AP bifurcation: Truth about Hyderabad

The Congress working Committee has come out with its decision of dividing the sate of Andhra Pradesh on July 30, 2013. Since then, most of the leaders have inhibited the process in some or other way. The most powerful weapon they tried to use on the normal public is the status of Hyderabad and its income.

• Andhra Pradesh state gets most of its revenue through various taxes; share in central government taxes; and through grant-in-aids.
• The bifurcation will not have any impact on the revenue received through the shares in central government taxes; revenue generated through various means other than taxes’ and the revenue generated through grant-in-aids.
• After bifurcation, the new capital of residual Andhra Pradesh will get add on revenue through real-estate business. Conversely, due to a fall in real-estate business in Hyderabad, the income will drop in Hyderabad and in turn in Telangana.
• The bifurcation has its impact only on the revenue received through state government taxes.
• Most of the revenue received in the form of state government taxes like sales tax, excise tax, stamps& registration, RTA tax covers 98% of the total revenue. The same is collected by the districts themselves. So, there will be only a negligible impact on the revenue through such taxes.
• Once, answering a question posed by the member of state assembly, the then finance minister Roshaiah answered that the revenue of Greater Hyderabad was 37% of the total revenue of Andhra Pradesh. Greater Hyderabad region covers not only twin cities but a portion of Rangareddy, Medak and Nalgonda districts. Neglecting the income from these parts of greater Hyderabad, the revenue may even be lesser than 37%.
• Even the entire revenue received from Hyderabad is not alone the income of Hyderabad as most of the companies which sell their products have been registered in Hyderabad. So, the revenue has been virtually recorded in Hyderabad region, whereas actually it is scattered in various parts of Andhra Pradesh.
• If these companies continue to exist in Hyderabad, even after bifurcation, these companies will be considered as interstate companies and the taxes paid by such companies will be owned by the central government and not the state government. If the companies opt to shift their registrations to the residual Seemandhra state, even then the taxes will be as per the central government taxes and not as per Telangana state taxes. The companies look for their own profit and will be opting for a shift of registration, accordingly.
• By the above facts, it becomes evident that Telangana will not gain any profit through the taxes even after the bifurcation rather it is the union government that would gain profits.
• In the beginning, Seemandhra capital will have real-estate business boom, while there will be a drop in Hyderabad for the same. After sometime, both will reach a saturation point and there will be a normal growth in either region as far as real-estate business is concerned.
• The residual Andhra Pradesh has great length of coastal area. This geographical feature can be better utilized for the development of that region. After Gujarat, the residual Andhra Pradesh will have such an advantage. Already the center has given nod for Ramayanapatnam port. Such many ports can be brought into force for effective export and import businesses.
• Next in the series are the IT jobs. Few people opine that the income the state government receives from IT sector will be lost in case of bifurcation. Most of Telugu software engineers work in Bengaluru, Pune and Noida apart from other foreign countries. Similarly people from all corners of India work in Hyderabad. Is this mean we are losing our state revenue? There is no merit in such a debate.