Naveen Patnaik demands raising tax devaluation to 50 per cent

BHUBANESWAR: Odisha Chief Minister Naveen Patnaik today demanded rise in the existing level of tax devolution to the states from 32 per cent of tax receipts of the Centre to 50 per cent.

Stating that tax devolution was the major part of transfer of resources to the states, Patnaik pointed out, though bulk of the expenditure responsibility lies with the states, the buoyant sources of revenue were with the Centre.

Addressing a meeting of the 14th Finance Commission headed by Y V Reddy here, the Chief Minister said "It is seen the share of Odisha in the aggregate transfer of resources recommended by successive Finance Commissions, shared tax and grants taken together, is going down. It is, therefore, imperative to design a suitable fiscal transfer formula, so that the states receive their due share."

A proper distribution largely determines the state's share in central taxes, the Chief Minister said.

"Hence we would submit before the Commission to design a formula or principle for determination of share of central taxes primarily on the principles of equity," he said.

On the grants-in-aid front, Patnaik informed the FC that acute gap in delivery of services due to resource constraints was important and should be taken into account while recommending the conditions attached to the grants.