Devolution of taxes: finance panel urged to go by 2011 census

Instead of the mandated 1971 census, the Telangana government has urged the 14 Finance Commission which was here on Friday to use the 2011 census in all cases where the population was a criterion for tax devolution and scaling other criteria.

The 2011 census put the total population of Telangana at 3.52 crore and the total number of migrants at 61.88 lakh, including 37.15 lakh from the present day Andhra Pradesh and 24.73 lakh from other States.

As regards grants-in-aid, the government sought Rs. 20,950.87 crore on the basis of critical gaps in the availability of services in the State, absence of alternative funding mechanism and multiplier effects that the proposed expenditure will have on the quality and effectiveness of delivery of critical services in the State.

These points were mentioned in a 138-page memorandum submitted by Chief Minister K. Chandrasekhar Rao to the commission chairman Y.V. Reddy. The document said the government was of the view that 1971 population could not be the basis for tax devolution and grants-in-aid during 2015-20 and that the present population of States should be the basis for realistic assessment of needs of people.

The population criterion was need-based and the needs of States could be assessed only if the current population figures were used. The government, therefore, appealed to the Commission that the changes in population of States subsequent to 1971 may be taken into account fully for the purpose of tax devolution as well as grants-in-aid. This will go a long way in addressing the resource constraints of backward and populous States of the country.

Even when the mandate was to use 1971 population, the 13 Finance Commission used the population of 2001 (latest population figures available then) for the purpose of recommending grants to rural and urban local bodies.

Priority areas

In the proposals for grants-in-aid, the government gave the highest priority to water sector management and development of water grid (it sought Rs. 7,700 crore). Among others, the proposals also included maintenance of forest (Rs. 1,046 crore), elementary education (Rs. 1,327 crore), maintenance of roads and bridges (Rs. 1,000 crore), power sector – segregation of agriculture feeders (Rs. 1,316 crore), strengthening of police department (Rs. 1,692 crore) and strengthening of information technology (Rs. 1,091.25 crore).

The government appealed to the Commission to consider additional devolution of funds to enable the new State to face the teething problems.