Telangana CM seeks higher devolution of taxes under 14th Finance Commission

The Telangana Chief Minister K Chandrasekhar Rao today made a case to devolve higher per cent of Central tax revenue to the State based on the functional responsibilities in the federal set up.

Speaking at the meeting of the 14th Finance Commission chaired by Y.V.Reddy and convened here today, the Chief Minister wanted the commission to allocate 40 per cent of the Central tax revenues in line with the roles played by the Centre and the State.

The Chief Minister of the newly formed State of Telangana submitted a memorandum making some suggestions and requesting the commission to consider the current status while allocating fund.

He said that the State is highly vulnerable to droughts and natural calamities, and therefore the Centre’s contribution may be increased. Nine out of 10 districts in the State are covered under backward region grant fund and the XII Five-year Plan had categorised Khammam and Mahbubnagar as ‘Most Hungry.’ Backwardness still haunts the State, six decades after formation of the combined State.

Favouring the introduction of Goods and Services Tax, he wanted it to ensure there is no accentuation of vertical imbalances and compromise of autonomy of States. “We are particular that an adequate compensatory mechanism is put in place. The important issue is to strike a balance between autonomy of States and the need for harmonisation of taxes across the common market of India,” he said.

“We want to reinvent and reorient Telangana. The institution of Finance Commission has a formidable reputation of nurturing the spirit of cooperative fiscal federalism and successfully adjudicating the claims of the Centre and States in a fair and equitable manner,” he said.

Rao said the neglect of Telangana in the combined State has been brought out vividly by the Planning Commission. It had observed that the balanced development in the State had become a casualty and regional imbalances went on increasing because of lopsided politics.

Eighty per cent of the State’s population belong to SCs, STs and backward classes. Despite backwardness, an erroneous impression has gained ground about the revenue potential of Hyderabad in particular and Telangana in general, he said.

He highlighted the fact that the growth of the economy slipped from 10.5 per cent during 2005-06 to 2009-10 to 4.5 per cent in 2012-13. The major challenge for the State Government is not only to regain the growth momentum but also make it inclusive.

Touching about various initiatives of the Government to bring all round development of the State, he said that the State requires funds to meet this expenses which could be met by higher tax revenue devolution.