Weekly Current Affairs

Centre owes Rs. 80,000 crore to States, says CAG report [Polity]

  • The Centre owes the States over Rs. 80,000 crore from its net proceeds of the period between 1996 and 2015, according to CAG report on ‘Compliance of Fiscal Responsibility and Budget Management Act, 2003.’
  • Revelation has the potential to significantly impact the finances of most States.
  • During the certification of ‘net proceeds’ by the CAG, based on the recommendations of the successive Finance Commissions, it was noticed that during the period from 1996-97 to 2014-15 an aggregated amount of Rs. 81,647.70 crore was short devolved to the States.
  • According to Article 279 of the Constitution , the CAG is “required to ascertain and certify the ‘net proceeds’ (any tax or duty the proceeds thereof reduced by the cost of collection), whose certification shall be final.”
  • The CAG report points out that in July 2000, the Finance Ministry requested for CAG certification of net proceeds of taxes afresh ante-dated from 1996-97 because of the 80th constitutional amendment.
  • The amendment resulted from the recommendations of the 10 Finance Commission for an alternative way of sharing proceeds of union taxes and duties between Centre and States.