Making the backwardness base of its argument, the newly created State of Telangana has asked the 14th Finance Commission to allocate 40 per cent of Central taxes as tax devolution to the States.
Telangana Chief Minister K Chandrashekar Rao in his presentation before the commission headed by YV Reddy in Hyderabad on Friday said that before bifurcation of Telangana and specially the districts of Mehbubnagar and Khammam were very backward and his Government was trying to expedite the development work.
KCR argued that that 40 per cent devolution can be made easily by a marginal reduction of 5% in the Centre’s expenditure on State subjects. The Chief Minister also demanded a waiver of outstanding central loans of Rs6,000 crore.
During the consultation by the 14th Finance Commission, KCR referred to several developmental initiatives of his four month-old Government including 3 acres of land for every Dalit family. He wanted the commission to be a “trailblazer” ushering in an era of resource transfers based on constitutionally assigned responsibilities.
Supporting the introduction of Goods and Service Tax (GST), KCR called for ensuring that there was no accentuation of vertical imbalances and compromise of autonomy of States. He demanded an adequate compensatory mechanism and liquor and cigarettes should be out of the purview of the GST.
KCR said despite its backwardness, an erroneous impression has gained ground about the revenue potential of Hyderabad in particular and Telangana in general.
“The higher revenue collections in Hyderabad was entirely because of the practice of all major VAT dealers paying their tax in Hyderabad for sales taking place all over the state and not because of higher revenue potential,” he said. The Chief Minister pointed out that the growth of the economy slipped from 10.5 percent in the period 2005-06 to 2009-10 to 4.5 percent in 2012-13. The major challenge before the State Government is not only to regain the growth momentum but also make it inclusive.
Earlier the commission had a consultation with the Andhra Pradesh Chief Minister N Chandrababu Naidu at Tirupati.