CashNews.co
Hyderabad: During a meeting with the 16th Finance Commission held at Jyotiba Phule Praja Bhavan on Monday, members of various trade bodies from Telangana like FICCI and CII have sought for change in criteria devolution which should incentivise a performing state. They also sought the intervention of the Finance Commission (FC) through a special fund for the revival of industries which have turned sick during the COVID-19 pandemic.
16th Finance Commission chairman Arvind Panagariya, along with the commission members held meetings with the representatives of political parties, municipal chairpersons, former sarpanches and representatives of various businesses and trade organisations, and members of state finance commission.
In its representation to the Finance Commission, Bharat Rashtra Samithi (BRS) also urged the Centre to increase Telangana’s share in the Central taxes from the present 41% to 50%. In the letter addressed to Arvind Panagariya, Siddipet MLA T Harish Rao said that states were only getting 31% share in the central taxes on account of the increasing recourse of the Centre to the cesses and surcharges, which are not shareable with states.
“In 2020-21, the share of cesses and surcharges in the gross tax revenue of the Centre was over 20%. Though the successive FCs have been recommending cutting down of the share of cesses and surcharges, the Centre has been simply side-stepping this recommendation,” Harish Rao informed the Commission.
He stated that 41% to 51% share in taxes could be accommodated by about 20% reduction in the expenditure of the Centre on State and Concurrent subjects.
Pointing out that in 2024-25, Centrally Sponsored Schemes (CSS) grants were budgeted at Rs 4,79,605 crore, while budgeted Finance Commission grants were only Rs 1, 32,378 crore, Harish Rao said that the CSS was mostly implemented in the areas listed under the State List, which was resulting in undermining the autonomy of States.
Noting that a decision was taken by the Centre to review CSS at an interval of every five years and make them coterminous with the award periods of FC, Harish stated that it was yet to be implemented.
Calamity Relief
Noting that the 15th FC had increased the size of State Disaster Response and Mitigation by over 100%, Harish Rao also requested that the size of the fund could be increased by at least 60%. Recalling the 14th Finance Commission’s recommendation of states contributing 10% to the SDRF during the award period, with the remaining 90 per cent coming from the Centre, which was not accepted by the Centre, Harish Rao requested the 16th FC to reduce the contribution of States from 25% to 10%.
“The current practice of utilising the 100% balances available in the SDRMF first in the case of severe calamity may be dispensed with. Instead, the previous practice of utilising 50% of available balances may be restored. This will enable States to cope with normal calamities in the subsequent years. In the case a calamity of a severe nature, ad hoc assistance should be extended by the Centre immediately,” he urged.