The last fortnight has been a good time for five eastern states. The NDA government has insisted that its spirit of co operative federalism will help the states of Bihar, Jharkand, Odisha, West Bengal and Chattisgarh in a big way. Both prime minister Narendra Modi and Finance Minister Arun Jaitley have been emphasising that east and parts of Central India will now have the monies to develop faster so that they can catch up the more advanced states like Maharashtra, Gujarat Tamil Nadu, Karnataka, Kerala as well as the national capital region states of Haryana and Delhi.
The acceptance of the fourteenth finance commission report has meant that more money will flow to all the states in the next five years. Jaitley has said the states' share would be Rs. 5.24 lakh crores next year compared to Rs. 3.38 lakh crore in the current year. This is a huge jump, and in addition Jaitley has said he would be transferring another Rs.3.04 lakh crores to the states for implementing central schemes. He has held out the promise of rolling out the goods and services tax in 2016 so that states revenue would go up as their revenues will increase under the new tax.
The auction of coal blocks which lie mainly in Jharkand, West Bengal, Odisha, Chattisgarh, Telengana has led to promise of payment of Rs. two lakh crores to the exchequer. Modi has said he would give away bulk of this money as royalties and license fees to the states, and the calculations are that in the next ten years, these four states would get about Rs. 1.4 lakh crores. Modi has also promised that the government is working on increase on royalties to state governments on oil and gas, which should benefit states like Maharashtra, Assam, Andhra Pradesh and Rajasthan mainly. If royalties on minerals like iron go up, then again Odisha, Jharkand and Karnataka would benefit in a big way.
But some economists have warned that calculations of state shares should be done more realistically, especially as the monies committed in coal auctions would be paid in installments, only if the coal price environment improves and consumers of coal like power companies pay higher costs. Similarly on the oil royalties, the economists feel that high realisations would not be possible if cost of imported oil is low, due to global crash in prices. Similarly the high tax share from central government would depend on the economy achieving a growth rate of over 8 per cent in the coming months.
Despite these warnings, budgets of several state governments will aim to spend more money in the coming months.
Tailpiece: Who is most co operative in giving phone numbers of Aam Aadmi Party MLAs in Delhi. It is the seven BJP MPS, as well as BJP corporators of South, East and North corporations of the city. The BJP which has been whitewashed in assembly elections is telling those with grievances to go to the AAP MLA. Some corporators have even put up signboards with phone numbers of AAP legislators.