The Fifteenth Finance Commission holds meeting with the Government of Chhattisgarh

The 15th Finance Commission headed by Chairman, Shri N.K. Singh alongwith its Members and senior officials met today with the Shri Bhupesh Baghel, Chief Minister of Chhattisgarh along with his Cabinet colleagues and senior State Government officials.

The Commission observed that:

• The State’s contribution to GDP of the country was 1.6% in 2018-19.
• In 2018-19, the share of primary, secondary and tertiary sector in GSVA (current prices) of the State was 30%, 33%, & 37%, of the GSDP respectively.
• In 2018-19, per capita NSDP of the State was ₹ 96,887 against per capita income of ₹ 1,26,406 for India.
• State’s share in inter-se devolution had risen from 2.47 during 2010-15 (as recommended by FC-XIII) to 3.08 during 2015-20 (as recommended by  FC-XIV).

On the State’s Fiscal parameters, the Commission noted that:

• In 2016-17, the own tax revenue to GSDP of the State was 7.44%, which was highest among all States.
• In 2016-17, the State had incurred 4th lowest committed expenditure (salary, pensions & interest payments) at 35.8% of total revenue expenditure, among all 29 states, as compared to that of 41.7% for all States.
• State Government has witnessed revenue surplus to GSDP of 2.2% & 1.2% in 2016-17 & 2017-18, respectively.
• The debt-GSDP ratio of the State was 18.6% in 2017-18, which is well below the prudent limit of 20% for States.
• There has been a continuous decline in AT&C losses of DISCOMS of the State from 21.8% in 2015-16 to 19.3% in 2016-17, and further to 18.8% in 2017-18 (against the target of 18% in 2017-18).

As per Pr. AG’s presentation, State Government received GST compensation of ₹ 1,589 crore for 9 months of 2017-18. In fact, there was a shortfall of more than 22% in GST collections compared to protected revenue of 9 months of 2017-18.

The fiscal deficit to GSDP of the State has increased from 1.6% in  2016-17 to 2.4% in 2017-18, though it is still below the prudent limit of 3%.

The debt-GSDP of the State has risen continuously from 10.8% in 2011-12 to 18.6% in 2017-18. It seems that the debt pressures are slowly building up in the State, as can also be judged from the request of State Government, in its memorandum, to raise the level of debt to GSDP to 25%, to be met by State by the end of FY 2025.

As per Rural Health Statistics, 2018, Chhattisgarh has been facing severe shortage of human resources in health sector: 595 vacancies (91.2%) of specialists in CHCs against the sanctioned strength of 652; 434 vacancies (54.7%) of doctors in PHCs against the sanctioned strength of 793.

The other fiscal parameters of concern were:

• In 2011-12, the population below poverty line in the State was 39.9% (highest among all states) against all India average of 21.9% (as per Tendulkar Methodology).
• Among 29 states, the State of Chhattisgarh ranks 15th on overall Sustainable Development Goals Index.
• Only 15 out of 18 functions envisaged in Twelfth Schedule of the Constitution have been devolved to ULBs.
• FC-XIV had recommended grants for only gram panchayats out of 3 tiers of PRIs.
• The progress of State is unsatisfactory on several UDAY barometers (as on 31st March, 2019).

According to the States’ memorandum the short term agricultural loan amount of ₹ 5,170 crores would be waived off for 15 lakh farmers allied to the Cooperative banks in the State and ₹ 1,223.47 crores would be waived off for 1.65 lakh loanee farmers of Chhattisgarh Rajya Grameen Bank (for loans taken upto 30th November, 2018).  The Commission sought to know from the State Government the annual impact on account of this farm loan waiver.

Out of 26 PSUs in the State, 21 PSUs had arrears of 28 accounts (ranging from 2013-14 to 2017-18) as on 30th September 2018 (as mentioned by  Pr. AG, Chhattisgarh). The Commission desired to know the cause for such large pendency.

In his address to the Finance Commission, the Chief Minister made a special mention of the State Government’s scheme NARVA, GARUVA, GHURVA, BAADI for transforming Rural Economy –

• Narva – Water Conservation works, Irrigation for doubling area under agriculture for doubling farmer’s income.
• Garva – Expansion of Gaothans in all Gram Panchayats, with Toilet facilities.
• Ghurva – Promotion of Organic Composting.
• Baadi – Promotion of Kitchen Garden for sustainable farming.

The State has made a total Demand for Grant-in-Aid of ₹ 178515 crores of which ₹ 70602 crores is for Ecology and Environmental Sustainability & Rural income, ₹ 62596 crores for HDI, ₹ 37546 crores for Physical Infrastructure, ₹ 5469 crores for Forestry and Environmental Conservation – Forest and ₹ 2300 crores for Security Infrastructure for LWE.  The State has also suggested that the 15th Finance Commission should increase the vertical devolution from 42% to 50% and GST compensation should be continued beyond the stipulated 5 years.  The State further suggested that 5% of the divisible pool be assigned to local bodies as basic grant, of which 1% should be for Panchayats in the PESA area.

The meeting discussed in details all the State specific queries raised by the Chairman and Members.  The State was assured that all their issues would receive due attention of the Commission in its recommendations to the union government.

Earlier the Commission had a detailed meeting with the representatives of all the political parties in the State including INC, BJP,  CPI, BSP and Congress Party of Chhattisgarh (J).  All the issues raised by the parties were noted by the Commission for addressing at the time of framing its recommendations.