Telangana's huge contribution to Central kitty and measly devolution of funds expose 'half-truths' spread by BJP leadership
Hyderabad: ‘Heads I win, tails you lose’ seems to be the ‘mantra’ adopted by the BJP government at the Centre towards States, particularly Telangana, right from the time it achieved the well-deserved Statehood in 2014. Take the balance sheets of the Union government and Telangana State over the past six years, and it is there for everyone to see – an open and shut case of discrimination.
To Telangana’s misfortune, the BJP rule in the country coincided with the State’s birth, and since then, the malnourished State has been left on its own to find its way out of the abysmal depths of underdevelopment it had endured for seven decades. It did, and how!
Today, Telangana has not only proved all its detractors wrong of ‘dark days ahead’ but has also emerged as a beacon among States in implementing several first-of-its-kind initiatives, both on the developmental and welfare fronts, so much so that copy-cat schemes have sprung all over the country including, ahem, the Centre!
A quick study of Telangana State’s contribution to the Central kitty and the reverse inflow of funds in the form of devolutions expose the ‘half-truths’ being spread by the BJP leadership among the people. No one is putting up an argument that Telangana is not receiving funds at all from the Union government, but the debate is over the disproportionate outflows and inflows of monies that have put the State at a great disadvantage. As is their wont, BJP leaders conveniently forget the fact that Central funds to States are sourced from tax collections from States which are then devolved as mandated by the Constitution.
During the pre-GST era, there was a clear separation between the Centre and the States on taxing goods and services. Barring some exceptions like alcohol and petroleum products, the Centre taxed goods on production (excise duty) while States taxed them on sales (sales tax or state value-added tax).
But GST, touted by the BJP government as a progressive tax system to bring uniformity, removed most production-oriented taxes and tax was imposed primarily at the point of consumption, which was to be shared by both States and the Centre. Income tax (from both companies and individuals) and customs duties are the sole purview of the Centre. Thus, the Centre ended up with a lion’s share of all taxes, having centralised the entire collections. What is intriguing and remains a mystery is the proportion in which the tax collections, major chunk of them coming from progressive States like Telangana, have to be divided between States and Centre.
Telangana suffered serious setback in terms of revenue receipts from the Centre after the GST implementation against the promises made by the Centre. The tax ‘grab’ by the Centre from Telangana State have grown exponentially after the GST regime – from Rs 40,727 crore in 2014-15 to Rs 52,250 crore in 2015-16 and then to Rs 69,677 crore in 2018-19. However, tax devolutions from the Centre stood at a meagre Rs 14,924 crore in 2014-15 which marginally rose to Rs 21,726 crore in 2015-16 and was restricted to just Rs 26,739 crore in 2018-19, when the State had contributed a handsome Rs 69,677 crore to the Centre!
The point to be noted is that the new State of Telangana figures among the top five States in the country having more than 60 per cent of State’s Own Tax Revenues in total State revenue as well as largest tax contributor to the Centre. So, what does the Centre do to reward Telangana for it above-par performance (read tax contribution)? It relegates the State to the status of being one of the most poorly-funded States in the country by the Centre, beyond tax devolutions!
It doesn’t stop there. The BJP government then rubs salt in Telangana’s wounds by heaping largesse on northern States such as Uttar Pradesh, disregarding factors like high growth rate and progressive policies that should ideally determine flow of funds to State and instead, cites population as one of the major parameters for funding.
So what if a Finance Commission or a Niti Aayog says ‘Bravo Telangana’ for its various unique policies that augur well not only for the people of the State but also for its economy. Remember Niti Aayog praising Mission Bhagiratha and Mission Kakatiya, two flagship programmes of the TRS government, and recommending the Union government to pay Rs 24,500 to Telangana for these schemes? The BJP government has not even bothered to acknowledge Niti Aayog’s observations, leave alone putting some money on Telangana’s way.
Telangana, for the record, contributed Rs 18,082 crore to the Centre in terms of GST in 2020-21 despite the Covid pandemic, and received a measly Rs 3,223 crore in return till August this year.
The Centre’s approach and attitude can at once be baffling and annoying. Rather than supporting States that record high growth rates by providing more funds, the Centre appears to be keen on gaining control over the State finances by delaying tax devolutions. Instead of releasing GST dues once in every two months as per the GST Council guidelines, the Centre has been releasing the GST dues to Telangana State after more than three months which has now become a regular phenomenon. Till date, the Centre owes more than Rs 4,500 crore to the State in GST dues.
Another unwelcome development is that the Centre has started tweaking tax allocation at the Finance Commission level, just by sheer muscle power. On paper, the Finance Commission is an impartial referee between the Centre and the States, but it has since been proved that the Centre can influence the Finance Commission through the terms of reference set by it.
The best example is the one per cent cut imposed by the Finance Commission in GST tax devolutions to the States from 42 per cent to 41 per cent in order to fund Jammu and Kashmir. Rather than contributing funds from its own coffers to Jammu and Kashmir, the Centre used its sheer strength of BJP-ruled States in the GST Council and its influence on the Finance Commission, and dented the tax share of performing States.
The tax revenues are distributed between the Centre and the States in terms of Centre’s tax devolution to the States, grants-in-aid to needy States, as well as funds to urban and rural local bodies. Of these, only revenue received through tax devolution can be used by the State government as per its needs, while the remaining funds are sanctioned by the Centre as per its whims and fancies to States with pre-conditions to use the funds for specific purposes. Measly funds and to top it, they tie the hands, how unfair is that!
For instance, the Centre has mandated that the State government implement its Ayushman Bharat scheme to avail additional funds under the Health Ministry whereas Telangana’s own Aarogyasri scheme is far superior to Ayushman Bharat, covering a wide variety of medical treatments and procedures. In majority of the Centrally Sponsored Schemes (CSS), the States are mandated to spend certain amounts from their treasuries to avail funds sanctioned by the Centre.
Even in the face of such heavy financial odds stacked against it, the TRS government didn’t hesitate for a moment when torrential rains created havoc in the city, with Chief Minister K Chandrashekhar immediately announcing Rs 550 crore for the flood-affected people in the State capital at the rate of Rs 10,000 per family. Neither did the State government flinch while announcing release of Rs 120 crore towards payment of salaries of TSRTC employees deferred on account of the hasty lockdown announced by the Centre to fight coronavirus pandemic.
On the other hand, the BJP leadership has the audacity to spread utter lies that the Centre contributes Rs 1,600 towards pensions under the State government’s Aasara scheme. The fact is that the Centre’s hands out a mere Rs 200 towards pension, that too covering a mere 7 lakh beneficiaries. Compare this with the 39 lakh beneficiaries in the State covered under the pension bouquet with the minimum pension at Rs 2,016 going up to a maximum of Rs 3,016, and the egg is on BJP’s face.
The saffron party also boasts of doling out huge funds running into crores to Telangana State. Pray, tell us under what head and which Ministry paid out the monies to the State. Surely, there must be some way the Centre can come clean on this, failing which, the silence can only mean acceptance of their efforts to spread falsehood among the people for political gain. Can the BJP speak of one programme or scheme that it has launched in the State, independently, that has touched the lives of the people?
And what does the BJP government do when faced with embarrassing and hard questions over devolution of funds, or for that matter the mismanagement of the Union government on various fronts? It snaps on the emotional rescue button and cries hoarse about Pakistan and China transgressing on India’s sovereignty. Some nationalism this!
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