Main recommendation of the Twelfth Finance Commission

The Twelfth Finance Commission (TFC) was appointed by President on 1st November 2002 under the Chairmanship of Dr. C. Rangarajan. The Terms of Reference of the Commission are at Annex-I.

Summary of the recommendations of the TFC are placed at Annex-II.

State-wise estimation of share in central taxes and specific amounts of grants recommended for various purposes have been compared with the recommendations of the Eleventh Finance Commission (EFC). The comparative position is encapsuled in Annex-III.

Salient Features of TFC Recommendations

1. Total Transfers recommended

The 12th Finance Commission has recommended a total transfer of Rs.7,55,751.62 crore ( share in central taxes and duties Rs.6,13,112.02 Crore + Grants-in-aid Rs. 1,42,639.60 crore) to States during 2005-10 as against Rs.4,40,209.26 crore ( Rs. 3,76,318.01 crore as share in central taxes and duties + Rs. 58,587.39 crore as grant-in-aid + Rs.5,303.86 crore as Centre's share of Incentive Fund) by 11th Finance Commission for the five years period 2000-05, showing an increase of 71.68% over TFC award period.

2. Grant in aid of States' revenues

The Non-plan grants under Article 275 of the constitution as per 12th Finance Commission are significantly higher when compared with the corresponding grants for the period of 11th Finance Commission 2000-05 as shown below:

(Rs. in crore)

Purpose of Grant During 2000-05 (11th FC) During 2005-10 (12th FC)
1. Local Bodies grants 10,000.00 25,000.00
2. Centre's share in Calamity Relief 8,255.69 16,000.00
3. Non-Plan revenue deficit grants 35,359.07 56,855.87
4. Grant for education Nil 10,171.65
5. Grant for heath Nil 5,887.08
6. Grant for maintenance of roads and bridges Nil 15,000.00
7. Grant for maintenance of public buildings Nil 5,000.00
8. Grant for maintenance of forest. Nil 1,000.00
9. Grant for heritage conservation. Nil 625.00
10. Grant for State-specific needs Nil 7,100.00
11. Upgradation and special problem grants. 4,972.63 Nil
12. Centre's share of Incentive Fund 5303.86 Nil
Total Non Plan Grants 63891.25 1,42,639.60

Under the scheme of transfer recommended by the TFC, the share of grants in the total transfer is 18.9 percent, whereas it was 8.1%, 11.1%, 13.8%,10.3% and 14.5% as per the recommendations of last five commissions.

3. Share in central Taxes

The share of the States in the net proceeds of shareable central taxes would be 30.5 per cent during 2005-10 (during 2000-05 it was 29.5%). For this purpose, additional excise duties in lieu of sales tax on textiles, tobacco and sugar are treated as a part of the general pool of central taxes. If the tax rental arrangement for these three commodities is terminated and the States are allowed to levy sales tax (or VAT) on these commodities without any prescribed limit, the share of the States in the net proceeds of shareable central taxes shall be reduced to 29.5 per cent.

Criteria and Relative Weights for determining Inter- se shares of States by 11th Finance Commission and 12th Finance Commission has been as under:-

Criterion Relative Weight (per cent)
11th Finance Commission 12th Finance Commission
1. Population 10.0 25.0
2. Income (Distance Method) 62.5 50.0
3. Area 7.5 10.0
4. Index of infrastructure 7.5 0.0
5. Tax effort 5.0 7.5
6. Fiscal Discipline 7.5 7.5

Commission has recommended that if any legislation is enacted in respect of service tax after the eighty eighth Constitutional amendment is notified, it must be ensured that the revenue accruing to a State under the legislation should not be less than the share that would accrue to it, had the entire service tax proceeds been part of the shareable pool.

4. Overall transfers to States

The Commission has recommended that indicative amount of over all transfer to States may be fixed at 38 per cent of the central gross revenue receipts, as against 37.5% of the gross revenue receipts of the Central Government recommended by EFC for 2000-05

5. Non-plan Revenue Deficit Grant

A total non-plan revenue deficit grant of Rs.56,855.87 crore is recommended during the award period for fifteen States. During the first year of the award period, non-Plan revenue deficit grant has been recommended for fifteen States amounting to Rs. 15091.86 crore. By the last year of the award period, only nine States would get non-Plan revenue deficit grant amounting to Rs.9,528.14 crore. Non-plan revenue deficit grants are largely for special category States, except four non-special category states of Kerala, Orissa, West Bengal and Punjab. The amount of the grant for each State having non-Plan deficits is indicated in Annex-IV for each of the 5 years starting from the financial year 2005-06.

6. Grant for Education and Health

Eight States have been recommended for grants amounting to Rs.10171.65 crore over the award period for the education sector, with a minimum of Rs.20 crore in a year for any eligible State.

Seven states have been recommended for grants amounting to Rs.5887.08 crore over the award period for the health sector, with a minimum of Rs.10 crore in a year for any eligible State.

Year-wise allocation for each State in the grants for education and health may be seen at Annex-V.

Grants for the education and health sectors are an additionality, over and above the normal expenditure to be incurred by the States in these sectors. The Commission has recommended that these grants should be utilized only for the respective sectors (non-Plan) based on certain conditionalities specified by the Commission. Monitoring of the expenditure relating to these grants will rest with the State government concerned.

7. Grants for maintenance of roads & bridges, public buildings and forests:

The 12th Finance Commission has recommended grants separately for maintenance of roads and bridges, maintenance of buildings and forests as under:

  1. A grant of Rs.15,000.00 crore over theaward period has been recommended for maintenance of roads and bridges.
  2. An amount of Rs.5000 crore is recommendedas grants for maintenance of public buildings.
  3. Grant of Rs.1000 crore spread over the award period 2005-10 has been recommended by the Commission for maintenance of forests.
  4. State-wise and year-wise allocations for these three grants may be seen at Annex-VI.
  5. The maintenance grants are anadditionality, over and above the normal maintenance expenditure to be incurred by the states. These grants are to be released and spent in accordance with certain conditionalties specified by the Commission.

8. Grants for heritage conservation

A grant of Rs.625 crore spread over the award period has been recommended for heritage conservation. This grant will be used for preservation and protection of historical monuments, archaeological sites, public libraries, museums and archives, and also for improving the tourist infrastructure to facilitate visits to these sites. State-wise and year -wise allocation of grants made please be seen at Annex-VII.

9. Grants for State specific needs

The grant recommended by the TFC for State specific needs is on the pattern of the grant recommended by EFC for the special problems of the States. The grant recommended by EFC for the special problems of States was Rs. 1,129.00 crore. TFC has recommended an amount of Rs.7,100 crore as grant for States' specific needs . While these grants have been phased out equally over the last four years, Commission has observed that this phasing should be taken as indicative in nature. The States may communicate the required phasing of grants to the Central government. The State-wise allocations along with the purpose of the grants may be seen at Annex-VIII.

10. Grants for local bodies

The Commission 's mandate was to recommend as to the measures needed to augment the Consolidate Fund of a State to supplement the resources of the Panchayats and the Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State.

The Commission has recommended a sum of Rs.25,000 crore for the period 2005-10 as grants-in-aid to augment the consolidated fund of the States to supplement the resources of the municipalities and the panchayats. This is equivalent to 1.24 percent of the shareable tax revenue and 0.9 per cent of gross revenue receipts of the Centre as estimated by the Commission during the period 2005-10.

The Commission has also recommended that amount of Rs.25000 crore may be divided between the panchayats and the municipalities in the ratio of 80:20.

A total grant of Rs.20,000 crore for the panchayati raj institutions and Rs.5,000 crore for the urban local bodies may be given to the States for the period 2005-10 with inter-se distribution as indicated in Annex-IX.

