Devolution of funds by Centre: Southern States protest, as Telangana Congress govt remains silent

HYDERABAD: The Centre presented a vote-on-account budget for 2024 on February 1 before the general elections.

Devolution of funds vis-a-vis what they are getting back in return has been a matter of concern for the South Indian states.

It may be recalled that former Telangana IT Minister K T Rama Rao was loud and clear on this point for at least two years. He had laid emphasis on the fact that Telangana despite being one of top five contributors to the country’s economy had not been given its due.

Now, the southern states are protesting against the Centre for its step-motherly attitude towards them when it comes distribution of funds.

They are contending that more allocations are being made to the northern states as compared to the southern states.

They are infuriated about about collecting money from southern states and spending it in BJP-ruled areas.

(Share of Union Taxes and Duties Allocated to States in percentage terms In the above table)

The Congress government in Karnataka had already protested in Delhi about this.

Karnataka Chief Minister Siddramaiah expressed his resentment while explaining the double standards pursued by Prime Minister Narendra Modi. He recalled Modi’s arguments during the days when he was the Chief Minister of Gujarat and how had launched a diatribe against the UPA regime back then.

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Following suit, the DMK Government in Tamil Nadu and the CPI-M Government headed by Pinarayi Vijayan in Kerala came out in the open against the Centre.

Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy too expressed his grief saying that “we get very less compared to the northern states.”

(STATEMENT SHOWING STATE-WISE DISTRIBUTION OF NET PROCEEDS OF UNION TAXES AND DUTIES FOR BE 2024-25 IN THE ABOVE TABLE)

Former Chief Minister of Telangana K Chandrashekar Rao had highlighted the discrimination against the state in terms of devolution of funds and vehemently opposed the Centre’s move to allot more to North Indian States, while Telangana was one of the major contributors.

Telangana Congress govt’s silence

What is surprising is that the Congress Government in Telangana led by Revanth Reddy has remained tight-lipped on the pertinent issue.

Though Telangana Deputy Chief Minister Malli Bhatti Vikramarka presented a vote-an-account budget in the Telangana Assembly on Saturday, there was no word of protest on the devolution and injustice meted out to Telangana by the Centre.

Revanth Reddy didn’t join chorus with his colleague chief ministers in the southern peninsula.

The Telangana Congress, which enjoyed solid backing from Karnataka Congress leaders in the elections, however, looked the other way when it came to supporting the cause of the fight against discrimination in distribution of funds to major contributors.

The BRS Government had introduced a budget of Rs. 2.90 lakh crores for 2023-24.

It was estimated that Rs.41,159 crore would come as a grant from the Centre. But not even 20 percent had come so far. The Revanth Reddy Government, however, revised the budget and provided the figures for the fiscal 2023-24.

As per the statistics released by the Centre, If a rupee went from Telangana to the Centre towards tax, it would return only 40 paise. Similarly, if a rupee went from Andhra Pradesh, only 50 paise would come

(Detail showing States' Share of Taxes and Duties Devolved to States during last (5) five years,)

UP versus Southern States

While Rs. 22,26,983 crore was remitted by five states to the Centre from south India, In the last five years, only a meagre 6,42, 295 crore was given back. While Rs. 3,41,817 crores went to the center from the northern state of UP in the last five years, the center rewarded that Rs.6, 91, 375 crores to that state.

This in effect means it’s a case of robbing Peter to pay Paul.

This explains that if a rupee went to the Centre from Uttar Pradesh, the Government of India would m return Rs 2.20 paise to that state.

Protests at Jantar Mantar

Karnataka Chief Minister Siddaramaiah and Deputy Chief Minister D K Shivakumar staged a protest demonstration on February 8 alleging that if Rs 100 was paid by their State in taxes, the State got back only Rs. 13.

They claimed that Karnataka gave more than Rs. 4.30 lakh to the Centre for which it was expected to get a meagre Rs. 62,098(Composition of revenue receipts (2023-24, figures in %)

The next day, Pinarayi Vijayan and his Cabinet colleagues too staged a dharna at Jantar Mantar protesting the discrimination against their state. Chief Minister of Delhi Arvind Kejriwal, Punjab CM Bhagwant Mann, Tamil Nadu IT Minister P Thiagarajan also joined Pinarayi’s protest.

Jagan’s contention

Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy said that the State had incurred a staggering loss of Rs 66,116 crore in the last three years due to pandemic. While the aggregate projected devolution for 2019-22 was pegged at Rs. 1,15,552 crore, the realised amount was put at Rs.88,352 crore. Revenue loss due to the state’s share in central taxes was put at Rs.27,200 crore. The aggregate of projected revenue in 2019-22 during Covid period was Rs.2,24,603 crore, while actual revenue was Rs. 1,85,687 crore, a loss of Rs 38,916 crore. The state had received only 31.5 percent of devolution as against the 41 percent recommended by the 15th Finance Commission.

For the year 2022-23, the GSDP of AP was projected at Rs.13,03,524 crore. The State got only Rs.38,381 crore.

Against this background, Jagan desired the next government should depend on the support of his party in the Lok Sabha for making up a majority.

A PRS survey projected the own tax revenue and non tax revenue against the devolution and grants in aid in percentage terms for 2023-24.

Telangana earns 61 percent through its own tax revenue and 11 per cent through non-tax revenue, while devolution and grant-in-aid from the centre are projected at 10 and 19 percent respectively.

While all other southern states are vociferously demanding their pound of flesh, the Congress Government in Telangana is maintaining a stoic silence, making many eyebrows to raise.