The Andhra Pradesh Chief Minister, N. Kiran Kumar Reddy, today sought higher Central tax devolution keeping in view growing responsibilities of States.
Giving a detailed presentation here today at a meeting with the Fourteenth Finance Commission, the Chief Minister said, “We request that at least 40 per cent of the divisible pool of Central taxes be devolved to States.”
He said, “It is a matter of grave concern to Andhra Pradesh that its share in tax devolution has been coming down with each finance commission. From 7.91 per cent in the Tenth Commission, it came down to 6.74 per cent in the Thirteenth Commission. If the divisible pool for the period 2015-2020 is conservatively estimated at Rs 20,00,000 crore, the reduction works out to Rs 20,000 crore, which is nearly 40 per cent of our present State Plan size.”
Instead of being rewarded, AP is being penalised for significantly improving the per capita income level, which is above the national average. In AP, if the per capita income of four districts, which have highest income is taken into account, the rest of 19 districts have lower than the national average. High income in these four districts should not lead to lower transfers to majority of the population, he felt.
He said that the State economy registered an annual average growth of 8.2 per cent in the X and the XI Plan and is expected to register a growth of 8.3 per cent in the XII Plan. The impact of the global downturn coupled with domestic supply constraints has resulted in the deceleration in growth of the economy.
The Chief Minister wanted the Goods and Services Tax regime be implemented early but wanted a mechanism to adequately compensate States which are likely to suffer revenue loss in initial years of its introduction.
He hoped that the Commission headed by Y.V.Reddy would consider the importance of re-aligning resources in favour of States.