Factors and weight adopted for working out inter-se allocation of the grant among the States:

Criterion Relative Weight(per cent)
11th Finance Commission 12th Finance Commission
1. Population 40.0 40.0
2. Geographical area 10.0 10.0
3. Distance from highest per capita Income 20.0 20.0
4. Index of decentralization 20.0 0.0
5. Revenue effort Of which 10.0 20.0
(a) with respect to own revenue of States - 10.0
(b) with respect to GSDP - 10.0
6. Index of deprivation 0.0 10.0

11. Financing of relief expenditure

11.1 Calamity Relief Fund(CRF)

The Commission has made thefollowing recommendations regarding Calamity Relief:-

  1. The scheme of CRF be continued in its present form with contributions from the Centre and the States in the ratio of 75:25.
  2. The size of the CRF for TFC 's award period is Rs.21,333.33 crore (Centre 's share of Rs. 16000 crore + State 's share of 5,333.33 crore). The State-wise contribution of CRF giving the Centre and State 's share is indicated at Annex-X.

Under the recommendations of EFC for the 2000-05 the size of the CRF was Rs.11007.59 crore (Centre 's share Rs.8,255.69 crore and Rs.2,751.90 crore as States share). The size of CRF as recommended by TFC is much larger than what was recommended by EFC even after indexation for inflation.

11.2 National Calamity Contingency Fund (NCCF)

  1. The TFC has recommended that the scheme of NCCF may continue in its present form with core corpus of Rs.500 crore. The outgo from the fund may continue to be replenished by way of collection of National Calamity Contingent Duty and levy of special surcharges.
  2. The definition of natural calamity, as applicable at present, may be expanded to cover landslides, avalanches, cloud burst and pest attacks.
  3. The Center may continue to make allocation of food grains to the needy States as a relief measure, but a transparent policy in this regard is required to be put in place.
  4. A committee consisting of scientists, flood control specialists and other experts be set up to study and map the hazards to which several States are subject to.
  5. The provision for disaster preparedness and mitigation needs to be built into the State plans, and not as a part of calamity relief.

12. Fiscal Reforms Facility:

The 12th Finance Commission felt that the Fiscal Reform Facility introduced by the government on the basis of the EFC recommendations did not play a significant role in bringing about an improvement in the State 's fiscal position. Accordingly, the Commission has recommended that the scheme of Fiscal Reform Facility may not continue over the period 2005-10, as the scheme of debt relief as recommended by it obviates the need for a separate Fiscal Reform Facility.

13. DebtRelief:

The Commission 's mandate was to make an assessment of the debt position of the States as on 31st March 2004, suggest such corrective measures, as are deemed necessary, consistent with macro-economic stability and debt sustainability. Such measures recommended will give weight-age to the performance of the States in the field of human development and investment climate.

The Commission has made the following recommendations;

  1. Each State must enact a fiscal responsibility legislation prescribing specific annual targets with a view to eliminating the revenue deficit by 2008-09 and reducing fiscal deficits based on a path for reduction of borrowings and guarantees. Enacting the fiscal responsibility legislation will be necessary pre-condition for availing of debt relief.
  2. Debt relief may not be linked with performance in human development or investment climate.
  3. The Central loans to States contracted till 31.3.04 and outstanding on 31.3.05 (amounting to Rs.1,28,795 crore) may be consolidated and rescheduled for a fresh term of 20 years (resulting in repayment in 20 equal instalments), and an interest rate of 7.5 per cent be charged on them. This will be subject to the State enacting the fiscal responsibility legislation and will take effect prospectively from the year in which such legislation is enacted.
  4. The debt relief during the award period for all the States put together, works out to Rs.21,276 crore in interest payments and Rs.11,929 crore in repayments. The State wise details of debt relief are at Annex-XI.
  5. A debt write-off scheme linked to the reduction of revenue deficit of States may be introduced. Under the scheme, the repayments due from 2005-06 to 2009-10 on central loans contracted up-to 31.3.04 and recommended to be consolidated will be eligible for write off.
  6. The quantum of write off of repayment will be linked to the absolute amount by which the revenue deficit is reduced in each successive year during the award period. The reduction in the revenue deficit must be cumulatively higher than the cumulative reduction attributable to the interest relief recommended. Also, the fiscal deficit of the State must be contained at least to the level of 2004-05. In effect, if the revenue deficit is brought down to zero, the entire repayments during the period will be written off. The enactment of the fiscal responsibility legislation would be a necessary pre-condition for availing the debt relief under this scheme also with the benefit accruing prospectively.
  7. The Central Government should not act an intermediary for future lending and allow the States to approach the market directly. If some fiscally weak States are unable to raise funds from the market, the Centre could borrow for the purpose of on lending to such States, but the interest should remain aligned to the marginal cost of borrowing for the Centre.
  8. External assistance may be transferred to States on the same terms and conditions as attached to such assistance by external funding agencies, thereby making Government of India a financial intermediary without any gain or loss. The external assistance passed through to States should be managed through a separate fund in the public account.
  9. The moratorium on repayments and interest payments on the outstanding special term loans amounting to Rs.3,772 crore as on 31.3.2000 given to Punjab may continue for another two years i.e. upto 2006-07, by which time the Central Government must finalise the quantum of debt relief to be allowed in terms of the recommendations of the EFC.
  10. In respect of relief and rehabilitation loans given to Gujarat from ADB and World Bank through the Central Government, the Central Government may, if the Government of Gujarat so desires, alter the terms and conditions of these loans, so that these are available to Gujarat on the same terms on which the external agencies have extended these loans.
  11. All States should set up sinking funds for amortisation of all loans including loans from banks, liabilities on account of NSSF etc. The fund should be maintained outside the consolidated fund of the States and the public account and should not be used for any other purpose, except for redemption of loans.
  12. States should set up guarantee redemption funds through earmarked guarantee fees. This should be preceded by risk weighting of guarantees. The quantum of contribution to the fund should be decided accordingly.

14. Sharing of Profit Petroleum:

The issue of sharing of Profit Petroleum was added to the terms of reference of the Commission in October, 2003. The Commission was required to make recommendation as to whether the non-tax revenue of 'Profit Petroleum" arising out of contractual provision, be shared with the States from where the mineral oils are produced, and if so, to what extent. Accordingly, the Commission has made the following recommendation:-

  1. The Union should share the Profit Petroleum from NELP areas with the States from where the mineral oil and natural gas are produced. The share should be in the ration of 50:50.
  2. There need not be sharing of profits in respect of nomination fields and non-NELP blocks.
  3. The revenues earned by the Central Government on contracts signed under the coal bed methane policy may be shared with the producing States in the same manner as Profit Petroleum.
  4. In respect of any mineral, if a loss of revenue is anticipated for a State in the process of implementation of a policy, which involves production sharing, a similar compensation mechanism should be adopted by the Central Government.

15. Contents of FiscalResponsibility Legislation

Each State should enact a fiscal responsibility legislation, which should, at a minimum, provide for

  1. Eliminating revenue deficit by 2008-09;
  2. Reducing fiscal deficit to 3 per cent of GSDP or its equivalent, defined as the ratio of interest payment to revenue receipts;
  3. Bringing out annual reduction targets of revenue and fiscal deficits;
  4. Bringing out annual statement giving prospects for the State economy and related fiscal strategy and
  5. Bringing out special statements along with the budget giving in detail the number of employees in government, public sector, and aided institutions and related salaries.

16. Status of Releases made against recommendations of XI FC

A statement indicating the allocations made by EFC and the grants released during 2000-05 is at Annex-XII.

17. Status on the issuance of Guidelines

To operationalise the various recommendations under Twelfth Finance Commission, following guidelines have been issued. Detailed guidelines are available on Ministry's website.

