakh per year.
For 5 courts, the cost comes to Rs.16.60 lakh. Since we are suggesting that only one car will be sufficient to meet the
needs of all 5 judges in a district, we have to subtract the cost of 4 drivers. The cost then becomes Rs.15.75 lakh. Further,
since only one vehicle has to be provided for 5 judges, we have to subtract the cost of maintenance of 4 vehicles, The cost
would then come down to Rs.14.55 lakh. Non-recurring cost: Cost of construction of 5 courtrooms with office rooms being
Rs.20 lakh and the cost of a vehicle, Rs.3 lakh, the total non-recurring cost for a district would be Rs.23 lakh.

Total cost:
Thus the total recurring cost of 5 sessions courts comes to Rs.14.55 lakh per year and the non-recurring cost, Rs.23
lakh. For 600 districts in the country the recurring cost will come to Rs. 87 crore per year, while the non-recurring cost,
Rs.138 crore. In the first year the cost will be Rs.225 crore. Thereafter the cost will be Rs.87 crore per year.

Appendix VII.2
(Para 7.22)
Scheme for utilisation of the upgradation grants provided towards computer training for school children
The upgradation grant provided by the Finance Commission towards computer training for school children should be
utilised by way of setting up a computer centre in each district. The cost of a centre is estimated to be Rs.43 lakh, inclusive
of 50 computer machines with necessary peripherals, building, instructors’ remuneration and training software. A commit-
tee chaired by the District Collector should manage each centre. Children studying in classes 8 to 12 and enrolled in
recognised schools as regular students alone would be entitled to use these centres. Weekends (Saturdays and Sundays)
and all other holidays should be reserved for students from schools located in the rural areas. A student may be allowed
to use the Centre for two hours in a week and should get about 50 hours of computer education in a year. For working out
the detailed modalities of construction, purchases, curricula, user charges, etc., each State may set up a committee under
the chairmanship of the Chief Secretary and other experts in the field.

309
 310
Appendix VIII.1
(Para 8.24)
Methodology adopted for determining the allocation to States towards Panchayats
The allocation for each State has been determined on the basis of a five-fold criterion, explained below:
1. Rural Population (Weight=40 per cent): In considering the rural population of the States, the 1991 Census
figures have been adopted.
2. Geographical Area (Weight=10 per cent): In considering the geographical rural areas of the States, the 1991
Census figures have been adopted.
3. Distance from per capita agricultural income (Weight=20 per cent): The average per capita GSDP from
primary sector (at current prices, excluding mining and quarrying) has been arrived at by using the GSDP figures pub-
lished by the CSO and population figures (projection) published by the Registrar General of India, for three years, viz.
1994-95, 1995-96 and 1996-97. Distance of each State is measured from the reference highest point, viz. the highest
average per capita GSDP, plus half of the standard deviation. The distances are weighted by the rural population (1991) of
the respective State to arrive at its share.
4. Own revenue efforts of the Panchayats (Weight=10 per cent): The own revenue efforts of the Panchayats in
each State have been measured against two indicators, viz. (i) the State’s own revenues and (ii) GSDP from primary
sector, excluding mining & quarrying. This is explained further below:
i. The own revenue collection of the Panchayats in each State is measured against the own revenue collection
of the State Government for three years, viz. 1995-96, 1996-97 and 1997-98. The average of these ratios is
weighted by the rural population (1991) to arrive at the share of each State. This index has been given a
weight of 5 per cent in the total allocation.
ii. The own revenue collection of the Panchayats in each State is measured against the GSDP from primary
sector excluding mining and quarrying for the years 1994-95, 1995-96 and 1996-97. The average of these
ratios is weighted by the rural population (1991) to arrive at the share of each State. This index has been
given a weight of 5 per cent in the total allocation.
