Tirupati: Andhra Pradesh government on Friday sought a greater share of central taxes to states, and around Rs 1 lakh rupees from the 14th Finance Commission as a special grant for the construction of a new capital over a period of five years.
"By 2022, we want to build AP as one of the three major developed states and want to be the number one state in the country by 2029 I urge the Finance Committee to create a separate Andhra Pradesh due to the bifurcation dispensation "Chief Minister N. Chandrababu Naidu told the Finance Committee here.
A four-member team headed by former RBI governor Y. Venugopal Reddy Dr. was appointed as the Finance Committee, which recommended the division of shareable central taxes between the central government and the states.
Highlighting the disparity between center and state finances, the chief N. Chandrababu Naidu AP minister threw for a higher proportion of 50 percent for the states of shareable central taxes. Currently, all states together receive 32 percent of the central divisible pool taxes.
This reduction is achieved distributed among individual states on the basis of equity or population, among other criteria, such as area, fiscal discipline and fiscal effort. A state with the highest population will have a lower per capita, and therefore will get more funds to develop them at par with other developed states. Mr. Naidu, however, pleaded with the Commission to reduce weight-age equity as a basis for the distribution, since "progressives penalizes states that are working to control the population growth and results in perverse incentive of rewarding bad results. "
The equity formula led to a reduction in the share of AP in taxes that can be shared from 7.91 percent in the 10th Finance Commission to 6.94 percent in the 13 Finance Commission noted that the central government has been increasing its financial resources beyond the taxes that can be shared by charging access and payment and revenue from food sources and the spectrum of the sale and asked the commission to make an arrangement for sharing such revenue with the states.
Making his case for additional funding from central taxes, the Prime Minister said that Section 46 of the Act AP Reorganistion explicitly asked the Finance Committee to make separate settlement of the successor states.
"Taking account of this, AP can be treated as a separate state and may be granted Rs 1,00,213 crore over the next five years for the state to build a modern capital," he said. He wants an additional Rs 40,000 crore for the development of backward regions like Rayalaseema and North Coastal Andhra.
Mr Naidu also sought the resignation of the commission of Andhra Pradesh to have higher deficit budgets to allow his government to rebuild their state. "Given our special needs and the need to raise funds to relocate the facilities in our new capital, allows us to have a fiscal deficit of 7 percent over the next five years."
The Law of Fiscal Responsibility and Budget Management (FRBM) has penal provisions such as rejection of the specific state subsidies, etc, if a state exceeds the ceiling of fiscal deficit.
The Prime Minister also criticized the central government to pass directly in affairs of state. "Instead of allocating a greater share of taxes, we are noticing a growing middle-sponsored invasion plans."
In order to take advantage of potential gas Krishna Godavari basin, Mr Naidu sought a share of the revenue from offshore drilling. "States are denied access to resources in offshore drilling, although such activities cause strong pressure on the infrastructure of the state," he said.
