The Telangana government has made a strong case for increased financial autonomy and resources from the central government. In a meeting with the 16th Finance Commission on September 10, Deputy Chief Minister and Finance Minister Bhatti Vikramarka presented a series of proposals aimed at strengthening the state’s financial position and promoting equitable development.
At the heart of the government’s request is a call for increasing Telangana’s share of Central taxes from the current 41% to 50%. Vikramarka pointed out that the rising trend of cesses and surcharges levied by the central government, which are not shared with states, has resulted in a shrinking share of total gross tax revenue for states. He argued that a larger share of Central taxes would provide the necessary fiscal space for Telangana to bolster welfare programs, address infrastructure deficits, and prioritize local development initiatives.
The government also emphasized the need for greater autonomy in implementing centrally sponsored schemes (CSS). Vikramarka stressed that states should have the flexibility to tailor CSS programs to meet their specific needs and priorities.
Moving beyond the sharing of central taxes, the Telangana government proposed a revision to the formula used for horizontal devolution, which distributes resources among states based on various factors. The state government argued that the current formula, which heavily relies on per capita income distance, unfairly disadvantages states like Telangana. They proposed incorporating gross state domestic production (GSDP) as a key factor in the formula, arguing that a greater weight on GSDP would encourage states to adopt reforms that promote productivity, attract investment, and create jobs, ultimately contributing to the national economy.
In a defense of the state’s social welfare programs, Vikramarka challenged the perception that initiatives like Rythu Bharosa, farm loan waivers, and food subsidies are mere “freebies”. He argued that these programs are critical investments in the well-being of the people and should be recognized as such.
Finally, acknowledging the significant burden of debt servicing on the state’s resources, Vikramarka requested the Finance Commission to either restructure the existing debt or provide additional assistance to help free up resources for development initiatives.
The 16th Finance Commission has been visiting Telangana since September 9, engaging in discussions with political parties, local body representatives, and industry chambers. The commission’s recommendations will have a significant impact on the financial landscape of Telangana and other states in the years to come.
