Avani Kapur Vikram Srinivas Accountability

Transcript:Avani Kapur Vikram Srinivas Accountability:
Avani Kapur Vikram Srinivas Accountability Initiative, Center for Policy Research Decoding Budget 2015-16: Implications for the social sector Based partially on work done collectively with Amee Misra, Ekta Joshi, Smriti Iyer and Anindita Adhikari Outline Key recommendations of the 14th FC (relevant from the Budget perspective) Implications on the social sector (current allocations and review of past scheme performances) Thoughts on challenges and next steps Major takeaways Fourteenth Finance Commission (FFC) recommendations have devolved significant “untied” funds from Center to States Center has responded by cutting allocations in social sector schemes How do funds flow from Center to State? Finance Commission is the Constitutional body which recommends transfers for a five-year period The Center also routes its own funds to states through a variety of methods, which were coordinated by the Planning Commission Tax devolution Grants-in-aid Major taxes collected by the Center (income tax, corporation tax, service tax etc), are combined into a ‘divisible pool’, of which a share is given to the States This is ‘untied’ funding: States are free to use it as they wish 13th FC provided untied grants to local bodies and for reducing non-plan revenue deficit, as well as tied grants for elementary education, health, disaster relief, infrastructure maintenance as well as for specific states. Two channels of Finance Commission funding 14th FC recommendations States' share in divisible pool of taxes increased from 32% to 42% Grants-in-aid have been made substantially untied: 53% of total grants are untied and for local governments 36% is untied grants for certain States where revenue deficits exist. Only 11% is for disaster relief. Effects of 14th FC Total share of funds transferred to States has only increased marginally from 49% to 50% of gross Central Government Revenues. Composition of transfers has significantly changed: FC grants now constitute 75% of total transfers to states, as opposed to 58% in FY 2014-15. Increase in untied funds transferred to states amounts to Rs. 1.8 lakh crore, equivalent to nearly 15% of estimated State revenues for FY 2015-16. Where does the money come from? Rs. 1.3 lakh crores of funding to Central Assistance to State Plans has been cut. Of this: Rs. 51,000 crores comes from elimination of various modes of Central Assistance Remainder is from various schemes which assisted States Which schemes are being cut? WHAT WE KNOW AND WHAT WE HOPE TO FIND OUT SOON IMPLICATIONS FOR THE SOCIAL SECTOR Some