AP for non tied-up schemes to make good of loss in share of transfers

The Andhra Pradesh government has evolved a strategy to get more resources through non tied-up programmes from the Centre. This move is to make good of the revenue loss on account of dwindling share of total transfers to the state.

The government has estimated that it is going to lose around Rs 4,000 crore in the next four years on account of the 12th Finance Commission recommendations.

According to the analysis made by the state finance department, the share of Andhra Pradesh in terms of percentage of total transfers will come down to 6.663 per cent for 2005-10 period as compared to 7.13 per cent during the 2000-05 period. As per the 10th Finance Commission recommendations, the share of Central transfers during 1995-2000 period was 7.978 per cent which indicates a continuous downtrend in Andhra's share of devolution.

"Apart from trying to get as many more grants as possible through various Central schemes which are not tied-up with the Planning Commission's guidelines, the government is also planning to bring pressure on the Union government to increase the weightage to performance parameters. This while reducing weightage to population indicator," a senior finance department official told Business Standard.

Though the decrease in the state's share in Central transfers on account of better performance in areas such as population growth among others is not new, it has been further fuelled by the 12th Finance Commission, the official observed.

As per the new recommendations, Andhra Pradesh will not get any assistance in health and education sectors for the entire period of 2005-10.

Under the new formula, Uttar Pradesh is expected to get the highest share of Rs 1,33,471.45 crore followed by Bihar with Rs 75,646.83 crore which are termed as the two most backward states in the country during the 2005-10 period.

West Bengal is placed next in terms of Central transfers with Rs 50,877 crore, followed closely by Andhra Pradesh with Rs 50,353.26 crore for the same period.

"States should not be penalised for better performance even while giving weightage to other parameters that could help backward states mop up more resources from the Centre. To rectify this situation, the Centre should increase the current weightage points to performance," the official said.

There are, however, other opportunities for states like Andhra Pradesh to increase their resources.

For example, reforms in financial management such as reduction in revenue deficit, and reducing non-plan expenditure will make the states eligible for special incentives announced by the Union government.

Andhra Pradesh will most likely become eligible to gain from out-of-fiscal reforms from the next financial year as finance department is confident of achieving all the parameters prescribed by the Centre under fiscal reforms programme.

The total monetary benefit on account of this will be to the tune of over Rs 5,000 crore for the next four-year period.

But with plan size being the largest in the country and other expenditure growing, the state government is no mood to leave any stone unturned to extract money from the Centre.