Release and Utilisation of grants-in -aid other than local bodies and CRF-NCCF

Local Bodies Grants

Calamity Relief Fund

Annex-I

Terms of Reference of Twelfth Finance Commission

The President vide the notification dated 1st November, 2002 mandated the Commission to do the following:-

The Commission shall make recommendations as to the following matters:-

  1. The distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them under Chapter I Part XII of the Constitution and the allocation between the States of the respective shares of such proceeds;
  2. The principles which should govern the grants-in-aid of the revenues of the States out of the Consolidated Fund of India and the sums to be paid to the States which are in need of assistance by way of grants-in-aid of their revenues under article 275 of the Constitution for purposes other than those specified in the provisions to clause (1) of that article; and
  3. The measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State.

The Commission shall review the state of the finances of the Union and the States and suggest a plan by which the governments, collectively and severally, may bring about a restructuring of the public finances restoring budgetary balance, achieving macro-economic stability and debt reduction along with equitable growth.

In making its recommendations, the Commission shall have regard, among other considerations, to:-

  1. The resources, of the Central Government for five years commencing on 1st April, 2005, on the basis of levels of taxation and non-tax revenues likely to be reached at the end of 2003-04;
  2. The demands on the resources of the Central Government, in particular, on account of expenditure on civil administration, defence, internal and border security, debt-servicing and other committed expenditure and liabilities;
  3. The resources of the State Governments, for the five years commencing on 1st April, 2005, on the basis of levels of taxation and non-tax revenues likely to be reached at the end of 2003-04;
  4. The objective of not only balancing the receipts and expenditure on revenue account of all the States and the Centre, but also generating surpluses for capital investment and reducing fiscal deficit;
  5. Taxation efforts of the Central Government and each State Government as against targets, if any, and the potential for additional resource mobilization in order to improve the tax-Gross Domestic Product (GDP) and tax-Gross State Domestic Product (GSDP) ratio, as the case may be;
  6. The expenditure on the non-salary component of maintenance and upkeep of capital assets and the non-wage related maintenance expenditure on plan schemes to be completed by the 31st March, 2005 and the norms on the basis of which specific amounts are recommended for the maintenance of the capital assets and the manner of monitoring such expenditure;
  7. The need for ensuring the commercial viability of irrigation projects, power projects, departmental undertakings, public sector enterprises etc. in the States through various means including adjustment of user charges and relinquishing of non-priority enterprises through privatization or disinvestment.

In making its recommendations on various matters, the Commission will take the base of population figures as of 1971, in all such cases where population is a factor for determination of devolution of taxes and duties and grants-in-aid.

The Commission shall review the Fiscal Reform Facility introduced by the Central Government on the basis on the recommendations of the Eleventh Finance Commission, and suggest measures for effective achievement of its objectives.

The Commission may, after making an assessment of the debt position of the States as on the 31st March 2004, suggest such corrective measures, as are deemed necessary, consistent with macro-economic stability and debt sustainability. Such measures recommended will give weightage to the performance of the States in the fields of human development and investment climate.

The Commission may review the present arrangements as regards financing of Disaster Management with reference to the National Calamity Contingency Fund and the Calamity Relief Fund and make appropriate recommendations thereon.

The Commission shall indicate the basis on which it has arrived at its findings and make available the State-wise estimates of receipts and expenditure.

In addition to the above, through a subsequent notification dated 31st October 2003, the Commission was asked to make recommendations on the following matters:

  1. Whether non-tax income of profit petroleum to the Union, arising out of contractual provisions, should be shared with the States from where the mineral oils are produced; and
  2. If so, to what extent.

Annex-II

Summary of Recommendations

Plan for Restructuring Public Finances

  1. By 2009-10, the combined tax-GDP ratio of the center and the States should be increased to 17.6 per cent, primary expenditure to a level of 23 per cent of GDP and capital expenditure to nearly 7 per cent of GDP.

    (Para 4.52)

  2. The combined debt-GDP ratio with external debt measured at historical exchange rates should, at a minimum, be brought down to 75 per cent by the end of 2009-10.

    (Para 4.45)

  3. The system of on-lending should be brought to an end over time and the long term goal for the center and States for the debt-GDP ratio should be 28 per cent each.

    (Para 4.45)

  4. The fiscal deficit to GDP ratio targets for the center and the States may be fixed at 3 per cent of GDP each.

    (Para 4.45)

  5. The centre's interest payment relative to revenue receipts should reach about 28 per cent by 2009-10. In the case of States, the level of interest payments relative to revenue receipts should fall to about 15 per cent by 2009-10.

    (Para 4.54)

  6. The revenue deficit relative to GDP for the center and the States, for their combined as well as individual accounts should be brought down to zero by 2008-09.

    (Para 4.51)

  1. States should follow a recruitment and wage policy, in a manner such that the total salary bill relative to revenue expenditure net of interest payments and pensions does not exceed 35 per cent.

    (Para 4.63)

  2. Each State should enact a fiscal responsibility legislation, which should, at a minimum, provide for

    1. eliminating revenue deficit by 2008-09;
    2. reducing fiscal deficit to 3 per cent of GSDP or its equivalent, defined as the ratio of interest payment to revenue receipts;
    3. bringing out annual reduction targets of revenue and fiscal deficits;
    4. bringing out annual Statement giving prospects for the State economy and related fiscal strategy; and
    5. bringing out special Statements along with the budget giving in detail the number of employees in Government, public sector, and aided institutions and related salaries.

      (Para 4.79)

Sharing of Union Tax Revenues

  1. The share of the States in the net proceeds of shareable central taxes shall be 30.5 per cent. For this purpose, additional excise duties in lieu of sales tax are treated as a part of the general pool of central taxes. If the tax rental arrangement is terminated and the States are allowed to levy sales tax (or VAT) on these commodities without any prescribed limit, the share of the States in the net proceeds of shareable central taxes shall be reduced to 29.5 per cent.

    (Para 7.22)

  2. If any legislation is enacted in respect of service tax after the eighty eighth Constitutional amendment is notified, it must be ensured that the revenue accruing to a State under the legislation should not be less than the share that would accrue to it, had the entire service tax proceeds been part of the shareable pool.

    (Para 7.22)

  3. The indicative amount of over all transfers to States may be fixed at 38 per cent of the central gross revenue receipt.

    (Para 7.22)

  4. The States should be given a share as specified in the following table in the net proceeds of all the shareable Union taxes in each of the five financial years during the period 2005-06 to 2009-10.

    (Paras 7.35, 7.36)

State Share (allshareable taxes excluding service tax)

(per cent)
Share of Service Tax

(per cent)
1 2 3
1. Andhra Pradesh 7.356 7.453
2. Arunachal Pradesh 0.288 0.292
3. Assam 3.235 3.277
4. Bihar 11.028 11.173
5. Chhattisgarh 2.654 2.689
6. Goa 0.259 0.262
7. Gujarat 3.569 3.616
8. Haryana 1.075 1.089
9. Himachal Pradesh 0.522 0.529
10. Jammu & Kashmir 1.297 0.000
11. Jharkhand 3.361 3.405
12. Karnataka 4.459 4.518
13. Kerala 2.665 2.700
14. Madhya Pradesh 6.711 6.799
15. Maharashtra 4.997 5.063
16. Manipur 0.362 0.367
17. Meghalaya 0.371 0.376
18. Mizoram 0.239 0.242
19. Nagaland 0.263 0.266
20. Orissa 5.161 5.229
21. Punjab 1.299 1.316
22. Rajasthan 5.609 5.683
23. Sikkim 0.227 0.230
24. Tamil Nadu 5.305 5.374
25. Tripura 0.428 0.433
26. Uttar Pradesh 19.264 19.517
27. Uttaranchal 0.939 0.952
28. West Bengal 7.057 7.150
All States 100.000 100.000

Local Bodies

  1. A total grant of Rs,.20,000 crore for thepanchayati raj institutions and Rs.5,000 crore for the urban local bodies maybe given to the States for the period 2005-10 with inter-se distribution as indicatedin Table 8.1. (See Annexure-XI)

    (Para 8.38)

  2. The PRIs should be encouraged to take over the assets relating to water supply and sanitation and utilize the grants for repairs/rejuvenation as also the O&M costs. The PRIs should, however, recover at least 50 percent of the recurring costs in the form of user charges.

