State prod for funds set to spark debate

Hyderabad: The State government is all set to stir up a national debate on the devolution of funds and funding for the Centrally-sponsored schemes to the ‘rich’ States. The State government has decided to put a demand before the Union government to allocate more funds to the States which contribute more revenues to the Central exchequer through taxes. 

The government argued that Telangana was getting only 50 per cent of the total tax collections that was going to the Centre from the State every year. A top official said that Telangana received Rs 25,000 crore funds from the Centre which included devolution, Centrally-sponsored schemes and under national highway development programmes.  
 
The total tax collections to the Centre from Telangana was more than Rs 50,000 crore in 2016-17, officials said adding that the income tax collections were Rs 32,186 crore, service tax Rs 7,671 crore, central excise – Rs 6,828 crore and Rs 3,328 crore was collected under customs duty. 

Though the Centre increased devolution from 32 per cent to 42 per cent in 2015, officials said the allocations for Centrally sponsored schemes had been reduced due to the decrease in matching grant from the Union government for many schemes. As a result, Telangana could get only Rs 1,000 crore funds extra. The State expected nearly Rs 3,000 crore more funds after the increase of devolution.   

The official maintained that Telangana was contributing more to the Centre’s exchequer but was receiving meager funds. The State government was not opposing to allocating more funds to the poor States like Bihar, Uttar Pradesh, Orissa etc. “It is only demanding to earmark substantial funds in proportionate to the tax collections which will also develop competitive spirit among all States in tax collections,” he said.   

At present, the Centre was providing 80 per cent of the funds required by the poor States. The high tax collecting states like Telangana, Maharashtra, Gujarat, Karnataka and Tamil Nadu could get only 20 per cent of the total funds from the Union government.     
   
Demand for fund allocations in Telangana has been increased as the government introduced slew of welfare and developmental programmes from 2014. To cater the financial needs, the Centre should also take into consideration the State’s performance in the tax collections, the official said, adding that the government was preparing a note in detail on Telangana’s performance in tax collections. A detailed report will be submitted to the 15th Finance Commission which is scheduled to hold its first meeting soon in the New Delhi.