The Fifteenth Finance Commission holds meeting with the Government of Rajasthan

The 15th Finance Commission headed by Chairman, Shri N.K. Singh alongwith its Members and senior officials met today with the Shri Ashok Gehlot, Chief Minister, Shri Sachin Pilot, Deputy Chief Minister, Rajasthan alongwith his Cabinet colleagues and senior State Government officials.

The Commission observed that:

5. Rajasthan is the largest state in terms of area. It constitutes 10.45% of total state’s area of the country.
5. The State has 5.76% of the total population of the country with an urbanisation rate of 24.9%.
5. Population density of Rajasthan is 200, which is way below the national average compared to the national average of 382.
5. Though comprising of 5.76% of total population of the country, the state’s share in inter-se devolution in XIV-FC was 5.495.
5. The contribution of primary sector to GSVA is high as compared to other General Category States. Share of Primary, Secondary and Tertiary sector in GSVA is 33, 23 and 44% in 2017-18.
5. Per capita Income of ₹ 98,078 in 2017-18 is below India’s average of ₹ 1,14,958.
5. In 2017-18, transfers from the Centre constituted around 48.6% of the total revenue receipts of the state.
5. Rajasthan also has the third highest solar capacity of 3072.43 MW (till March 2019).
5. Rajasthan State Industrial Development & Investment Corporation Ltd. (RIICO) and Japan External Trade Organization (JETRO) have collaborated for facilitating Japanese investment in the State of Rajasthan during the period 2006-2016.
5. Rajasthan is the second largest crude oil producing state in India after Bombay High offshore field being operated by ONGC.
5. Tourism Potential in Rajasthan:

The state offers vast and unexploited potential for domestic tourists who, along with the foreign tourists, could contribute towards pushing the economic growth further, while providing employment opportunities.

• According to the Tourism Statistics at a Glance 2018, State ranks 5th amongst all Indian States in attracting foreign tourists visits in the country in 2017. 6 percent of all Foreign Tourist visits were attracted by the State of Rajasthan in 2017.
• State ranks 10th amongst all Indian States in attracting domestic tourists visits in the country in 2017. 2.8 percent of all Domestic Tourist Visits were attracted by the State of Rajasthan in 2017.

Positive Points:

5. Poverty: The State has made significant development in reducing the poverty, thereby showing its commitment towards SDG 1. The state has a poverty ratio of 14.7 in 2011-12 declining from 34.4 in 2004-05 (Population below Poverty Line Tendulkar Methodology).
5. Education: According to ASER 2018 Report, (section on sports infrastructure in schools) Among the top states, almost half the schools in Rajasthan were seen to have dedicated physical education teacher, followed by Kerala, Bihar and Karnataka.
5. In primary schools, student attendance improved by 3 percentage points or more over 2016 levels.
5. Forest Cover: According to Forest Survey of India, the state has shown 2.48% increase in the forest cover in 2017 from 2015. This shows states commitment towards maintaining of ecological cover in the state.
5. .The state is taking ample steps to address the issues of low literacy and education levels like -

• Appointment of 2 lakh new teachers
• Development of model schools in each Panchayat,
• ‘Panchayat Elementary Education Officer’ (PEEO) has been setup at Gram Panchayat level in charge of literacy for operation, monitoring and review of schemes,
• Free bicycle distribution to girls, smart virtual classes etc.

5. There has been substantial progress in development of Integrated Financial Management System (IFMS) in State:

• Budgeting is being done through Budget Module and Accounting through Treasury Module.
• CAG/AG interface module and Online Reconciliation Module are under implementation process.
• Integration of Local Bodies Accounting into IFMS to facilitate monitoring of utilization of funds by local bodies which is currently the weakest link in accounting of the State.

5. Balanced Memorandum: The memorandum submitted by the State has given a balanced picture of both equity and efficiency indicators. The State has proposed various indicators for performance based indicators linked to The National Priority Programme like states effort in widening and deepening of GST Net, Efforts towards achievement of flagship schemes, sustainable development goals etc.

The issues of concern of the Finance Commission are:

5. The state is exhibiting a rising trend in its Outstanding Debt to GSDP no’s. The Debt to GSDP ratio has increased from 23.87% in 2012-13 to 34.15% in 2017-18.
5. UDAY: GoR had taken over 75 % of total debt amounting to  ₹ 62,422 crore during the period 2015-16 and 2016-17
5. Double Digit Debt growth rate of government of Rajasthan for the past years violating the norms of fiscal prudence.

Rising gap between Revenue Receipts and Revenue Expenditure of the State-

5. The state is experiencing an unsustainable trajectory in growth of revenue receipts and expenditure pattern where there is huge divergence observed in the revenue receipts growth and expenditure growth.

In the Power Sector, specifically on UDAY:

5. The State has achieved 100 % progress in Feeder Metering, Rural feeder audit and reducing the ACS-ARR gap per unit.  GoR appears to have done all financial restructuring (loan, subsidy, equity) as per UDAY Scheme. However, the operational reforms and efficiency reforms are behind targets.