    (Para 8.40)

  3. Out of the grants allocated for the panchayats, priority should be given to expenditure on the O&M costs of water supply and sanitation. This will facilitate panchayats to take over the schemes and operate them.

    (Para 8.41)

  4. At least 50 per cent of the grants provided to each State for the urban local bodies should be earmarked for the scheme of solid waste management through public-private partnership. The municipalities should concentrate on collection, segregation and transportation of solid waste. The cost of these activities, whether carried out in house or out sourced, could be met from the grants.

    (Para 8.42)

  5. Besides expenditure on the O&M costs of water supply and sanitation in rural areas and on the schemes of solid waste management in urban areas, PRIs and ULBs should, out of the grants allocated, give high priority to expenditure on creation of data base and maintenance of accounts through the use of modern technology and management systems, wherever possible. Some of the modern methods like GIS (Geographic Information Systems) for mapping of properties in urban areas and computerization for switching over to a modern system of financial management would go a long way in creating strong local Governments, fulfilling the spirit of the 73rd and 74th Constitutional amendments.

    (Para 8.43)

  6. The States may assess the requirement of each local body on the basis of the principles Stated by us and earmark funds accordingly out of the total allocation re-commended by us.

    (Para 8.43)

  7. Grants have not been recommended separately for the normal and the excluded areas under the fifth and sixth schedule of the Constitution. The States having such areas may distribute the grants recommended by us to all local bodies, including those in the excluded areas, in a fair and just manner.

    (Para 8.51)

  8. The Central Government should not impose any condition other than those prescribed by us, for release or utilization of these grants, which are largely in the nature of a correction of vertical imbalance between the center and the States.

    (Para 8.52)

  9. The normal practice of insisting on the utilization of amounts already released before further releases are considered, may continue and the grants may be released to a State only after it certifies that the previous releases have been passed on to the local bodies. The amounts due to the States in the first year of our award period i.e. 2005-06 may be released without such an insistence.

    (Para 8.52)

  10. State Governments should not take more than 15 days in transferring the grants to local bodies after these are released by the Central Government. The center should take a serious view of any undue delay on the part of the State.

    (Para 8.53)

  1. The Central Government should take note of our views on the issues listed in para 8.23, while formulating or revising various policy measures. In particular, action may be taken to raise the ceiling on profession tax.

    (Para 8.23)

  2. The State should adopt the best practices listed in para 8.19 to improve the resources of the panchayats.

    (Para 8.19)

  3. The suggestions made by us in respect of State finance commissions in paras 8.29 to 8.37 and 8.54 should be acted upon with a view to strengthening the institution of SFCs, so that it may play an effective role in the system of fiscal transfers to the third tier of Government.

    (Paras 8.29 to 8.37, 8.54)

Calamity Relief

  1. The scheme of CRF be continued in its present form with contributions from the center and the States in the ratio of 75:25.

    (Paras 9.10, 9.11)

  2. The size of the CRF for our award period is worked out at Rs.21333.33 crore.

    (Para 9.11)

  3. The scheme of NCCF may continue in its present form with core corpus of Rs.500 crore. The outgo from the fund may continue to be replenished by way of collection of National Calamity Contingent Duty and levy of special surcharges.

    (Paras 9.16, 9.17)

  4. The definition of natural calamity, as applicable at present, may be expanded to cover landslides, avalanches, cloud burst and pest attacks.

    (Para 9.12)

  5. The centre may continue to make allocation of foodgrains to the needy States as a relief measures, but a transparent policy in this regard is required to be put in place.

    (Para 9.18)

  6. A committee consisting of scientists, flood control specialists and other experts be set up to study and map the hazards to which several States are subject to.

    (Para 9.14)

  7. The provisions for disaster preparedness and mitigation needs to be built into the State plans, and not as a part of calamity relief.

    (Para 9.14)

Grants-in-aid to States

  1. The system of imposing a 70:30 ratio between loans and grants for extending plan assistance to non-special category States (10:90 in the case of special category States) should be done away with. Instead, the centre should confine itself to extending plan grants to the States, and leave it to the States to decide how much they wish to borrow and from whom.

    (Para 10.4)

  2. A total non-plan revenue deficit grant of Rs.56,855.87 crore is recommended during the award period for fifteen States (vide Table 10.4). (Please see Annexure-VI).

    (Paras 10.12, 10.13)

  3. Eight States have been recommended for grants amounting to Rs.10,171.65 crore over the award period for the education sector, with a minimum of Rs.20 crore in a year for any eligible State (vide Table 10.5). (Please see Annexure-VII)

    (Para 10.17)

  4. Seven States have been recommended for grants amounting to Rs.5,887.08 crore over the award period for the health sector (major head 2210 and 2211), with a minimum of Rs.10 crore a year for any eligible State (vide Table 10.6). (Please see Annexure-VII)

    (Para 10.18)

  5. The grants for the education and health sectors are an additionality, over and above the normal expenditure to be incurred by the States in these sectors. These grants should be utilized only for the respective sectors (non-Plan), i.e., major head 2202 in the case of education and major heads 2210 and 2211 in the case of health. Conditionalities governing the releases and utilization of these grants have been specified. No further conditionalities should be imposed by the Central or the State Government for the release or utilization of these grants. Monitoring of the expenditure relating to these grants will rest with the State Government concerned.

    (Para 10.19)

  6. A grant of Rs.15,000 crore over the award period is recommended for maintenance of roads and bridges. This amount will be in addition to the normal expenditure which the States would be incurring on maintenance of roads and bridges. This amount will be provided in equal instalments over the last four year (i.e. 2006-07 to 2009-10) of the award period, so that the States get a year for making preparations to absorb these funds.

    (Para 10.21)

  7. An amount of Rs.5,000 crore is recommended as grants for maintenance of public buildings.

    (Para 10.22)

  8. The maintenance grants for roads and bridges, and for buildings, are an additionality, over and above the normal maintenance expenditure to be incurred by the States. These grants should be released and spent in accordance with the conditionalities indicated in annexures 10.4 to 10.6.

    (Para 10.23)

  9. A grant of Rs.1,000 crore spread over the award period 2005-10 is recommended for maintenance of forests. This would be an additionality over and above what the States would be spending through their forest departments. It should also result in increased expenditure to the extent of this grant, in addition to the normal expenditure of the forest department.

    (Para 10.25)

  1. A grant of Rs.625 crore spread over the award period is recommended for heritage conservation. This grant will be used for preservation and protection of historical monuments, archaeological sites, public libraries, museums and archives, and also for improving the tourist infrastructure to facilitate visits to these sites.

    (Para 10.26)

  2. An amount of Rs.7,100 crore has been recommended as grant for State specific needs. While these grants have been phased out equally over the last four years, this phasing should be taken as indicative in nature. The States may communicate the required phasing of grants to the Central Government (vide Table 10.11). (Please see Annexure-X).

    (Para 10.28)

Fiscal Reform Facility

  1. The scheme of Fiscal Reform Facility may not continue over the period 2005-10, as the scheme of debt relief, as described in chapter 12 obviates the need for a separate Fiscal Reform Facility.

