Twelfth Finance Commission - Indian Budget 2006 – 2007 (108 - 109)

XII FISCAL CONSOLIDATION

Twelfth Finance Commission

108. The recommendations of the Twelfth Finance Commission (TFC) are being implemented. Cumulatively, State loans amounting to Rs.103,710 crore have been consolidated so far. Under the new scheme of tax devolution, Rs.94,402 crore will be released as the States’ share in the current year compared to Rs.78,595 crore in 2004-05. As regards grants-in-aid, the amounts granted in 2004-05 and 2005-06 (RE) are Rs.12,081 crore and Rs.25,134 crore respectively. In 2006-07, both the tax devolution and the grants will be substantially higher. The States have never been so well provided, as you will find from the Budget papers.

109. I may add that I have made appropriate provision in the Budget for debt consolidation and relief. I have also provided Rs.3,000 crore towards compensation for VAT losses, if any, in 2006-07.