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Chandrababu Naidu upset with finance commission’s recommendations for AP, says it is not fair

Naidu said that the Finance Commission has not considered challenges of an essentially agrarian State.

Written by Sreenivas Janyala | Hyderabad | Updated: February 26, 2015 5:34:09 pm
Andhra Pradesh, Chandrababu Naidu, 14th Finance Commission, NDRF, SDRF Andhra Pradesh Chief Minister N Chandrababu Naidu (Source: PTI)

Andhra Pradesh Chief Minister N Chandrababu Naidu said that the 14th Finance Commission has not addressed the development needs of the state after it’s unscientific bifurcation and has denied it a level-playing field. The Chief Minister said that the Finance Commission has not made any specific award for Andhra Pradesh, though it acknowledged that Andhra Pradesh has suffered fiscal damage as a result of reorganization.

“The Finance Commission has treated Andhra Pradesh on par with other States, both for the purpose of tax devolutions and revenue deficit grant,” the Chief Minister said, expressing his dissatisfaction.

Even the grant of Rs 2,429 crore for NDRF and SDRF suggested for disaster management  in the next five financial years is insufficient as AP is in the seismic zone and is vulnerable to several disasters, he said, adding the grants for rural and urban local bodies at Rs 8,654 crore and  Rs 3635 crore, respectively, too are insufficient.

He added that the Commission’s estimates clearly indicate that Andhra Pradesh would be the only state in the country (other than the special category States) that would continue to have revenue deficit even in fiscal 2019-2020 while several other states will close the year with a surplus budget. While the Commission’s increased devolution to states is a welcome move, the Chief Minister said that the award of Rs 2,06,819.24 crores over the next five year period (2015-16 FY to 2019-2020 FY) only addresses the revenue expenditure needs (administration and maintenance costs of governance) of the state and does not take into consideration the development challenges of an agrarian state that does not have adequate space for revenue elasticity, lacks a capital city and the ecosystem for development and is devoid of major growth engines.

This clearly illustrates that Andhra Pradesh, despite being 8th largest state in terms of population, would be at the bottom (compared to other states), during the next five years in terms of fiscal performance.

The Chief Minister said that he sincerely hopes that the Central Government will take note of the concerns of the people of Andhra Pradesh and take comprehensive measures in the upcoming Union budget for creating the level-playing field and enable the state to catch up with the national development momentum in the spirit of cooperative federalism.

The 14 FC has identified eleven revenue deficit states, which includes Andhra Pradesh, Assam, Kerala, West Bengal, Himachal, J&K and other smaller states. It recommended an allocation of Rs 22,113 crores over five years to Andhra Pradesh, which is about 11.38 per cent of the total allocation to eleven States over five years amounting to Rs 1,94,821 crores.

The CM said that Finance Commission has not made any specific award for Andhra Pradesh, though it acknowledged that Andhra Pradesh has suffered fiscal damage as a result of reorganisation, and treated Andhra Pradesh State on par with other States, both for the purpose of tax devolutions and revenue deficit grant. The Commission’s estimates clearly indicate that Andhra Pradsh would be the only State in the country, other than the special category States, that would continue to have revenue deficit even in the last year of its award, ie., 2019-2020.

The Finance Commission has not taken into consideration the development challenges of an essentially agrarian State that does not have adequate space for revenue elasticity, without a capital city, without the ecosystem for development and without major growth engines. It has not explicitly acknowledged the handicap suffered by the State as a result of reorganisation. Though the State Government had requested for Rs 1,41,467 crores as grants-in-aid to create a level playing ground and create an ecosystem for catching up with the other States, the Commission has not awarded any grants-in-aid despite the handicap sufferred as a result of reorganisation.

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