    (Para 11.25)

Debt Relief and Corrective Measures

  1. Each State must enact a fiscal responsibility legislation prescribing specific annual targets with a view to eliminating the revenue deficit by 2008-09 and reducing fiscal deficits based on a path for reduction of borrowings and guarantees. Enacting the fiscal responsibility legislation on the lines indicated in chapter 4 will be a necessary pre-condition for availing of debt relief.

    (Para 12.36)

  2. Debt relief may not be linked with performance in human development or investment climate.

    (Para 12.38)

  3. The central loans to States contracted till 31.3.04 and outstanding on 31.3.05 (amounting to Rs.1,28,795 crore) may be consolidated and rescheduled for a fresh term of 20 years (resulting in repayment in 20 equal instalments), and an interest rate of 7.5 per cent be charged on them. This will be subject to the State enacting the fiscal responsibility legislation and will take effect prospectively from the year in which such legislation in enacted.

    (Para 12.42)

  4. A debt write-off scheme linked to the reduction of revenue deficit of States may be introduced. Under the scheme, the repayments due from 2005-06 to 2009-10 on central loans contracted up to 31.3.04 and recommended to be consolidated will be eligible for write off. The quantum of write off of repayment will be linked to the absolute amount by which the revenue deficit is reduced in each successive year during the award period. The reduction in the revenue deficit must be cumulatively higher than the cumulative reduction attributable to the interest relief recommended by us. Also, the fiscal deficit of the State must be contained at least to the level of 2004-05. In effect, if the revenue deficit is brought down to zero, the entire repayments during the period will be written off. The enactment of the fiscal responsibility legislation would be a necessary pre-condition for availing the debt relief under this scheme also with the benefit accruing prospectively. Details of the scheme have been outlined in para 12.44.

    (Para 12.43)

  1. The Central Government should not act as an intermediary for future lending and allow the States to approach the market directly. If some fiscally weak States are unable to raise funds from the market, the centre could borrow for the purpose of on lending to such States, but the interest rates should remain aligned to the marginal cost of borrowing for the centre.

    (Para 12.46)

  2. External assistance may be transferred to States on the same terms and conditions as attached to such assistance by external funding agencies, thereby making Government of India a financial intermediary without any gain or loss. The external assistance passed through to States should be managed through a separate fund in the public account.

    (Para 12.49)

  3. The moratorium on repayments and interest payments on the outstanding special term loan amounting to Rs.3,772 crore as on 31.03.2000 given to Punjab may continue for another two years i.e. up to 2006-07, by which time the Central Government must finalize the quantum of debt relief to be allowed in terms of the recommendations of the EFC.

    (Para 12.51)

  4. In respect of relief and rehabilitation loans given to Gujarat from ADB and World Bank through the Central Government, the Central Government may, if the Government of Gujarat so desires, alter the terms and conditions of these loans, so that these are available to Gujarat on the same terms on which the external agencies have extended these loans.

    (Para 12.55)

  5. All States should set up sinking funds for amortization of all loans including loans from banks, liabilities on account of NSSF etc. The fund should be maintained outside the consolidated fund of the States and the public account and should not be used for any other purpose, except for redemption of loans.

    (Para 12.59)

  6. States should set up guarantee redemption funds through earmarked guarantee fees. This should be preceded by risk weighting of guarantees. The quantum of contribution to the fund should be decided accordingly.

    (Para 12.60)

Profit Petroleum

  1. The Union should share the profit petroleum from NELP areas with the States from where the mineral oil and natural gas are produced. The share should be in the ratio of 50:50.

    (Para 13.31)

  2. There need not be sharing of profits in respect of nomination fields and non-NELP blocks.

    (Para 13.32)

  3. The revenues earned by the Central Government on contracts signed under the coal bed methane policy may be shared with the producing States in the same manner as profit petroleum.

    (Para 13.33)

  4. In respect of any mineral, if a loss of revenue is anticipated for a State in the process of implementation of a policy, which involves production sharing, a similar compensation mechanism should be adopted by the Central Government.

    (Para 13.34)

A Permanent Secretariat for the Finance Commission

  1. The finance commission division of the Ministry of Finance should be converted into a full-fledged department, serving as the permanent secretariat for the finance commissions. This secretariat should be vested with the powers of a full-fledged department of the Government, with Ministry of Finance only as its nodal ministry for the purpose of linkage with the Parliament.

    (Paras 14.6, 14.7)

  2. The expenditure of finance commissions should be treated as expenditure "charged " on the consolidated fund of India.

    (Para 14.9)

  3. A research committee should be set up with adequate funding to organize studies relevant to fiscal federalism.

    (Para 14.8)

  4. The finance commissions should have a tenure of at least 3 years to enable them to do their work adequately.

    (Para 14.8)

  5. The Thirteenth Finance Commission should be set up at the beginning of 2007 and appropriate and adequate arrangements for the office and residence of the chairman and members of the Commission must be made before the appointment of the Commission, so that Commission's time is not wasted in routine administrative matters.

    (Para 14.8)

Monitoring Mechanism

  1. Every State should set up a high level monitoring committee headed by the Chief Secretary with the Finance Secretary and the Secretaries/heads of departments as members for monitoring proper utilization of finance commission grants.

    (Paras 14.11, 14.12)

  2. The monitoring committee should meet at least once in every quarter to review the utilization of the grants and to issue directions for mid-course correction, if considered necessary.

    (Para 14.12)

  1. The monitoring committee should be responsible for monitoring both financial and physical targets and for ensuring adherence to the specific conditionalities in respect of each grant, wherever applicable.

    (Para 14.11)

  2. In the beginning of the year, the monitoring committee should approve finance commission assisted projects to be undertaken in each sector, quantify the targets, both in physical and financial terms and lay down the time period for achieving specific milestones.

    (Para 14.11)

Accounting Procedure

  1. Central Government should gradually move towards accrual basis of accounting.

    (Para 14.16)

  2. In the interim period, additional information in the form of Statements should be appended to the present system of cash accounting to enable more informed decision making. The additional information may relate to subsidies, expenditure on salaries, expenditure on pensions, committed liabilities, maintenance expenditure, segregation of salary non-salary portions and liabilities and repayment schedule on outstanding debts.

    (Para 14.16)

  3. The definition of revenue and fiscal deficits be standardized and instructions for a uniform classification code down to the object head may be issued to all the States.

    (Para 14.17)

  4. A National Institute of Public Financial Accountants be set up by the Government of India and its charter be decided in consultation with the Comptroller and Auditor General.

    (Para 14.18)

Annex-IV

Grant-in-aid for Non-Plan Revenue Deficit (2005-10) (Rs. in crore)
State 2005-06 2006-07 2007-08 2008-09 2009-10 2005-10(Total)
1. Arunachal Pradesh 271.84 262.94 293.07 273.92 256.11 1357.88
2. Assam 305.67 Nil Nil Nil Nil 305.67
3. Himachal Pradesh 2164.12 2107.14 2120.96 1991.64 1818.52 10202.38
4. Jammu & Kashmir 2458.56 2446.64 2552.18 2510.64 2385.44 12353.46
5. Kerala 470.37 Nil Nil Nil Nil 470.37
6. Manipur 808.39 841.17 889.10 918.50 934.82 4391.98
7. Meghalaya 376.67 359.02 393.24 355.78 312.15 1796.86
8. Mizoram 537.19 556.52 605.17 634.00 644.91 2977.79
9. Nagaland 993.65 1037.66 1124.44 1168.17 1212.58 5536.50
10. Orissa 488.04 Nil Nil Nil Nil 488.04
11. Punjab 1556.83 922.64 653.20 Nil Nil 3132.67
12. Sikkim 66.81 47.06 52.86 21.94 Nil 188.67
13. Tripura 1041.91 1064.30 1122.91 1131.90 1133.18 5494.20
14. Uttaranchal 1112.91 1064.30 1115.02 992.02 830.43 5114.68
15. West Bengal 2438.90 605.82 Nil Nil Nil 3044.72
Total States 15091.86 11315.21 10922.15 9998.51 9528.14 56855.87

