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Uniform levies will eat into State resources: Achuthanandan

Thiruvananthapuram: Chief Minister V.S. Achuthanandan has expressed the fear that the introduction of uniform levies, such as the goods and services tax, and the move to abolish the Central sales tax will further erode the resource base of the State.

He was inaugurating a national seminar on “Centre-State fiscal relations in the context of the 13th Finance Commission,” organised by the Kerala State Planning Board and the Gulati Institute of Finance and Taxation, here on Tuesday.

Mr. Achuthanandan said that successive finance commissions had not succeeded in reducing inter-State disparities.

“The States are increasingly becoming dependent on the Centre despite the claims that successive finance commissions have attempted to make the States fiscally more independent,” he said.

This dependence has become more acute in the post-liberalisation period. The liberalisation of the economy and the structural adjustment programme initiated by the Centre have had a direct bearing on the States’ finances. In the past, the vertical imbalance was invariably taken care of by progressive transfers by the finance commissions. In the face of an increasing fiscal strain at the Centre in the post-liberalisation period, the States are forced to fend for themselves, he said.

“In the changed circumstances, it is doubtful whether the finance commissions will be able to address in full measure the vertical imbalances in view of the differences in the level of economic development between the States and, therefore, the capacity of the States to face the challenges of liberalisation and globalisation also differs,” he said. The Chief Minister said States which could invest heavily in physical infrastructure were better placed to exploit the emerging opportunities that States such as Kerala whose expenditure priorities had always been in favour of social sectors. West Bengal Minister for Finance and Excise Asim Dasgupta, who is the Chairman of Empowered Committee on taxes, presided over the meeting.

Ministers and representatives of several States are participating in the two-day seminar.

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