No special concessions to NE states

NEW DELHI, July 28: While recommending fundamental restructuring of the system of Central financing of the Special Category states, the 11th Finance Commission has recommended that the responsibility for development of infrastructure of vital importance of these states, including Assam and other north-eastern states requiring large investments should be that of the Centre. The recommendations of the Finance Commission tabled in the Parliament here on Thursday may not be good news for the states reeling under severe financial crisis as no special concessions have been made to them as sought by the states. The Commission in its reports has observed that because of the weak revenue base of the Special Category states, all the states have large deficits on their non-plan revenue account before devolution. With 90 per cent of the Central assistance for the state plans in 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 finance 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 expenditure of these states needs a fundamental restructuring the Finance Commission opined. Special consideration is given to the Special Category states in view of the weak economic base and as their own resources on an average meet a small percentage of their revenue expenditure. Northeastern states are given plan assistance in form of 90 per cent grant and 10 per cent loan.