(FE)
The 15th Finance Commission (FC), whose award will be valid for the FY 21-25 period, may recommend discontinuation of revenue deficit grants to the states, while proposing ince-ntives to the ones that take visible steps to improve fiscal health and the quality of spending. Taking into account the states’ expenditure requirements, the tax devolution to them and their revenue mobilisation capacity, the 14th FC had recommended ‘post-devolution revenue deficit grants’ of a total of Rs 1,94,821 crore for 11 states during its award period (FY16-FY20).
“Revenue deficit will unlikely be a permanent feature. (Remedy for it) will be subsumed in the vertical and horizontal devolution pattern itself,” an official told FE. Of the 11 states, Andhra Pradesh, Kerala and Himachal Pradesh have not yet eliminated revenue deficits (The 14th FC had mandated that the 11 states wipe out the deficits by FY20). Besides these three states, five more (Rajasthan, Punjab, Maharashtra, Tamil Nadu and Hary-ana) have also projected revenue deficits, varying from 0.2% to 2.6% of their GSDPs for FY20.