3. Index of decentralisation (Weight=20 per cent): The index of decentralisation has taken into account the
following ten indicators:
i. Enactment of State Panchayat Legislation in conformity with the 73rd CAA: States have been graded on
a scale of 5 for their promptitude in enactment of conformity legislation, with reference to the date of bringing
into force the 73rd CAA, i.e. 24th April, 1993. Marks have been assigned as 5, 4, 3, 2 and 1 for bringing in such
legislation within 3 months, 3 to 6 months, 6 to 9 months, 9 to 12 months and above 12 months, respectively.
No mark has been assigned for those States that have not brought in such legislation so far.
ii. Intervention/restriction in the functioning of the Panchayats: The level of autonomy made available to
the Panchayats in the State Panchayat Legislation has been measured in terms of the provisions relating to
three kinds of intervention/restriction, viz. (a) power to suspend/dissolve the elected bodies, (b) power to
suspend/remove the elected officials and (c) power to suspend/cancel the resolutions/orders of the Panchayats.
These have been measured on a scale of 5 each for each tier of the Panchayats and marks assigned as
under:
Authority for intervention Marks
None 5
State Government 4
Head of the Department/ 3
Commissioner/Zilla Parishad
District Collector 2
Sub-Divisional Officer 1
States having three-tier Panchayats have been measured against a total of 45 marks and those having two-tier
Panchayats, 30 marks.
iii. Assignment of functions to the Panchayats in the State Panchayat Legislation vis-à-vis the Eleventh
Schedule: The 29 functions listed in the Eleventh Schedule of the Constitution have been grouped1 as core
functions (5 items), welfare functions (13 items), agriculture & allied (9 items) and industries (2 items). Assign-
ment of each function has been measured on a scale of 5, giving 5 marks for assigning the function to the village
panchayats; 4, to the intermediate panchayats; and 2, to the district panchayats. For assignment of a function
concurrently to the panchayats at village level as well as to one or more at the higher tiers, 5 marks are awarded.
The core functions are given a weight of 3, welfare functions, 2 and the remaining, 1. In this way, the States are
measured on a scale of 260.
 311
iv. Transfer of functions to the Panchayats by way of Rules/Notifications/Orders of State Governments:
The methodology indicated for item (iii) above has been adopted here too, while comparing the status of
actual transfer of functions to the Panchayats in the States by way of rules/notifications/orders of the State
Government.
v. Assignment of taxation powers to the village panchayats as per State Panchayat Acts: A menu of 23
taxes has been prepared that includes the taxes provided for levy by the village panchayats in the various
State Panchayat Legislation. Of these, the house/property tax has been given a weight of 3, profession tax,
2 and the remaining taxes, 1 each. For an obligatory levy, 5 marks and for optional, 3 marks, are assigned.
vi. Levy of taxes by the village panchayats: The methodology indicated for item (v) above has been adopted
here too, while comparing the actual levy of taxes by the village panchayats in the States.
vii. Constitution of State Finance Commissions and submission of Action Taken Reports: The promptness
of the State Governments both in (a) constitution of the State Finance Commission (SFC) and (b) submission
of Action Taken Report (ATR) on the SFC Report is measured on a scale of 5 each. For the first item, the date
of constitution of SFC has been reckoned w.r.t. 24th April, 1993. States that constituted the SFC within 12
months, are assigned 5 marks; within 12 to 24 months, 3; 24 to 36 months, 1; and beyond 36 months, zero.
As regards the ATR, States that submitted it within 3 months of the Report of the SFC, are assigned 5 marks;
3 to 6 months, 4; 6 to 12 months, 3; and beyond 12 months, nil.
viii. Action taken on the major recommendations of the SFC: The major recommendations of the SFCs are
grouped as those relating to devolution of resources and ‘others’, and given a weight of 2 and 1, respectively.