State has not initiated metering of DTs in rural areas, poor performance is noted in feeder segregation.

5. The State has not achieved target of reduction of AT&C loss to 15 % by 2018-19.
5. Out of 92.21 lakh total household as on July 2018, 71.82 lakh households (77%) have been electrified. Remaining 20.38 lakh (22.10) still remained un-electrified.
5. There is a need for Improvement in power supplies and services with provision of 24 hours uninterrupted proper power supply to the rural domestic individual consumers
5. Reducing the T&D loss and the Distribution Transformers (DT) failure rate should be a priority for the state Government.
5. Wrong classification of consumers and Non-billing/delayed billing of consumer should be curtailed.

The Commission has noted that:

5. Though the Database formats of Third Tier bodies have been linked to the Model Accounting System and through this few reports/data such as annual receipts and payments, monthly reconciliations, consolidated abstracts register are being generated. However only few PRI’s do monthly reconciliations.
5. Following the 73rd Constitutional Amendment, orders on devolution were issued by the State Government in June 2003 and October 2010. Accordingly, out of 29 functions to be devolved in terms of XI Schedule of the Constitution, 23 functions were transferred. However, funds and functionaries were transferred in respect of 15 subjects only.
5. Dependency on grants and lack of fiscal autonomy is a matter of serious concern that needs to be addressed for improving governance at grass-root level.

Aspirational Districts

Special focus has to be made for improving the socio-economic development indicators of aspirational districts of Baran, Dhaulpur, Jaisalmer, Karauli and Sirohi.

Key Social Indicators- Rajasthan:

5. With an HDI Score of 0.577, Rajasthan is ranked 11th and is below the All-India score of 0.609. This indicates that efforts made towards improving social indicators have not been fruitful and there is an urgent need for course correction.
5. The states performance in key social indicators is adverse as compared to the National Average for key social indicators.

SDG INDEX – NITI AAYOG- 14th Rank

5. The state has a SDG Index value of 59, slightly higher the national average value of 57. The State ranks 14th amongst the Indian States.
5. State is a front runner in SDG-4- Quality Education, SDG-10-Reduced Inequality, SDG-15- Life on Land, SDG-16- Peace, Justice and Strong Institutions. However, the state needs to improve on SDG-2 Zero Hunger, SGD -3 Good Health and Well Being SDG 5 Gender Equality SDG-6 Clean Water and Sanitation and SDG-11 sustainable cities and communities.

Inadequate Technical Skilled Population

5. According to Niti Aayog, Lack of technically qualified personnel in the state has been a concern.
5. The expected availability of skilled personnel is around 2.17 lakh less than half of the expected requirement in the state.
5. In case of Semi-skilled personnel, where the expected requirement is 30.91 lakh and the expected availability is around 10.91 lakh individuals.

Low Water Endowment and Severe Problem of Drinking Water-

5. The state comprises of only 1.1 percent surface water and 2. 5 percent of ground water resources. The per capita water availability in India is 1700 cubic meter per year, whereas, in Rajasthan, the availability is only 640 cubic meter per year.
5. The ground water condition in the State has become quite alarming due to overexploitation in the last two decades. Out of total 295 blocks in the State, only 52 blocks are safe, 191 over exploited, 11 critical, semi critical and 3 are saline.
5. 34 Blocks have been identified by Central Ground Water Board as highly critical.

Inadequate Transport Infrastructure

5. Rajasthan still lags behind the national average with respect to road length.
5. The road density in Rajasthan is 74.3 km per 100 sq. km as against the national average of 143.1 km in the year 2016-17.
5. The total length of roads in the State is about 1,89,825 km in the year 2017-18. The length of national highways in the State is about 9,271 km while state highways extend to about 15,032 km.

7th Pay Commission

5. The state is reeling under the burden of 7th Pay Commission, there has been a substantial impact on salary and pension expenditure due to implementation of 7th Pay Commission with effect from 1st January 2016 and a large-scale creation of posts during the last 2 years.
5. The annual additional liability is around ₹ 10400 crore on account of salary and pension (Salary: ₹ 7124 crore: Pension: ₹ 3276 crore)
5. According to AG, Rajasthan Effect of 7th CPC in state will be felt in 2018-19 as arrears will have to be paid.

Transport Sector: There is a need for revamping and restructuring for transport sector.

5. Transport Sector RSTRC remained in losses consistently in the past few years due to negative net earnings per km because of higher cost of operation per km as compare to revenue earned per km.
5. Metro Project need to be commercially viable as currently phase 1 of the metro is making huge losses due to factors like wrong selection of routes and lack of technical expertise in involved in its operation and logistics.

Earlier the Commission had a detailed meeting with the representatives of all the political parties in the State including Bhartiya Janta Party, Indian National Congress, Communist Party of India, Communist Party of India (Marxist) and Nationalist Congress Party.  All the issues raised by the parties were noted by the Commission for addressing at the time of framing its recommendations.

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MC