Political, economic ramifications of AP split felt in budgets

Ever since Telangana state was carved out of Andhra Pradesh in June last year, the successor state of AP has been facing severe resource crunch.

By P S Jayaram

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Published: Sat 14 Mar 2015, 11:22 PM

Last updated: Thu 25 Jun 2015, 9:09 PM

Hyderabad — The political and economic ramifications of the division of Andhra Pradesh to create a separate Telangana state last summer was felt in the first full-fledged budgets presented by the respective states this week.

While the Telugu Desam Party (TDP) government cried foul over the NDA government’s “indifferent attitude” to the residuary state leading to very difficult financial situation, the Telangana Rashtra Samithi (TRS) government claimed that the revenue-surplus budget presented by it was a clear indicator of the robustness of the new state, and the deliberate attempt by successive governments during the united Andhra Pradesh era to push the region into backwardness.

AP Finance Minister Y Ramakrishnudu, presenting a deficit budget for 2015-16, lamented that the State had lost out heavily on account of bifurcation and sought special assistance from the centre to tide over the difficult financial situation.

“The division has made us a hugely revenue deficit state. The impact of bifurcation on our finances is such that the state is not even left with reasonable resources for a meaningful plan outlay,” the finance minister said.

Ever since Telangana state was carved out of Andhra Pradesh in June last year, the successor state of AP has been facing severe resource crunch.  The loss of Hyderabad, the powerhouse of resource generation, has been a massive setback to AP. In contrast, the Telangana state presented a revenue surplus budget on Wednesday. While presenting the budget with a total outlay of Rs1100 billion and a revenue deficit of Rs730 billion, Ramakrishnudu sought to project a grim picture of the state’s economy and attributed it to the inadequate flow of funds from the centre and failure of the 14th Finance Commission to consider the “special problems” being faced by the state post-bifurcation.

“The decision to bifurcate the state without even finalising the capital city signifies an epitome of irresponsibility. The provisions in the A P Reorganisation Act, 2014, for development of the successor state of AP signify tokenism and they may not in any way compensate for the loss of opportunity for the people,” the minister said.

Later, talking to reporters, he said that a detailed report on the state’s financial situation would be sent to the centre soon and a request would be made for financial assistance.  “The deficit will continue to grow if the centre does not step and help us. Since we cannot burden the people with fresh taxes, increasing the non-tax revenues is the only option left for us,” Ramakrishnudu said.

On the other hand, Telangana Finance Minister Eetala Rajender, presenting a revenue-surplus budget, pointed out that Telangana was only the second state in the country, after Gujarat, to be revenue surplus. “Our budget outlay and revenue projections reflect the robustness of Telangana.” he said.

He, however, voiced displeasure over “drastic reduction” in plan transfers and “less than expected” tax devolutions from the centre.

This, he said, had placed severe constraints on the state government in raising the plan outlay for 2015-16.


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