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EconomyWhy states, UTs want more central funds; why trade unions are boycotting...

Why states, UTs want more central funds; why trade unions are boycotting meeting with FM

States are concerned their fiscal autonomy is constrained by centrally sponsored schemes while unions don’t like the terms offered for the meeting with the FM

States, regardless of whether they are ruled by the BJP or NDA, and union territories sought more funds from the union government when Union Finance Minister Nirmala Sitharaman met their finance ministers as part of the pre-budget 2023-24 consultations.

Pre-budget consultation is an annual exercise under which representatives of different sectors give suggestions and raise demands to be addressed through the budget.

Purposes states say they will spend the money on

Chhattisgarh, which had decided to abandon the National Pension Scheme (NPS) and go for the old one, demanded a release of Rs 17,000 crore. The state government says that the amount it seeks had been spent on the in the form of contributions from employees and the state government.

Some states, such as the LDF-ruled Kerala, used the platform to pitch for getting 60% of the GST receipts rather than the conventional 50-50 share of collections. “States must be given more fiscal powers/autonomy to ensure co-operative federalism and encourage state-specific efforts to attain growth and ensure social justice,” Kerala Finance Minister KN Balagopal said in his submission.

Nadu Finance Minister P Thiaga Rajan said states wanted more funds as the centrally sponsored schemes had reduced their elbow room. “All states across ruling parties expressed a common concern that states’ fiscal autonomy has been greatly constrained by the extent of centrally sponsored schemes, by the extent of changing ratios of funding of such schemes,” he said.

However, most states used the meeting to seek special packages for one purpose or another. While fiscally stressed Punjab cited its border districts to demand assistance, Andhra Pradesh wanted it for meeting its capital expenditure requirement. Andhra and had earlier been flagged as states, which were undertaking off-budget borrowings and violating the norms. Besides demanding funds for various schemes, Maharashtra suggested incentives for clean energy sectors, including tax sops.

Why trade unions are boycotting a similar meeting the government invited them to

A joint forum of 10 trade unions with nationwide presence has decided to boycott the virtual pre-budget consultation with finance minister Nirmala Sitharaman on 28 November, demanding a physical meeting with reasonable allotted to each union representative to speak.

In a letter dated 25 November, the forum stated, “Now your email dated 25 November 2022 under reference, makes it explicit that each central trade union will be allowed to speak for three minutes. This is a joke and we refuse to be part of such a cheap joke. We will not participate in the proposed video conference on 28 November 2022.”

Earlier yesterday, the forum had jointly protested against a restricted video conference for pre-budget consultations — in a letter shot off to the finance ministry.

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