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“Many States have described the Centrally Sponsored Schemes (CSS) as a honey trap where the initial finances, which may accrue to the State, have almost an aphrodisiac effect,” NK Singh, Chairman, 15th Finance Commission, said here on Monday.
Speaking at the G Ramachandran memorial lecture, organised by the Southern India Chamber of Commerce and Industry (SICCI), he said while the size of CSS in the last five years was estimated at 13 per cent of Gross Domestic Product, many CSS schemes would have lost contemporary relevance.
He said quite a few States had argued that Central outlays and CSS should be merged to optimise benefits.
Arguing for the creation of a working relationship between the GST Council and Finance Commission, Singh said while the Finance Commission recommended devolution of finances, the GST council decided on tax rates, implementation and exemptions.
“Who is to monitor, scrutinise and evaluate the best outcomes since both are constitutional bodies?” Singh asked.
He said that with the introduction of GST, States had lost the autonomy in deciding tax rates on subjects that fell within the State list. “The inability of States to fix tax rates to match their development requirements implies greater dependence on the Centre for funds,” Singh said.
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