Telangana set to lose Rs 9,621 cr as finance panel cuts State’s share

As per the 15th Finance Commission report for 2021-26, Telangana will receive Rs 1.09 lakh crore as its share of tax devolution and also grants-in-aid from the Central pool of Rs 52.41 lakh crore.

Hyderabad: Telangana is likely to lose a whopping Rs 9,621 crore of tax devolution over the next five financial years, following the 15th Finance Commission’s new formula for calculating tax devolutions, compared to that of the 14th Finance Commission’s period.

As per the 15th Finance Commission report for 2021-26, Telangana will receive Rs 1.09 lakh crore as its share of tax devolution and also grants-in-aid from the Central pool of Rs 52.41 lakh crore.

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While the State will receive an estimated Rs 88,806 crore through its share in Central taxes and duties over the five-year period, the commission has recommended a release of total grants-in-aid amounting to Rs 20,980 crore, including special grants of Rs 2,362 crore.

The 14th Finance Commission awarded 2.43 per cent of State share in tax devolutions to Telangana for 2016-21. However, the 15th Finance Commission worked out a new formula following which the State was awarded only 2.102 per cent which means a 0.228 per cent dip.

Consequently, the State will lose an estimated Rs 9,621 crore which translates into about Rs 2,405 crore per annum. Telangana lost in tax devolution as it is a revenue-surplus State and has high per capita income.

Further, the fertility rate in the State is below the replacement rate of the country, which has cost the State exchequer. Further, Telangana being a revenue-surplus State is among the few States which do not get any funds for post devolution revenue deficit.

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