For a recommendation where final decision has been taken, 5 marks, and where only partial decision taken,
3 marks are assigned. For a recommendation under consideration, no mark is given.
ix. Elections to the Panchayats: States have been graded for their promptitude in conducting elections to the
Panchayats in accordance with the 73rd CAA as per the following scale:
No delay 5
12 to 24 months 4
24 to 36 months 3
36 to 48 months 2
Above 48 months 0
2
x. Constitution of District Planning Committees : States that have constituted the District Planning
Committees in all the districts, have been assigned 5 marks, whereas those that have constituted it in some
districts only, 3 marks. No mark is assigned to the State that has not constituted any District Planning
Committee so far.
Construction of the index of decentralisaton: The index of decentralisation has been constructed in the
following steps:
Step 1: Marks scored by the States in respect of each of the above mentioned 10 items 3 have been converted on
scales of 100.
Step 2: In respect of each item, States are grouped into 4 categories, as follows:
Group A Above the Arithmetic Mean (A.M.) plus 0.5 Standard Deviation (s.d.).
Group B A.M. + 0.5. s.d.
Group C Below A.M. – 0.5 s.d., but above zero.
Group D Zero.
Step 3: For position of the States in each Table as A, B, C or D, the following marks are assigned:
A =3, B =2, C =1 and D=0.
Step 4: Arithmetic mean and standard deviation of the total marks of the various States have been computed and
States grouped into four categories and marks assigned as follows:
Group Range Marks
A Above (A.M. + 0.5 s.d.) 4
B A.M. + 0.5 s.d. 3
C Below (A.M. –0.5 s.d) but 2
above zero
D Zero 1
Step 5: The marks so obtained have been used as weights to the rural population to determine the index of
decentralisation and, accordiSngly, the share of each State under this criterion.
1
Functions appearing in the Eleventh Schedule at Sl. Nos. 1, 13, 14, 23 and 29 are classified as Core functions; Sl. Nos. 10, 15 to 21, 24 to 28, as
Welfare functions; 1 to 7, 12 & 22 as Agriculture & Allied; and Sl. Nos. 8 and 9, as Industries.
2
Constitution of Metropolitan Planning Committees has not been considered since none of the States has constituted it.
3
Where requisite information has not been furnished by the State, no mark has been assigned for that item.
 312
Appendix VIII.2
(Para 8.24)
Methodology adopted for determining the allocation to States towards Urban Local Bodies
The allocation for each State has been determined on the basis of a five-fold criterion, explained below:
1. Urban Population (Weight=40 per cent): In considering the urban population of the States, the 1991 Census
figures have been adopted.
2. Geographical Area (Weight=10 per cent): In considering the geographical urban areas of the States, the 1991
Census figures have been adopted.
3. Distance from per capita non-agricultural income (Weight=20 per cent): The average per capita GSDP
excluding primary sector (at current prices) has been arrived at by using the GSDP figures published by the CSO and
population figures (projection) published by the Registrar General of India, for three years, viz. 1994-95, 1995-96 and
1996-97. Distance of each State is measured from the reference highest point, viz. the highest average per capita GSDP,
plus half of the standard deviation. The distances are weighted by the urban population (1991) of the respective State to
arrive at its share.
4. Own revenue efforts of the ULBs (Weight=10 per cent): The own revenue efforts of the ULBs in each State
have been measured against two indicators, viz. (i) the State’s own revenues and (ii) GSDP excluding the primary sector.
This is explained further below:
i. The own revenue collection of the ULBs in each State is measured against the own revenue collection of the
State Government for three years, viz. 1995-96, 1996-97 and 1997-98. The average of these ratios is weighted
by the urban population (1991) to arrive at the share of each State. This index has been given a weight of 5
per cent in the total allocation.
ii. The own revenue collection of the ULBs in each State is measured against the GSDP excluding the primary
sector for the years 1994-95, 1995-96 and 1996-97. The average of these ratios is weighted by the urban
population (1991) to arrive at the share of each State. This index has been given a weight of 5 per cent in the
total allocation.
