Gujarat Seeks Compensation For Prohibition From 15th Finance Commission

The Gujarat government today submitted a memorandum to the 15th Finance Commission asking for compensation for the revenue loss of over Rs 9,000 crore annually due to prohibition in the state.

Finance Commission chairman N K Singh told reporters here that Gujarat Chief Minister Vijay Rupani had stated in the memorandum that it was losing Rs 9,864 crore annually due to its prohibition policy.

"They told us that Gujarat is losing around Rs 9,864 crore every year due to the prohibition policy. Even Bihar is incurring such loss. The government has made a recommendation and we will think about it" Mr Singh told reporters here after meeting Mr Rupani.

The commission is on a three-day visit to Gujarat.

A state government release said that Vijay Rupani asked the commission to devise a compensation for states which are losing revenue for implementing a complete ban on the sale and consumption of liquor.

Mr Singh said that the Gujarat government had recommended the restructuring of the National Disaster Relief Fund with regard to its sharing and funding pattern.

The state government had suggested that death caused by lightning be included in the purview of the relief fund parameters, Mr Singh informed.

The 15th Finance Commission chairman lauded the economic performance of Gujarat but opined that Goods and Services Tax (GST) remains "one of the big challenges" for the state.

"Once the 14 per cent guarantee as GST compensation by the Union govt winds up, Gujarat will need to look at GST collection projections seriously and tax buoyancy may become an issue" he told reporters.

He added that Gujarat's growth momentum is dependent on "some exogenous uncertainties like GST" while maintaining key macro-economic parameters.

Mr Singh said that the commission was particularly impressed with the reduction of Gujarat's Debt to GDP Ratio, which at 21 per cent, was close to the 20 per cent stipulated by the new FRBM (Fiscal Responsibility and Budget Management) Act and which has to be be achieved by 2023-24.

"Debt to GDP, in case of Gujarat, has come down. Its 21 per cent. As per the FRBM Act, it should be 20 per cent. Gujarat is tantalisingly close. In other states, its as high as 29 per cent. Thus, other states need to follow Gujarat in this regard," he told reporters.

He added that Gujarat government also sought a special package from the commission for being a "border state".

Apart from meeting government officials, the 15th Finance Commission also sought views of leaders from various political parties.

During field visits tomorrow, the commission will visit Sardar Sarovar Dam, Statue of Unity and GIFT City as well as meet representatives of trade and industry.

On July 25, it will visit Rajkot to see the Aji-I reservoir, SAUNI Yojana Phase 2 and Integrated Command and Control Centre (ICCC) under the Smart City Project.