Spending tips for states

New Delhi, April 11: Finance minister Arun Jaitley today advised states to stick to fiscal discipline, spend on infrastructure and development activities and use Aadhaar to transfer benefits to people.

"All of us will have to spend within means. Ever since we have shown this tendency of spending more yet sticking to fiscal discipline, this has brought immediate results in terms of interest rates and India's credibility," Jaitley said at the second conference of state finance secretaries.

The Centre has decided to lower fiscal deficit to 3.5 per cent of GDP (gross domestic product) in 2016-17 from 3.9 per cent in the last fiscal.

He asked states to ensure increased spending in development activities in the social sector, in infrastructure creation and rural areas.

"The tendency to spend on non-development activities may in the short term appear to be attractive but in the longer run it doesn't reap results," he said.

States' share in Union taxes has substantially gone up after the implementation of the 14th Finance Commission report that prescribed a record 10 per cent increase in their share in the Union taxes to 42 per cent.

"It is obvious what states were getting in the 13th Finance Commission and what they are getting now. It may have come down on one or two heads but the other overall volumes have increased," he said.