5. Index of decentralisation (Weight=20 per cent): The index of decentralisation has taken into account the
following ten indicators:
i. Enactment of State Municipal Legislation in conformity with the 74th CAA: States have been graded on
a scale of 5 for their promptitude in enactment of conformity legislation, with reference to the date of bringing
into force the 74th CAA, i.e. 1st June, 1993. Marks have been assigned as 5, 4, 3, 2 and 1 for bringing in such
legislation within 3 months, 3 to 6 months, 6 to 9 months, 9 to 12 months and above 12 months, respectively.
No mark has been assigned for those States that have not brought in such legislation so far.
ii. Intervention/restriction in the functioning of the Municipal Bodies: The level of autonomy made available
to the ULBs in the State Municipal Legislation has been measured in terms of the provisions relating to three
kinds of intervention/restriction, viz. (a) power to suspend/dissolve the elected bodies, (b) power to suspend/
remove the elected officials and (c) power to suspend/cancel the resolutions/orders of the local bodies.
These have been measured on a scale of 5 each for the Municipal Corporations and other Municipal Bodies
and marks assigned as under:
Authority for intervention Marks
None 5
State Government 4
Head of the Department/ Commissioner 3
District Collector 2
Sub-Divisional Officer 1
States having Municipal Corporations as well as other levels of Municipal Bodies, have been measured against a
total of 30 marks and others, 15 marks.
iii. Assignment of functions to the ULBs in the State Municipal Legislation vis-à-vis the Twelfth
Schedule: The 18 functions listed in the Twelfth Schedule of the Constitution have been grouped1 as core
functions (5 items), welfare functions (6 items) and development functions (7 items). Assignment of each
function has been measured on a scale of 5, giving 5 marks for assigning the function to either the Municipal
Corporations or the Municipalities, and 10, where a function is assigned to both the levels of ULBs. The core
functions are given a weight of 3, welfare functions, 2 and the development functions, 1. In this way, the
States that have got Municipal Corporations also are measured on a scale of 340 and others, on 170.
iv. Transfer of functions to the ULBs by way of Rules/Notifications/Orders of State Governments: The
methodology indicated for item (iii) above has been adopted here too, while comparing the status of actual
transfer of functions to the ULBs in the States by way of rules/notifications/orders etc. of the State Government.
 313
v. Assignment of taxation powers to the ULBs as per State Municipal Acts: A menu of 33 taxes has been
prepared that includes the taxes provided for levy by the ULBs in the various State Municipal Legislation. Of
these, the house/property tax has been given a weight of 3, profession tax, 2 and the remaining taxes, 1 each.
Octroi has been omitted. For an obligatory levy, 5 marks and for optional, 3 marks, are assigned.
vi. Levy of taxes by the ULBs: The methodology indicated for item (v) above has been adopted here too, while
comparing the actual levy of taxes by the ULBs in the States.
vii. Constitution of State Finance Commissions and submission of Action Taken Reports: The prompt-
ness of the State Governments both in (a) constitution of the State Finance Commission (SFC) and (b)
submission of Action Taken Report (ATR) on the SFC Report is measured on a scale of 5 each. For the first
item, the date of constitution of SFC has been reckoned w.r.t. 24th April, 1993. States that constituted the SFC
within 12 months are assigned 5 marks; within 12 to 24 months, 3; 24 to 36 months, 1; and beyond 36 months,
zero. As regards the ATR, States that submitted it within 3 months of the Report of the SFC, are assigned 5
marks; 3 to 6 months, 4; 6 to 12 months, 3; and beyond 12 months, nil.
viii. Action taken on the major recommendations of the SFC: The major recommendations of the SFCs are
grouped as those relating to devolution of resources and ‘others’, and given a weight of 2 and 1, respectively.
For a recommendation where final decision has been taken, 5 marks, and where only partial decision taken,
3 marks are assigned. For a recommendation under consideration, no mark is given.
ix. Elections to the ULBs: States have been graded for their promptitude in conducting elections to the Munici-
pal Bodies in accordance with the 74th CAA, as per the following scale:
No delay 5
12 to 24 months 4
24 to 36 months 3
36 to 48 months 2
Above 48 months 0
2
x. Constitution of District Planning Committees : States that have constituted the District Planning
Committees in all the districts, have been assigned 5 marks, whereas those that have constituted it in some
districts only, 3 marks. No mark is assigned to the State that has not constituted any District Planning
Committee so far.
