Citizens must now weigh the cost of freebies against the need for better infrastructure, warned economist and 16th Finance Commission Chairman Arvind Panagariya on Thursday. Speaking after a meeting with Goa’s top ministers and officials, Panagariya highlighted the delicate balance between development funding and political priorities in a democracy.
Addressing concerns over states allegedly misusing funds meant for infrastructure to provide freebies, he said, “If money is allocated for projects, it should be used for those works.” However, he clarified that elected governments ultimately decide how to utilize such funds. “The Finance Commission can raise issues for macroeconomic stability but cannot dictate state expenditures,” he added.
Panagariya placed accountability on voters, urging them to choose between improved public services and cash transfers. “Ultimately, the citizens must decide—better roads, water, and sewerage systems, or freebies in their bank accounts,” he said.
The Goa government, in its meeting with the commission, called for a significant increase in its share of funds from the divisible pool, proposing a jump from 0.386% to 1.76%. Chief Minister Pramod Sawant, alongside key ministers, also sought ₹32,706 crore to support 13 special projects across various sectors.
The commission chairman noted that Goa, like most states, has pressed for an increase in the Centre’s share of tax revenues to states from the current 41% to 50%. “This is a recurring recommendation—14 out of 15 states we’ve visited have made similar demands,” he said.
Goa also proposed changes to the income distance criterion, which allocates higher funds to poorer states. The state recommended reducing the weightage from 45% to 30%, with 12.5% redirected to Sustainable Development Goals (SDGs) and 2.5% to fiscal performance incentives.