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Breaking ranks with the southern states on the issue of population criterion, Telangana chief minister K Chandrasekhar Rao on Friday requested the 14th Finance Commission to adopt the 2011 Census figures for tax devolution instead of the 1971 data as is being followed till now.
The stand taken by KCR, as Rao is popularly known, on the census for calculating the weightage of population, is a departure from not just what the governments of the undivided AP followed but also of the truncated AP.
“The government has to cater to the needs of the present population and not to the notional 1971 population. The use of 1971 Census data penalises states like Telangana, which witnessed a lot of migration from other regions of the erstwhile state of Andhra Pradesh and other parts of the country,” he told commission chairman Y Venugopal Reddy and its members at a meeting here today. The commission held the meeting to elicit the views of the state on various terms of references, including tax devolution.
The share of Telangana in the combined population of erstwhile AP, which was 36.37 per cent in 1971, increased to 41.69 per cent in 2011 entirely on account of migration, while that of the Andhra region declined from 63.63 per cent to 58.31 per cent, he said in support of his demand.
In a similar meeting last week with the commission at Tirupati, the AP government reiterated the demand for maintaining a status quo as far as population figures are concerned. It argued that any dilution in the use of 1971 population will amount to penalising the states, which have taken pro-active measures to moderate their population growth in the national interest and will create perverse incentives not to perform.
The use of 2011 Census would have put 11 states at a disadvantageous position while the potential losses for Tamil Nadu, West Bengal, Orissa, Andhra Pradesh, Kerala and Karnataka would have been extremely significant had the 13th Finance Commission switched to the new criteria.
By demanding to switch to the 2011 census, as population was given a significant 25 per cent weightage during the 13th Finance Commission period, KCR inadvertently or otherwise has become a new friend of the most populous states like Rajasthan, Bihar and Uttar Pradesh besides Gujarat. Switching to the 2011 Census will predominantly benefit these states.
While pitching for the weights of 25 and 30 per cent respectively to population and the area, KCR said his government is of the view that population and area represents the needs of a state in terms of provision of public goods and services more than any other indicator.
Also, the Telangana chief minister requested the commission to earmark 40 per cent of central tax revenue as tax devolution to states as compared with 50 per cent demanded by his AP counterpart N Chandrababu Naidu. Incidentally, the government of the undivided AP too had sought enhancement of central devolution to 40 per cent from the present 32 per cent level.
“With focus on inclusive growth, the commitments of states have increased considerably. As most of the sectors touching on the lives of the people fall within the purview of states, there is an imperative to align resources in favour states,” KCR said.
Telangana’s share in the divisible pool is expected to be a little over 3 per cent compared with 6.937 per cent of the undivided AP on the 1971 population basis. The commission is scheduled to submit its recommendations to Government of India next month.
Other issues raised by KCR
* Higher weightage to equity parameters saw a massive erosion of the share of middle-income states in tax devolution. Therefore, the issues of income inequalities need be addressed through specific schemes and not through tax devolution.
* Reward states based on the quality of fiscal adjustment driven by revenues rather than mechanical observance. Newly-formed states should be given relaxations in the Fiscal Responsibility and Budget Management (FRBM) norms.
* Enhance grants to local bodies to at least 4 per cent from the present 2.5 per cent of the divisible pool.
* Telangana is a fit case to get more grants as fulfilling the aspirations of nearly 40 million people, which had remained suppressed, is a major challenge before the government. Nine out of the 10 districts in Telangana were covered under the Backward Regions Grant Fund(BRGF) in the undivided AP.
* Need more central support as the state government plans to spend Rs 50,000 crore on SCs and Rs 25,000 crore on BCs for their upliftment in the next five years. Also, it has initiated plans to ramp up forest cover as well as to restore 48,000 irrigation tanks.
