Home / Economy / State reforms, capex among issues at ministers’ budget meeting today

State reforms, capex among issues at ministers’ budget meeting today

On Thursday, Sitharaman held pre-budget meetings with representatives of trade, service industry and the social sector including health, education, and rural development. (Mint)Premium
On Thursday, Sitharaman held pre-budget meetings with representatives of trade, service industry and the social sector including health, education, and rural development. (Mint)

  • At the physical meeting in the capital, state ministers are expected to pitch for specific locally relevant development projects to be included in the Union budget for FY24.

NEW DELHI : State finances, reforms, capital expenditure by states and use of central funds for infrastructure creation are expected to be the focus of a pre-budget consultation between Union finance minister Nirmala Sitharaman and state finance ministers on Friday.

At the physical meeting in the capital, state ministers are expected to pitch for specific locally relevant development projects to be included in the Union budget for FY24.

Ministers are expected to discuss the extent of utilization of the Centre’s financial support to states for infrastructure creation, which is a key element of the Centre’s efforts to crowd in private investments, a person informed about the meeting said on condition of anonymity.

Availability of new projects for financing under the Centre’s window of 50-year interest-free loans to states for infrastructure creation may figure in the meeting.

Mint reported on 18 November that the central government has sanctioned 60,000 crore of long-term capital expenditure funds to states this fiscal, marking a strong beginning to the scheme announced in the budget for this fiscal to build roads, ports, bridges, airports and highways across the country. The scheme envisages giving 1 trillion of 50-year interest-free loans to states, over and above the normal borrowing they are allowed.

For FY23, states were allowed a fiscal deficit of 4% of gross state domestic product (GSDP) of which 0.5% is tied to power sector reforms. Also, 20% of the 1 trillion capex support is tied to reforms at state level, as progress in state reforms is of particular interest to the Centre.

The customary pre-budget meeting offers central and state finance ministers a chance to meet at a time when the date for the next GST Council meeting has not yet been announced.

While most state ministers are expected, only officials are likely to come from some of the states where legislative assemblies are in session, said a second person who also spoke on condition of anonymity.

On Thursday, Sitharaman held pre-budget meetings with representatives of trade, service industry and the social sector including health, education, and rural development.

Representatives from trade and industry sought compliance relief and tax incentives. The Bengal Chamber Commerce Industry, which was part of the meeting, said in a statement that there is an urgent need to increase personal tax exemption and deduction limits.

CUTS International, a global policy research and advocacy group said in a statement after the meeting that different government initiatives were not entirely consistent with each other and that Competitiveness Act was needed to bind all agencies to work in coherence.

ABOUT THE AUTHOR

Gireesh Chandra Prasad

Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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