Telangana Chief Minister K. Chandrasekhar Rao on Friday made a hard pitch to explain the factual position of Telangana in revenue generation following bifurcation of Andhra Pradesh before the 14 th Finance Commission and urged it to recommend higher share in taxes collected by the Centre and enhancement in central assistance and grants-in-aid to the State.
Presenting a status report of Telangana to the Commission, Mr. Rao said the State had become a casualty in the combined AP and regional imbalances had gone up because of lopsided policies. All the agencies and committees which were entrusted the task of identifying backward areas had categorised nine out of ten districts in Telangana as backward with Mahabubnagar and Khammam being the “most hungry and backward”, he noted.
Mr. Chandrasekhar Rao stressed the need to align resources in favour of States as most of the sectors touching the lives of people fall within the purview of States. There was another compelling reason for a paradigm shift in resource sharing in favour of States as there had been considerable increase in non-tax revenues of the Centre from off-shore royalties, sale of spectrum and disinvestment proceeds. Besides, there had been a reduction in the size of the divisible pool because of the levy of cesses and surcharges by the Centre, he explained.
Requesting the Finance Commission to recommend devolution of 40 per cent of central tax revenue to States, Mr. Rao suggested that it could be easily be accommodated by a marginal reduction of 5 per cent in the Centre’s expenditure on State subjects. He also sought assigning weightages judiciously to better performing States and relaxation in FRBM norms to new States such as Telangana.
Seeking review of debt levels of States for sustainable fiscal environment, Mr. Rao requested the Commission to recommend writing off of outstanding Central loans to the State, increase in the Centre’s contribution to the State Disaster Response Fund (SDRF) from 75 per cent to 90 per cent and enhancement of grants to local bodies from 2.5 per cent of the divisible pool to at least 4 per cent.
Announcing support to introduction of GST the Telangana Chief Minister, however, sought an adequate compensatory mechanism for plugging revenue loss and requested that petroleum and liquor be kept out of the GST purview.
Chairman of the Commission Y.V. Reddy, Members Prof. Abhijit Sen, Sushma Nath, Dr. Govinda Rao and Dr. Sudipto Mundle, Ministers several State Government officials were present.
