Prime minister Narendra Modi's claim on Friday that no state coffer is big enough to contain the excess funds that the 14th finance commission has recommended might have not gone down well with his ally, Nara Chandrababu Naidu.
The chief minister of Andhra Pradesh, apparently, is the only dissatisfied CM even after a 10 percentage point jump in devolution of tax revenues to 42% to the states. He reasons that the state's bifurcation has left the residuary state severely revenue deficit. The state has been affected by the loss of Hyderabad to Telangana and is poorer by about Rs 16, 000 crore this fiscal (2014-15), he claims.
Though the commission has recommended Rs 2,06,819 crore to be granted to the state between 2015-2020, the CM says that it addresses only the revenue expenditure needs and not the massive development requirements of the "handicapped" new state - without a capital city or any growth engines.
“The finance commission acknowledged that AP suffered fiscal damage as a result of bifurcation but it went on to treat AP on par with other states, both for the purpose of tax devolutions and revenue deficit grant. It has denied our state a level playing field,” a miffed Naidu said.
The YV Reddy headed commission had recognized Andhra Pradesh among the 11 revenue deficit states and had recommended Rs 22,113 crore for it over next five years.
But Naidu terms this as insufficient and points to the commission estimates to state that Andhra would be the only non-special category state in the country to continue with fiscal deficit even in 2019-20, “and all other states would close that year with a surplus budget.”
Naidu has been vying for a special category status to his state which would ease the pressure on his finances but the Modi government so far is unenthusiastic fearing the demand from others too.
“States like Tamil Nadu or Telangana would accrue a disproportionate benefit after the increased devolution. Our request of grants-in-aid of Rs 1,41,467 crore to create an eco-system for catching up with the other states was declined by the commission. Now, the centre has to move to salvage us,” one senior finance official told HT.
Naidu, who also expressed his dissatisfaction over the railway budget on Thursday, now pinned his hopes on the union budget to be presented on Saturday.