The Hindu : Andhra Pradesh / Hyderabad News : ‘State given raw deal in devolution of funds’

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Wednesday, May 07, 2008
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Andhra Pradesh

Andhra Pradesh - Hyderabad

‘State given raw deal in devolution of funds’

Special Correspondent

Andhra Pradesh leads in implementing reforms: Rosaiah

Finance Commissions charged with ignoring State’s performance
State wants 13th Commission to take total review of Centre’s expenditure

HYDERABAD: Complaining that the State was not getting a “fair deal” from successive Finance Commissions in spite of its good performance, Finance Minister K. Rosaiah has sought increase in its share in total devolutions.

Participating in a seminar on “Terms of reference of 13th Finance Commission” at Thiruvananthapuram on Tuesday, Mr. Rosaiah said the State was in the forefront of implementing fiscal reforms, welfare and poverty alleviation programmes and had registered impressive GDP growth rate of 10.37 per cent in 2007-08.

Yet the successive Finance Commissions did not take note of this good performance. “We would like this to be corrected and addressed as per the terms of reference of the present Commission”, he said at the seminar organised by the Gulati Institute of Finances and Taxes.

At a disadvantage

Mr. Rosaiah said even after 12 Finance Commissions, an objective transfer mechanism had eluded the policy makers. Andhra Pradesh has been at a disadvantage in terms of the policy of rewarding States which are less performing.

The State’s share in the total devolutions declined from 7.98 per cent in 10th Finance Commission to 7.13 per cent in the 11th and to 6.66 per cent in the 12th. “It is time the finance efficiency outcome is given due weightage.”

It was “unfair” that the State’s expenditure on civil administration, debt servicing and other committed liabilities were not taken into reckoning like in the case of the Centre while making its recommendations on devolution of funds, he said. This needed to be considered by the Commission.

He wanted the 13th Commission to take a total review of the Central Government expenditure and eliminate spending on activities unconnected to its mandate under the Constitution.

It should arrive at actual objective expenditure rather than on basis of committed expenditure. “This would release huge pool of resources for distribution among States,” he added

Mr. Rosaiah also wanted the 13th Commission to recommend suitable sharing of proceeds of Service Tax as per the 80th amendment to the Constitution.

The Commission should also look into the States’ demand for including surcharges and cesses into the divisible pool. The commitment on social expenditure by States should also be adequately factored in by the Commission.

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