States urge central government to share pay hike burden

November 3rd, 2008 - 10:27 pm ICT by IANS  

Chandigarh, Nov 3 (IANS) Finance ministers of various states Monday urged the central government to bear half their additional financial burden, caused by the Sixth Pay Commission recommendations.”The union government should come forward to minimise the impact of its Sixth Pay Commission (recommendations). At least 50 percent of the additional financial burden on the states due to this should be borne by the government of India,” Punjab Finance Minister Manpreet Singh Badal told reporters after a meeting of the empowered committee of state finance ministers here.

“In the next meeting of empowered committee named, ‘Emergency Meeting’ Dec 15, this will be one of the major issues to discuss and we will try to reach some consensus on the issue,” Badal said.

The two-day meeting of the committee started here Monday in which 10 state finance ministers attended.

“The overall rate of growth in the collection of value-added tax (VAT) revenue of all states till September 2008 has increased by 23.43 percent if we compare it with the corresponding period in 2007,” said Asim Dasgupta, West Bengal finance minister and chairman of the empowered committee.

“Till September 2008, there is no impact of macro level recession in the world’s economy on the Indian market, but there might be some impact in the next six months. The areas of concern are steel, cement and iron,” stated Dasgupta.

Taking a serious note of the financial status of various states, Dasgupta said: “Most of the states are debt ridden and a good chunk of this debt is imposed by the union government. The union government always gives money to the states in the form of loans and very rarely in the form of grants.”

Badal has said there is a common problem faced by most of the states in the tax collection as the central government directly collects 70 percent of the tax and the state government collects only 30 percent.

“This system should be changed and both the state and central governments should collect 50 percent of the tax each from the state,” he added.

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