Opinion: AP must shelve false ego
Only judicious use of government revenues will make the State self-reliant in its Budget.
By JR Janumpalli
Hyderabad: The political and economic contours of both Telangana and Andhra Pradesh have now clearly emerged. Eight years is a long time for people to understand the ground realities and separate facts from fiction. It’s time to draw a blueprint for sustainable development and progress depending on the strengths and resources of each State.
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The myths and false prestige of the past need to be shelved. Pragmatism and democratic cooperation must be ushered in for the benefit of both States.
Fact Vs Fiction
However, it does not seem to be happening. Politicians, media and the educated elite from Andhra in Andhra Pradesh and in Hyderabad are repeating the same old fiction of developing Telangana at their cost. This facade worked before the demerger because of the unverifiable and fudged accounts in the united State. But post-demerger, the CAG audited accounts of the two States have made things quite clear.
The audited accounts are available from 2014-15 to 2020-21 which clearly show where the two States stand in their financial parameters. After the demerger, the Centre continues to support residual AP’s deficit Budget in place of Telangana.
Telangana is self-reliant and is forging ahead. Andhra was in a revenue deficit right from 1953 to 1956. The Budget in the united State for 58 years was in balance, regularly. Immediately after the demerger, residual AP registered a big revenue deficit of over Rs 6,000 crore in 2014-15, while Telangana reported Rs 238 crore surplus. That provides the true financial picture of the two regions. AP always had more revenue expenditure than its revenue income. It was the same while it was in Madras State, in separate Andhra and in united AP.
Handholding AP
The Finance Commission, both 14th and 15th, together has provided Rs 52,000 crore revenue deficit grant to AP from 2015-16 to 2025-26 averaging about Rs 5,000 crore every year. It is an exceptional and the highest deficit revenue dole-out to any divided State in the country. Yet, the revenue deficit of AP doesn’t show any improvement. In fact, it is growing rapidly every year. It has grown from about Rs 6,000 crore in Rs 2014-15 to Rs 35,541 crore in 2020-21 — a hard and verifiable fact. And, every year, Andhra gets double the Central devolution than Telangana.
If we take the audited figures of the two States from 2015-16 to 2020-21, it reveals that AP has its average State Own Tax Revenue (SOTR) at 52% as against Telangana’s 72% in their total annual revenue income. That means AP depends on Central devolution and grants to the extent of 48%, whereas Telanganas’ dependence on it is 28%. This makes a big difference. In fact, Telangana gets much less amount of devolution than its contribution of central taxes to the Centre. AP collects less but gets more from the Centre.
Fiscal Prudence
The SOTR has a major significance in the Budget of a State. The average SOTR of States in the country is 46%. The top-performing States in the country have an SOTR of more than 65%. If we look at the RBI estimates from 2015-21 in this regard, only 8 States have more than 65% SOTR, including Telangana (75%), and these are the States leading the economic development of the country. (See infographics)
AP’s high debt-to-GDP ratio, high quantum of freebies and off-budget borrowings etc are keeping it in the crosshairs of the Reserve Bank of India (RBI) for its financial risk, along with some other 10 States in the country. AP needs to work out its financial strategies to come out of that predicament of financial risk.
The Andhra elite must analyse those areas where the State is not doing good and bring it to the focus of the government so that the government takes suitable political actions to correct them. This outlandish dual State politics in Hyderabad will do no good, for themselves or the crossborder State they love. It is time they understood that what they were claiming all along with regard to Telangana is not correct. What Telangana people claimed in their ‘udyamam’ have become real.
It is deep pockets of government revenue and the prudential use of it that can make a State self-reliant in its Budget. It is time for the Andhra elite to come out of their hangover of false prestige and unfounded victimhood. They need to work hard for making their State financially sustainable.