Annex-V

Grants-in-aid for Education Sector (major head 2202) and Health Sector (major head 2210 & 2211) (Rs in crore)
State 2005-06 2006-07 2007-08 2008-09 2009-10 2005-10 (Total)
- Education Sector (major head 2202)
Assam 183.20 200.60 219.66 240.53 263.38 1107.37
Bihar 443.99 486.17 532.36 582.93 638.31 2683.76
Jharkhand 107.82 118.06 129.28 141.56 155.01 651.73
Madhya Pradesh 76.03 83.25 91.16 99.82 109.30 459.56
Orissa 53.49 58.57 64.13 70.22 76.89 323.30
Rajasthan 20.00 20.00 20.00 20.00 20.00 100.00
Uttar Pradesh 736.87 806.87 883.52 967.45 1059.36 4454.07
West Bengal 64.83 70.99 77.73 85.11 93.20 391.86
Total 1686.23 1844.51 2017.84 2207.62 2415.45 10171.65
- Health Sector (major head 2210 & 2211)
Assam 153.58 171.24 190.93 212.89 237.38 966.02
Bihar 289.30 322.57 359.66 401.02 447.14 1819.69
Jharkhand 57.39 63.99 71.35 79.55 88.70 360.98
Madhya Pradesh 28.88 32.20 35.90 40.03 44.63 181.64
Orissa 31.22 34.81 38.81 43.28 48.25 196.37
Uttar Pradesh 367.63 409.90 457.04 509.60 568.21 2312.38
Uttaranchal 10.00 10.00 10.00 10.00 10.00 50.00
Total 938.00 1044.71 1163.69 1296.37 1444.31 5887.08

Annex-VI

Grants-in-aid for Maintenance of Roads & Bridges, Public Buildings and Forest (Rs. incrore)
State 2005-06 2006-07 2007-08 2008-09 2009-10 2005-10 (Total)
- Maintenance of Roads & Bridges
1. Andhra Pradesh 0 245.03 245.03 245.03 245.03 980.12
2. Arunachal Pradesh 0 11.09 11.09 11.09 11.09 44.36
3. Assam 0 82.53 82.53 82.53 82.53 330.12
4. Bihar 0 77.34 77.34 77.34 77.34 309.36
5. Chhattisgarh 0 65.60 65.60 65.60 65.60 262.40
6. Goa 0 9.87 9.87 9.87 9.87 39.48
7. Gujarat 0 223.80 223.80 223.80 223.80 895.20
8. Haryana 0 45.68 45.68 45.68 45.68 182.72
9. Himachal Pradesh 0 65.41 65.41 65.41 65.41 261.64
10. Jammu & Kashmir 0 29.42 29.42 29.42 29.42 117.68
11. Jharkhand 0 102.26 102.26 102.26 102.26 409.04
12. Karnataka 0 364.53 364.53 364.53 364.53 1458.12
13. Kerala 0 160.58 160.58 160.58 160.58 642.32
14. Madhya Pradesh 0 146.72 146.72 146.72 146.72 586.88
15. Maharashtra 0 297.42 297.42 297.42 297.42 1189.68
16. Manipur 0 19.24 19.24 19.24 19.24 76.96
17. Meghalaya 0 21.60 21.60 21.60 21.60 86.40
18. Mizoram 0 10.53 10.53 10.53 10.53 42.12
19. Nagaland 0 30.22 30.22 30.22 30.22 120.88
20. Orissa 0 368.77 368.77 368.77 368.77 1475.08
21. Punjab 0 105.24 105.24 105.24 105.24 420.96
22. Rajasthan 0 158.33 158.33 158.33 158.33 633.32
23. Sikkim 0 4.66 4.66 4.66 4.66 18.64
24. Tamil Nadu 0 303.60 303.60 303.60 303.60 1214.40
25. Tripura 0 15.37 15.37 15.37 15.37 61.48
26. Uttar Pradesh 0 600.79 600.79 600.79 600.79 2403.16
27. Uttaranchal 0 81.14 81.14 81.14 81.14 324.56
28. West Bengal 0 103.23 103.23 103.23 103.23 412.92
Total 0 3750.00 3750.00 3750.00 3750.00 15000.00
- Maintenance of Public Buildings
1. Andhra Pradesh 0 60.64 60.63 60.63 60.63 242.53
2. Arunachal Pradesh 0 14.35 14.35 14.36 14.36 57.42
3. Assam 0 57.66 57.66 57.66 57.66 230.64
4. Bihar 0 89.90 89.90 89.91 89.90 359.61
5. Chhattisgarh 0 45.78 45.77 45.77 45.77 183.09
6. Goa 0 6.05 6.05 6.04 6.04 24.18
7. Gujarat 0 50.90 50.90 50.90 50.91 203.61
8. Haryana 0 37.95 37.95 37.95 37.95 151.80
9. Himachal Pradesh 0 36.90 36.90 36.90 36.90 147.60
Grants-in-aid for Maintenance of Roads & Bridges, Public Buildings and Forest (Rs. incrore)
State 2005-06 2006-07 2007-08 2008-09 2009-10 2005-10 (Total)
- Maintenance of Forests
21. Punjab 0.40 0.40 0.40 0.40 0.40 2.00
22. Rajasthan 5.00 5.00 5.00 5.00 5.00 25.00
23. Sikkim 1.60 1.60 1.60 1.60 1.60 8.00
24. Tamil Nadu 6.00 6.00 6.00 6.00 6.00 30.00
25. Tripura 3.00 3.00 3.00 3.00 3.00 15.00
26. Uttar Pradesh 4.00 4.00 4.00 4.00 4.00 20.00
27. Uttaranchal 7.00 7.00 7.00 7.00 7.00 35.00
28. West Bengal 3.00 3.00 3.00 3.00 3.00 15.00
Total 200.00 200.00 200.00 200.00 200.00 1000.00

Annex-VII

Grants-in-aid for Heritage Conservation (Rs. in Crore)
State 2005-06 2006-07 2007-08 2008-09 2009-10 2005-10(Total)
1. Andhra Pradesh 0 10.00 10.00 10.00 10.00 40.00
2. Arunachal Pradesh 0 1.25 1.25 1.25 1.25 5.00
3. Assam 0 5.00 5.00 5.00 5.00 20.00
4. Bihar 0 10.00 10.00 10.00 10.00 40.00
5. Chhattisgarh 0 2.50 2.50 2.50 2.50 10.00
6. Goa 0 5.00 5.00 50 5.00 20.00
7. Gujarat 0 6.25 6.25 6.25 6.25 25.00
8. Haryana 0 3.75 3.75 3.75 3.75 15.00
9. Himachal Pradesh 0 2.50 2.50 2.50 2.50 10.00
10. Jammu & Kashmir 0 2.50 2.50 2.50 2.50 10.00
11. Jharkhand 0 2.50 2.50 2.50 2.50 10.00
12. Karnataka 0 12.50 12.50 12.50 12.50 50.00
13. Kerala 0 6.25 6.25 6.25 6.25 25.00
14. Madhya Pradesh 0 5.00 5.00 5.00 5.00 20.00
15. Maharashtra 0 12.50 12.5 12.50 12.5 50.00
16. Manipur 0 1.25 1.25 1.25 1.25 5.00
17. Meghalaya 0 1.25 1.25 1.25 1.25 5.00
18. Mizoram 0 1.25 1.25 1.25 1.25 5.00
19. Nagaland 0 1.25 1.25 1.25 1.25 5.00
20. Orissa 0 12.50 12.50 12.5 12.50 50.00
21. Punjab 0 2.50 2.50 2.50 2.50 10.00
22. Rajasthan 0 12.50 12.50 12.50 12.50 50.00
23. Sikkim 0 1.25 1.25 1.25 1.25 5.00
24. Tamil Nadu 0 10.00 10.00 10.00 10.00 40.00
25. Tripura 0 1.25 1.25 1.25 1.25 5.00
26. Uttar Pradesh 0 12.50 12.50 12.50 12.50 50.00
27. Uttaranchal 0 1.25 1.25 1.25 1.25 5.00
28. West Bengal 0 10.00 10.00 10.00 10.00 40.00
Total States 0 156.25 156.25 156.25 156.25 625.00