Construction of the index of decentralisaton: The index of decentralisation has been constructed in the following
steps:
Step 1: Marks scored by the States in respect of each of the above mentioned 10 items 3 have been converted on
scales of 100.
Step 2: In respect of each item, States are grouped into 4 categories, as follows:
Group A Above the Arithmetic Mean (A.M.) plus 0.5 Standard Deviation (s.d.).
Group B A.M. + 0.5. s.d.
Group C Below A.M. – 0.5 s.d., but above zero.
Group D Zero.
Step 3: For position of the States in each Table as A, B, C or D, the following marks are assigned:
A =3, B =2, C =1 and D=0.
Step 4: Arithmetic mean and standard deviation of the total marks of the various States have been computed and
States grouped into four categories and marks assigned as follows:
Group Range Marks
A Above (A.M. + 0.5 s.d.). 4
B A.M. + 0.5 s.d. 3
C Below (A.M. –0.5 s.d) but 2
Above zero
D Zero 1
Step 5: The marks so obtained have been used as weights to the urban population to determine the index of
decentralisation and, accordingly, the share of each State under this criterion.
1
Functions appearing in the Twelfth Schedule at Sl. Nos. 4, 5, 6, 14 and 17 are classified as Core functions; Sl. Nos. 9 to 13 and 15, as Welfare
functions; and Sl. Nos.1, 2, 3, 7, 8, 16 and 18, as Development functions.
2
Constitution of Metropolitan Planning Committees has not been considered since none of the States has constituted it.
3
Where requisite information has not been furnished by the State, no mark has been assigned for that item.
 314
APPENDIX XI.1
(Para 11.22)
Improvement in Fiscal Performance: Scheme of Debt Relief
As an incentive to better fiscal management, a modified version of the scheme recommended by the Tenth
Finance Commission which linked debt relief to the fiscal performance of a State on revenue account is being recommended.
Improvement in fiscal performance is to be measured by comparing the ratio of revenue receipts (including devolution and
grants from the Centre but excluding revenue deficit grants) to total revenue expenditures in a given year (r) with the
average of corresponding ratios (r*) in the three immediately preceding years. Thus, each State is to be considered
against its own performance in the past. Debt relief will be calculated as percentage of repayment falling due in each year
of the period of recommendation. Only those repayments as pertain to fresh Central loans to the States during 1995-96
to 1999-2000 and as outstanding on March 31, 2000 will be covered. This percentage (R) will be five times the excess of
(r) over (r*) as defined above. Thus, if the performance of a State improves by 2.5 percentage points, i.e. (r-r*) = 2.5, the
State government will become entitled to a relief equivalent to 12.5 per cent, i.e. R = 12.5 (per cent). The maximum limit
of R has been prescribed as 25 per cent.
This scheme of relief is dynamic in the sense that performance is to be evaluated each year. However, since
there is a time lag in actual data regarding revenues and expenditures, the scheme operates with a lag.
Values of r are calculated in a corresponding manner for each year during 2000-01 to 2004-05. As such, the relief
pertaining to repayments due in 2004-05 will be given in the next financial year. If in any year, the Ministry of Finance finds
an increase in revenue receipts or revenue expenditure of a State on account of an unusual or abnormal item, it may take
cognizance of this and make suitable adjustments.
It may be noted that for the calculation of relief in any one year, a reference to 6 years becomes relevant. Thus, for
relief in year t, we refer to the following years:
Year in which relief is given : t
Year with reference to which relief
is determined (repayments due will
relate to this year) : (t-1)
Year for which latest actuals are
available (r is calculated for this
year) : (t-3)
Years from which (r*) is calculated : (t-4), (t-5), (t-6)