Finance Commission to Assess Economic Impact of Freebie Schemes

The 16th Finance Commission will examine the freebie schemes run by both states and the Centre, as these significantly affect finances, Chairman Arvind Panagariya stated on Thursday. He emphasised that the commission must ensure macroeconomic and financial stability in the country while considering these schemes.

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Panagariya mentioned, "The schemes that provide individual benefits given by the state and perhaps by the Centre also have a deep impact on the finances. Keeping it in view, the commission also has to see that macroeconomic and financial stability is maintained in the country. This comes within our mandate."

Assessing Financial Conditions

The Finance Commission is currently evaluating the financial conditions of various states after its formation. It will make recommendations based on discussions with both state and central governments. Panagariya noted that it might take six to seven months to finalise their stance on these issues.

Earlier, commission members held discussions with Chief Minister Bhajanlal Sharma, Deputy Chief Minister Diya Kumari, Deputy CM Premchand Bairwa, and other state officials. The state government requested a 50 per cent share in taxes from the Centre instead of the current 41 per cent.

Rajasthan's Unique Challenges

In a presentation, it was highlighted that Rajasthan is the largest state in India by area, with two-thirds of its land being desert. The state contains about 21 per cent of the country's wasteland and has an international border of approximately 1071 km.

The state government pointed out that due to low population density, more expenditure is required on infrastructure to provide basic facilities. Around 75 per cent of Rajasthan's population lives in villages, and 31 per cent belong to SC-ST communities. Water scarcity remains a significant issue.

Panagariya remarked on the demand for special state status for Rajasthan, stating, "Nothing can be said about it right now. We have visited four states so far. We have to visit 24 more states. Only after that, something can be said about it."

The commission will consider whether it can address these issues in its report. Panagariya added, "So, the Finance Commission will definitely consider it. Whether we will be able to say something on it or not and what we will say, it will take time."

The state government also called for changes in the standards of sharing between states based on geography, area, and special circumstances. This request aims to reflect Rajasthan's unique challenges and needs more accurately.

As part of its mandate, the Finance Commission aims to balance individual benefit schemes with broader economic stability. This task involves assessing how these schemes impact overall finances while ensuring sustainable economic growth.

The commission's recommendations will be crucial in shaping future fiscal policies and addressing regional disparities across India. The ongoing assessments and discussions are vital steps towards achieving a balanced approach to financial governance.