Annex-VIII

Grants-in-aid for State-Specific Needs (Rs. in Crore)
State 2005-06 2006-07 2007-08 2008-09 2009-10 2005-10(Total) Purpose
1. Andhra Pradesh 0 125.00 125.00 125.00 125.00 500.00 Drinking Water Supply to Flouride effected area ( Rs. 325 crore), Improving the Socio-economic condition of people in remote areas(Rs. 175 crore)
2. Arunachal Pradesh 0 2.50 2.50 2.50 2.50 10.00 Treasury building
3. Assam 0 32.50 32.50 32.50 32.50 130.00 Development of Urban areas (Rs 121 crore), Health infrastructure (Rs. 9 crore)
4. Bihar 0 100.00 100.00 100.00 100.00 400.00

Technical education (Rs. 50 crore), Administrative training Institute. (RS. 50 crore), E-Governance (RS. 40 crore), Construction of Homes under juvenile justice

Act and improvement of remand home , etc.(Rs. 20 crore), Improvement of Urban water supply &drainage (Rs. 180 crore)Fire services (Rs. 10 crore), Residential schools & Hostels for SC/ST/OBC (Rs. 50 crore)

5. Chhattisgarh 0 75.00 75.00 75.00 75.00 300.00 Development of State Capital at Raipur(Rs. 200 crore), Police infrastructure(Rs. 100 crore)
6. Goa 0 2.50 2.50 2.50 2.50 10.00 Health infrastructure(Rs. 10 crore)
7. Gujarat 0 50.00 50.00 50.00 50.00 200.00 Salinity ingress
8. Haryana 0 25.00 25.00 25.00 25.00 100.00 Water logging / salinity and declining water table
9. Himachal Pradesh 0 12.50 12.50 12.50 12.50 50.00 Development of Urban areas
10. Jammu & Kashmir 0 25.00 25.00 25.00 25.00 100.00 Tourism(Rs. 90 crore), Construction of Public Service Commission building in Jammu (RS. 10 crore)
11. Jharkhand 0 82.50 82.50 82.50 82.50 330.00 Development of State Capital at Ranchi (Rs. 200 crore), spl.needs of Police force (Rs. 130 crore)
12. Karnataka 0 150.00 150.00 150.00 150.00 600.00 General Administration(Rs. 250 crore), Youth Service and Sports facility (Rs. 100 crore),improvement of Police administration(Rs. 100 crore), & Health Services(Rs. 150 crore)
Grants-in-aid for State-Specific Needs (Rs. in Crore)
State 2005-06 2006-07 2007-08 2008-09 2009-10 2005-10(Total) Purpose
13. Kerala 0 125.00 125.00 125.00 125.00 500.00 Inland water and canals(Rs. 225 crore), Coastal Zone management (Rs. 175 crore),improvement of quality of School education (Rs. 100 crore)
14. Madhya Pradesh 0 75.00 75.00 75.00 75.00 300.00 Development of Tourism(Rs. 67 crore), Development of road infrastructure(Rs. 208 crore), Dev. Of urban areas(Rs. 25 crore)
15. Maharashtra 0 75.00 75.00 75.00 75.00 300.00 Infrastructure for Women-child development programme(Rs. 50 crore), Postal and eco-tourism(Rs. 250 crore)
16. Manipur 0 7.50 7.50 7.50 7.50 30.00 Secretariat complex(Rs. 3.50 crore), Sports complex (Rs. 15 crore) Loktak lake (Rs. 11.50 crore)
17. Meghalaya 0 8.75 8.75 8.75 8.75 35.00 Zoological Park (Rs. 30 crore), Botanical garden (Rs. 5 crore)
18. Mizoram 0 16.25 16.25 16.25 16.25 65.00 Bamboo flowering(Rs. 40 crore), Sports complex (Rs. 25 crore)
19. Nagaland 0 11.25 11.25 11.25 11.25 45.00 Health facility (Rs. 15 crore), Assembly Sectt. (Rs. 30 crore)
20. Orissa 0 42.50 42.50 42.50 42.50 170.00 Eco-restoration work in Chilika lake (Rs. 30 crore), For Sewerage system for Bhubaneswar(RS. 140 crore)
21. Punjab 0 24.00 24.00 24.00 24.00 96.00 Stagnant agriculture
22. Rajasthan 0 112.50 112.50 112.50 112.50 450.00 Indira Gandhi Nahar Pariyojana (Rs. 300 crore), Meeting drinking waster scarcity in Border and desert districts(Rs. 150 crore)
23. Sikkim 0 25.00 25.00 25.00 25.00 100.00 Construction of airport
24. Tamil Nadu 0 75.00 75.00 75.00 75.00 300.00 Development of urban areas(Rs. 250 crore), Sea erosion (Rs. 50 crore)
25. Tripura 0 12.25 12.25 12.25 12.25 49.00 Construction of capital complex(Rs. 28 crore), Hospital for Dhalai District at Kulai (Rs. 11 crore), Model prison at Bishalgarh(Rs. 10 crore)
26. Uttar Pradesh 0 200.00 200.00 200.00 200.00 800.00 Renovation of Collectorate buildings (Rs. 60 crore), Development of Bundelkhand and Eastern regions(Rs. 700 crore), Development of urban area(Rs. 40 crore)
27. Uttaranchal 0 60.00 60.00 60.00 60.00 240.00 Development of State Capital (Rs 200 crore), Promotion of tourism (Rs. 35 crore), Health (Rs. 5 crore)
28. West Bengal 0 222.50 222.50 222.50 222.50 890.00 Arsenic contamination of ground water(Rs. 600 crore), Erosion by Ganga Padma river in Malda and Murshidabad Distts. (Rs. 190 crore, Development of Sundarban regions(Rs. 100 crore)
Total 0 1775.00 1775.00 1775.00 1775.00 7100.00 -

Annex-IX

Shares of States in Allocation (2005-10) - Local Bodies (Rs.Crore)
State Panchayats Municipalities
Per cent Per cent (Rs.Crore)
1. Andhra Pradesh 7.935 1587.00 7.480 374.00
2. Arunachal Pradesh 0.340 68.00 0.060 3.00
3. Assam 2.630 526.00 1.100 55.00
4. Bihar 8.120 1624.00 2.840 142.00
5. Chhattisgarh 3.075 615.00 1.760 88.00
6. Goa 0.090 18.00 0.240 12.00
7. Gujarat 4.655 931.00 8.280 414.00
8. Haryana 1.940 388.00 1.820 91.00
9. Himachal Pradesh 0.735 147.00 0.160 8.00
10. Jammu & Kashmir 1.405 281.00 0.760 38.00
11. Jharkhand 2.410 482.00 1.960 98.00
12. Karnataka 4.440 888.00 6.460 323.00
13. Kerala 4.925 985.00 2.980 149.00
14 Madhya Pradesh 8.315 1663.00 7.220 361.00
15. Maharashtra 9.915 1983.00 15.820 791.00
16. Manipur 0.230 46.00 0.180 9.00
17. Meghalaya 0.250 50.00 0.160 8.00
18. Mizoram 0.100 20.00 0.200 10.00
19. Nagaland 0.200 40.00 0.120 6.00
20. Orissa 4.015 803.00 2.080 104.00
21. Punjab 1.620 324.00 3.420 171.00
22. Rajasthan 6.150 1230.00 4.400 220.00
23. Sikkim 0.065 13.00 0.020 1.00
24. Tamil Nadu 4.350 870.00 11.440 572.00
25. Tripura 0.285 57.00 0.160 8.00
26. Uttar Pradesh 14.640 2928.00 10.340 517.00
27. Uttaranchal 0.810 162.00 0.680 34.00
28. West Bengal 6.355 1271.00 7.860 393.00
Total 100.000 20000.00 100.000 5000.00

