Home In the Spotlight Finance panel lets down Telangana, Andhra Pradesh

Finance panel lets down Telangana, Andhra Pradesh

 

Hyderabad: The 15th Finance Commission has poured cold water on Telangana and Andhra Pradesh states expectations of receiving funds for the 2020-21 financial year. When the Finance Commission met Chief Ministers K. Chandrasekhar Rao of Telangana state and Y.S. Jagan Mohan Reddy of AP, they pleaded for sanction of funds under various heads. Both CMs said that there should be an increase in the states’ share in tax devolution, but the Finance Commission has reduced the states’ share from 42 per cent to 41 per cent.

The Finance Commission did not honour any request of the Telugu Chief Ministers.

In the ensuing financial year, the TS government will get Rs 33,104 crore and AP Rs 46 324 crore under tax devolution and various grants. This will have an impact on annual Budgets of both states.

Both states have asked the commission to increase the borrowing limit, but the commission has not recommended this. The Finance Commission has recommended Rs 5,897 crore as revenue gap funding to AP against its request of Rs 5 lakh crore in five years.

Moreover, the share of total funds from the Centre to Telangana state and AP has come down compared to the 14th Finance Commission. Telangana state’s share has come down from 2.4 to 2.1 per cent and AP from 4.3 to 4.1 per cent.

The Finance Commission has calculated that for AP the pre-devolution revenue deficit will be Rs 41,054 crore and for Telangana state, the pre-devolution revenue surplus will be Rs 7,735 crore. It has recommended Rs 35,156 crore as tax devolution to AP and Rs 18,241 crore to Telangana state.

The commission said that post devolution, AP will face a Rs 5,897-crore revenue deficit and recommended this amount as revenue deficit grant. Telangana state will have Rs 26,698 crore revenue surplus. In fact both states are facing revenue deficit by December in the current financial year.

According to government records, by December 2020, the Telangana state government will face a Rs 3,404-crore revenue deficit and AP, Rs 29,407 crore.

The Finance Commiss-ion has projected that in the 2020-21 financial year AP’s own tax revenue will be Rs 77,398 crore and non-tax revenue will be Rs 5,267 crore. TS’s own tax revenue will be Rs 87,129 crore and non-tax revenue will be Rs 10,728 crore.

Surprisingly, in the current financial year, the Telangana state government had projected in the Budget Rs 15,875.03 crore as non-tax revenue but by December 2019 it had collected only Rs 2,983 crore. It has collected Rs 60,261.78 crore as tax revenue against its budget projection of Rs 89,047 crore.

The AP government projected Rs 7,354.72 crore as non-tax revenue but by December it had collected only Rs 2,173 crore and received tax revenue of Rs 57,162 crore against its Budget projection of Rs 1,10, 271 crore.