Finance body recommendation will hurt Andhra Pradesh, feels Chandrababu Naidu
Hyderabad: The Andhra Pradesh government feels that the recommendations of the 14th Finance Commission (FFC) will leave AP lagging behind all other states for the next five years in terms of fiscal performance. “The recommendations fall way behind our expectations”, a senior official said. The state government has officially released a note titled “Impact of 14FC Award on Andhra Pradesh” which indicates its disappointment on the recommendations and urges the Centre to intervene to bail out the state.
In a point-by-point analysis, it stated: “Though the FFC recommended an award of Rs 2,06,819.24 crore over the next five year by way of devolutions, revenue deficit grants and other means, it addresses only the revenue expenditure needs (administration and maintenance costs of governance) rather than the massive development requirements of the new state without a capital city, without the ecosystem for development and without major growth engines.”
“AP was badly affected due to the bifurcation. The Commission has also acknowledged it but that was not reflected in allocations. We were treated on par with other states in tax devolutions and deficit grants. The Commission has estimated that AP is the only state — other than the special category states —that will have huge revenue deficit even in the last year of its award i.e. FY 2019-20. Then, why was this point was not taken into consideration?” the government asked.
Narrating how AP was discriminated against, the government stated: “AP’s revenue deficit would grow to Rs 1,92,798 crore during the next five years, whereas Telangana will have a Rs 21,972 crore surplus prior to the devolution. Even after 42 per cent devolution, AP would have a net deficit of Rs 22,112 crore over the next five years, whereas Telangana would have a surplus of Rs 1,18,678 crore over the next five years. Similarly, the other South Indian states will have a surplus.”
“There is a resource gap of over Rs 15,000 crore in the current financial year itself which is the first year of the bifurcation. But the Centre has given just Rs 500 crore.” Blaming the Commission for not looking into the developmental challenges, the government stated, “We requested for Rs 1,41,467 crore as grants-in-aid to create a level playing ground and create an ecosystem for catching up with the other states, but the Commission has not awarded anything. It is now the responsibility of the Centre to step in and address our concerns.”
“The devolution of 42 per cent of the divisible pool of the central revenues to the states will disrupt the ongoing centrally sponsored schemes. Different CSSes will now see a change in sharing pattern, with states sharing a higher fiscal responsibility. The central assistance to state plans will also be affected. All these would increase our fiscal burden,” the state government pointed out. In a nutshell, these recommendations will have an adverse impact on the development dynamics of AP, it says.
“AP is in need of substantial investment for building new capital city, creating essential infrastructure and nurturing an ecosystem for sustainable and inclusive growth. Without proactive and special central assistance, it would be well nigh impossible to create the development momentum essential for catching up with the national mainstream. So, the centre should help us by taking comprehensive measures,” the note further stated.
Meanwhile, the Telangana state government appeared happy with the recommendations of the 14th Finance Commission, though it has some reservations over delinking of the eight centrally-sponsored schemes. “We have to wait and watch and redraw our plans accordingly. The FFC has also said the sharing pattern would also undergo change and details have to be worked out department-wise,” Eatela Rajender, finance minister of Telangana said.
Mr Rajender did not want to enter into verbal duel with AP. “I don’t wish to say that we are denied something and AP has got a fair deal etc. etc. The FFC works under certain parameters and makes recommendations accordingly. Our per capita income is around Rs 94,000, which is higher than the national average of Rs 77,000. Ours is a revenue surplus state. We have to devise plans as per the funds available” he said. But he dropped hints that they would continue to prevail upon the Union government to allocate more funds in the Union Budget.
