Cheema:Divide cess, surcharge for more equitable distribution

Finance Minister Harpal Singh Cheema recently addressed the 16th Finance Commission Conclave of Finance Ministers at Thiruvananthapuram in Kerala.

He highlighted the pressing concerns affecting the states and outlined Punjab’s vision, aspirations and set the tone for a productive and insightful discourse.

Cheema shed light on the stark disparity between social and developmental expenditures and the constrained fiscal autonomy resulting from the implementation of the Goods and Services Tax (GST).

He emphasised the imperative for the commission to acknowledge and address the unique challenges faced by each state, while also advocating for a significant enhancement of vertical devolution from the current 41 per cent of the divisible pool to a much higher share.

He recommended the inclusion of cesses, surcharges and select non-tax revenues in the divisible pool to ensure a more equitable distribution of resources.

Additionally, he urged the commission to develop a nuanced formula that allocates resources based on a state’s developmental performance and provides targeted support to underperforming states, thereby fostering a more inclusive and balanced growth trajectory.

Cheema said the state had also made certain suggestions to make the Fiscal Responsibility and Budget Management (FRBM) Act more inclusive.