Freebies or better amenities, choice rests with citizens: Panagariya

PTI, Jan 9, 2025, 6:14 PM IST

Panaji: People have to decide if they want freebies or better roads, good drainage system and improved water supply, said economist and 16th Finance Commission Chairman Arvind Panagariya on Thursday.

He was interacting with the media here after a meeting between a delegation of the commission and top ministers and officials from Goa.

To a question about states allegedly utilising funds allocated for infrastructure for distributing freebies, Panagariya said if the money is given for projects, then it has to be used for those works. However, in a democracy, the elected government makes the final decision, he added.

“The decisions are not made by the Finance Commission. The Finance Commission can raise the issue in the overall interest of macroeconomic stability. The commission can say something at the general level but cannot control how states choose to spend the amount,” he said.

The onus finally lies with the citizens as they elect governments, said Panagariya.

“If citizens vote for a government based on freebies, then they are asking for freebies. Ultimately, the citizens should decide whether they want better amenities, better roads, better sewerage, better water or these freebies transferred to your bank accounts,” he added.

During the meeting with the commission members, Goa officials sought a four-fold increase in the coastal state’s share of funds from the divisible pool. Chief Minister Pramod Sawant and many of his ministerial attended the meeting held at a hotel in the Dona Paula area.

The divisible pool is that portion of gross tax revenue which is distributed between the Centre and the states.

Panagariya said the Goa government has urged the commission to increase its share from 0.386 per cent to 1.76 per cent. “That is practically four times the (present) share of Goa,” he said.

Goa has also demanded Rs 32,706 crore to fund 13 special projects in various sectors, said the chairman of the commission, which is a constitutional body set up for the allocation of certain revenue resources between the Centre and states.

He said that Goa made a presentation suggesting that the Centre’s share to the states should be increased from 41 per cent to 50 per cent.

“This is a common recommendation that has been coming from the states. Goa is the 15th state we are visiting. Fourteen out of 15 states have said that the share should be increased to 50 per cent. One state has suggested that it should be 45 per cent,” said the commission chief.

“The Goa government said the devolution on the criteria of ‘income distance’ should be reduced from 45 per cent by the 15th Finance Commission to 30 per cent during the current commission,” said Panagariya.

He said the criterion of income distance has been kept to promote equity. The poorer is the state, the larger is the devolution, he said.

“What Goa is suggesting is that reduce income distance devolution by 15 per cent of which 12.5 per cent should be towards SDG (Sustainable Development Goals) and another 2.5 per cent to fiscal efforts,” he added.