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India to grow 6-6.5% in 2015-16: Arun Jaitley

Patchy growth in manufacturing one of the biggest challenges for New Delhi, says FM in a meeting with state FMs

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Finance minister Arun Jaitley on Friday said during a pre-budget consultation with the state finance ministers that the economy will grow in the range of 6-6.5% during 2015-16, adding it has a potential to grow at a much higher rate.

During the consultation, the state governments have sought de-centralisation of the centrally sponsored schemes and lower interest rates for the infrastructure projects.

"We will take all these suggestions into consideration while formulating policies for Budget," Jaitley said after a four-hour long brain storming session with the state finance ministers.

Referring to a patchy growth in the manufacturing sector in his address, Jaitley said, "This was one of the biggest challenges for the centre." He urged the states to work with New Delhi for putting India back on the path of higher growth rate.

On GST, however, there are still some differences that need to be ironed out with the state governments. Tamil Nadu chief minister O Paneerselvam has raised issues such as compensation mechanism and revenue bands.

"This is not acceptable to us. We would rather suggest that the government of India should permit the empowered committee of state finance ministers to decide on these issues before enactment of the Bill," Panneerselvam said at the meeting.

Telengana, which is ruled by Telegu Desam Party – an NDA ally, has made a case for provision in the Budget for compensation of revenue loss suffered by states due to reduction in CST. The central government meanwhile already made a commitment that the states will be compensated for the loss of revenue. The centre has already committed Rs 11,000 crore to meet these losses in the current financial year.

Other suggestions include more allocations of funds directly to the states. States also asked for tax holiday in order to increase investment in their states. Mining states called for removal of export duty on iron ore among others.

They also pitched for more funds under JNNURM for urban renewal mission and encouragement to the SME sector. Some asked for declaration of water as a national asset, restructuring of MGNAREGA and provision of remunerative price mechanism for agriculture produce in lieu of Minimum Support Price (MSP) among others.

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