With soaring tourist traffic to hill stations like Mussoorie, Simla and Shillong putting pressure on the already choked infrastructure of these towns, the Himalayan states have come together to seek a special grant from the Centre.
Seasonal tourists apart, the states get a lot of religious tourists every year. This requires the states to build additional public facilities such as link roads, bus terminals, roadside amenities and stay arrangements among others. Such facilities need periodic maintenance too.
"In the backdrop of the religious nature of tourism and the low-paying capacity of the pilgrims, the returns are not commensurate with the cost of services being provided by the state governments," the states have said in a joint memorandum to the 15th Finance Commission.
They have urged the Finance Commission to give preferential treatment and make suitable provision in the devolution formula for additional share of the Centre's tax kitty. Making a strong case for enhanced resources, the Himalayan states, in a representation to Finance Commission Chairman N.K. Singh, have said that infrastructure of the region is deficient and hence to improve service delivery and overall progress, they need special attention.
The states have said that they are behind the national average in own tax/gross state domestic product (GSDP) ratio. As a result of mismatch between receipts and expenditure, most of the states are heavily dependent on central transfers to meet their requirement.
"In the long run given the low fiscal capacity of the states, if the due revenue deficit grant is not given, then to meet its statutory and constitutional obligations, these states will have to borrow more which will further increase the debt to GSDP ratio of the state, making it highly indebted," the memorandum said.
The 11 Himalayan states that include erstwhile Jammu and Kashmir, Uttarakhand, Himachal Pradesh, Tripura, Nagaland and Arunachal Pradesh have claimed that their credit deposit (CD) ratio is much below 50 per cent. This reflects low credit offtake and low spending in these states.
The states have also pitched for extending the period for the Goods and Services Tax (GST) compensation beyond the initial five years. They have sought continuation of revenue protection (compensation) till the end of the 15th Finance Commission period.
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