Annex-X

Calamity Relief Fund (CRF) during 2005-10 (Rs. in crore)
State Total 2005-2010 Central Share State Share
1. Andhra Pradesh 1901.24 1425.93 475.32
2. Arunachal Pradesh 150.07 112.56 37.52
3. Assam 1023.84 767.89 255.97
4. Bihar 789.83 592.37 197.46
5. Chhattisgarh 592.60 444.45 148.16
6. Goa 11.64 8.73 2.91
7. Gujarat 1359.30 1019.47 339.82
8. Haryana 687.28 515.46 171.82
9. Himachal Pradesh 534.01 400.52 133.50
10. Jammu & Kashmir 458.54 343.89 114.63
11. Jharkhand 668.61 501.46 167.15
12. Karnataka 633.55 475.16 158.39
13. Kerala 472.42 354.32 118.12
14. Madhya Pradesh 1348.37 1011.27 337.09
15. Maharashtra 1231.68 923.77 307.92
16. Manipur 29.48 22.11 7.36
17. Meghalaya 59.84 44.88 14.96
18. Mizoram 34.90 26.19 8.73
19. Nagaland 20.29 15.19 5.06
20. Orissa 1599.16 1199.37 399.79
21. Punjab 806.88 605.16 201.72
22. Rajasthan 2296.68 1722.50 574.17
23. Sikkim 92.97 69.74 23.24
24. Tamil Nadu 1155.28 866.46 288.82
25. Tripura 68.14 51.12 17.04
26. Uttar Pradesh 1569.49 1177.11 392.37
27. Uttaranchal 492.38 369.28 123.09
28. West Bengal 1244.86 933.64 311.20
Total 21333.33 16000.00 5333.33
Grants-in-aid for Maintenance of Roads & Bridges, Public Buildings and Forest (Rs. incrore)
State 2005-06 2006-07 2007-08 2008-09 2009-10 2005-10 (Total)
- Maintenance of Public Buildings
10. Jammu & Kashmir 0 41.14 41.14 41.13 41.13 164.54
11. Jharkhand 0 39.90 39.90 39.90 39.91 159.61
12. Karnataka 0 51.28 51.28 51.28 51.28 205.12
13. Kerala 0 25.88 25.88 25.87 25.87 103.50
14. Madhya Pradesh 0 110.76 110.76 110.75 110.75 443.02
15. Maharashtra 0 55.90 55.90 55.90 55.91 223.61
16. Manipur 0 9.42 9.43 9.43 9.43 37.71
17. Meghalaya 0 8.75 8.76 8.75 8.76 35.02
18. Mizoram 0 5.82 5.82 5.82 5.83 23.29
19. Nagaland 0 11.54 11.55 11.54 11.54 46.17
20. Orissa 0 97.28 97.28 97.29 97.29 389.14
21. Punjab 0 37.95 37.95 37.95 37.95 151.80
22. Rajasthan 0 53.27 53.27 53.27 53.28 213.09
23. Sikkim 0 8.04 8.03 8.04 8.04 32.15
24. Tamil Nadu 0 60.64 60.63 60.63 60.63 242.53
25. Tripura 0 12.53 12.53 12.53 12.52 50.11
26. Uttar Pradesh 0 150.07 150.07 150.08 150.06 600.28
27. Uttaranchal 0 24.40 24.40 24.40 24.40 97.60
28. West Bengal 0 45.30 45.31 45.32 45.30 181.23
Total 0 1250.00 1250.00 1250.00 1250.00 5000.00
- Maintenance of Forests
1. Andhra Pradesh 13.00 13.00 13.00 13.00 13.00 65.00
2. Arunachal Pradesh 20.00 20.00 20.00 20.00 20.00 100.00
3. Assam 8.00 8.00 8.00 8.00 8.00 40.00
4. Bihar 1.00 1.00 1.00 1.00 1.00 5.00
5. Chhattisgarh 17.00 17.00 17.00 17.00 17.00 85.00
6. Goa 0.60 0.60 0.60 0.60 0.60 3.00
7. Gujarat 4.00 4.00 4.00 4.00 4.00 20.00
8. Haryana 0.40 0.40 0.40 0.40 0.40 2.00
9. Himachal Pradesh 4.00 4.00 4.00 4.00 4.00 20.00
10. Jammu & Kashmir 6.00 6.00 6.00 6.00 6.00 30.00
11. Jharkhand 6.00 6.00 6.00 6.00 6.00 30.00
12. Karnataka 11.00 11.00 11.00 11.00 11.00 55.00
13. Kerala 5.00 5.00 5.00 5.00 5.00 25.00
14. Madhya Pradesh 23.00 23.00 23.00 23.00 23.00 115.00
15. Maharashtra 14.00 14.00 14.00 14.00 14.00 70.00
16. Manipur 6.00 6.00 6.00 6.00 6.00 30.00
17. Meghalaya 6.00 6.00 6.00 6.00 6.00 30.00
18. Mizoram 5.00 5.00 5.00 5.00 5.00 25.00
19. Nagaland 5.00 5.00 5.00 5.00 5.00 25.00
20. Orissa 15.00 15.00 15.00 15.00 15.00 75.00

Annex-XI

State-wise Debt Relief after Consolidation of Central Loans Contracted before 31-03-2004 and Outstanding on 31-03-2005
States Total (Debt Servicing during 2005-10)
Repayment Interest Total
1 2 3 4
1. Andhra Pradesh 739.64 2683.74 3423.38
2. Arunachal Pradesh 19.98 71.73 91.71
3. Assam 507.62 153.87 661.49
4. Bihar 620.45 1268.27 1888.72
5. Chhattisgarh 146.03 393.77 539.80
6. Goa 39.06 94.66 133.72
7. Gujarat 849.15 1840.02 2689.17
8. Haryana 258.30 387.67 645.96
9. Himachal Pradesh 69.88 134.79 204.67
10. Jammu & Kashmir 161.38 264.02 425.40
11. Jharkhand 204.94 454.49 659.43
12. Karnataka 431.32 1529.43 1960.74
13. Kerala 379.14 715.03 1094.17
14. Madhya Pradesh 616.66 1310.98 1927.64
15. Maharashtra 1133.12 1217.39 2350.51
16. Manipur 292.14 27.26 319.40
17. Meghalaya 14.82 56.49 71.30
18. Mizoram 7.31 50.54 57.85
19. Nagaland 21.35 56.06 77.41
20. Orissa 872.85 1008.43 1881.28
21. Punjab 351.48 523.18 874.66
22. Rajasthan 737.77 962.25 1700.02
23. Sikkim 10.69 33.96 44.65
24. Tamil Nadu 688.67 1195.47 1884.14
25. Tripura 24.77 123.97 148.73
26. Uttar Pradesh 1553.04 3132.68 4685.72
27. Uttaranchal -10.13 37.70 27.57
28. West Bengal 1187.48 1547.81 2735.29
Total 11928.91 21275.65 33204.56

* The state is not getting benefit in repayments as some loans which would otherwise have got fully repaid during our award period are getting rescheduled for a fresh period of 20 years and existing repayment profile of Block Loans seems to involve a moratorium on half the repayment during 2005 to 2009.