Making a forceful plea to the team, Patel said special incentives to states observing financial discipline alone could inspire other states to follow suit. He said the Commission should not recommend concessions to the backward states at the cost of other states which were prospering because of a better fiscal management.

About the price Gujarat has to pay for a disciplined financial management, Patel said the State's share in taxes had been slashed from 5.5 per cent to 4.046 over a period. He reiterated that the state's demand for a hike in its share of the Central taxes was justified, and said the states showing better recovery of Central taxes should be given additional five per cent over and above the regular share.

He demanded that states' shares of 75 per cent in taxes should be raised to 85 and sought reimbursement to the tune of Rs 250 crore from the National Renewal Fund for financing the voluntary retirement scheme under its economic restructuring programme.

Referring to several schemes, including financing urban and rural local bodies for development of basic facilities, water supply as well as the Sardar Sarovar Project, he said the Centre could help the State in a better way in these schemes as the state was not able to sources funds.

Pointing out to the loss Gujarat had been incurring because of the prohibition policy, Industries Minister Suresh Mehta told the team that the state was feeling cheated as it continued to lose around Rs 854 crore every year without being compensated for the same. He also pleaded for special Central assistance for rehabilitation of those displaced by natural calamities in the coastal areas.

Finance minister Vajubhai Vala stressed on an urgent time-frame for periodical revision of royalty on crude oil and gas. He lamented that the rates for Gujarat had not been revised for the past five years as against the normal three years in the case of other states. And the current ad hoc rates were fixed seven years ago, he pointed out.

Minister-in-charge for Roads and Buildings Department Ashok Bhatt said that Rs 230 crore for road development was very inadequate vis-a-vis the requirement of Rs 690 crore. Water Resources Minister Narottam Patel also put across his demands for his department, while Chief secretary L N S Mukundan noted that the Centre's policies had affected the State's income.

In his response, Commission chairman Dr A M Khusro commended Gujarat's disciplined attitude and expressed satisfaction over its progress in public sector restructuring. He advised the State to expedite the process of closing unviable government-owned enterprises.

The Commission also asked the State to percolate funds to local bodies in the same way as it was asking the Centre in its own case. The state was also asked to reduce the gap between fiscal and budgetary deficit.