Central funds to Telugu states get reduced

In a blow to the Telugu states of Andhra Pradesh and Telangana, share of both in devolution of Central revenues will further dip for the next five years, beginning from the 2021-22 fiscal.

 As per the recommendations of the 15th Finance Commission, the share of AP in devolution will fall from 4.31 per cent to 4.04 per cent, and last year’s revised share of 4.11 per cent as recommended by the 14th Finance Commission. In the case of Telangana state, Central devolution will drop from the previous 2.37 per cent to 2.1 per cent.

In the current fiscal also, AP will receive Rs 9,000 crore less than the estimated Rs 32,000 crore from central pool of funds and TS about Rs 5,000 crore from the estimated Rs 16,000 crore.

The silver lining for Andhra Pradesh, however, is that it will get a revenue deficit grant of Rs 30,000 crore in the next three years. This will be out of the Rs 2,94,514 crore country-wide revenue deficit grant. The pre-devolution deficit in AP will be Rs 44,000 crore in 2021-22 and is likely to come down to Rs 20,040 crore by 2025-26.

The Finance Commission also acceded to AP government's proposal seeking help to make Vizag as an economic hub, read capital according to Chief Minister Y.S. Jagan Mohan Reddy’s plans, and recommended grant of  Rs 1,400 crore for improving urban infrastructure like roads, drains and drinking water. 

For Telangana, almost the entire state-specific grant of Rs 2,350 crore would go for maintenance of Mission Bhagiratha.

Explaining the reasons for the fall, a senior finance official told Deccan Chronicle that both states had “fared well in population control and increasing per capita income”, hence the trimming.

“The Finance Commission still refers to AP as a larger state and places it on the same pedestal as Uttar Pradesh, Karnataka or Gujarat,” the official said.

Except for a fishing hub in Visakhapatnam and a freight corridor between Vijayawada and Kharagpur (in West Bengal), there is no mention of financial assistance to any ongoing or proposed projects. Telangana state did not figure at all in any budgetary announcements worth mentioning.

Telangana’s financial position is estimated to be on the surplus side. Significantly it is the only state that will register a surplus of Rs 2,155 crore and Rs 9,151 crore respectively for the next two fiscals. When it comes to state-specific grants, AP will get Rs 2,300 crore during the 15th Finance Commission tenure and TS will get Rs 2,362 crore.

“The only way the two Telugu states could pitch in for more Central assistance is through proposing infrastructure projects to get additional funds from the capital expenditure pool,” an official pointed out.

As a witty critic on social media pointed out, “No good deed goes unpunished, whether for individuals, companies or states. You do well as an individual, the government taxes you. A state does well, it gets lesser funds.” 



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