Southern States - Andhra Pradesh   

Finance panel urged to hike States' tax share

By Our Special Correspondent

HYDERABAD AUG. 22. The Andhra Pradesh Government has made out a forceful case before the Twelfth Finance Commission for increasing the States' share in Central tax revenues from the existing 29.5 per cent to 50 per cent.

Making a presentation before the Commission Chairman, C. Rangarajan, and its members at Jubilee Hall, here on Friday it also pleaded for inclusion of surcharge on income tax in the divisible pool of taxes and to allow States to levy service tax. Dr. Rangarajan received representatives of the Government, leaders of political parties and urban and rural local bodies to elicit their views on the priorities for the next five-year plan beginning 2005.

The Chief Minister, N. Chandrababu Naidu, who led the Government contingent, made his oft-repeated plea that the Centre must stop punishing the performing States and rewarding the non-performance States while giving grants. The present system did not distinguish between fiscally imprudent and fiscally disadvantaged States like those in the North-East.

He proposed a devolution criterion under which population & area and per capita income would get a weightage of 25 per cent each. The remaining 50 per cent would be distributed equally among five other variables such as expenditure on maintenance of physical and social infrastructure, expenditure on HRD, devolution to local bodies, fiscal discipline and tax effort.

Mr. Naidu also came up with his familiar argument favouring abolition of all Centrally-sponsored schemes and transfer of their funds to the States. Part-funding by the Centre was forcing the States to spend money on schemes which were not relevant to the local environment.

Indulging in a bit of self-gratification over reforms in the power sector, he welcomed the Centre's new Electricity Act which, among other things, envisages phasing out cross-subsidies between various categories of consumers. But, he wanted the sharing of the transitional burden between the Centre and the State.

Apparently stung by the mention of A.P.'s cumulative debt of Rs. 57,000 crores and debt servicing cost of Rs. 6.900 crores by the Principal Accountant General, M. S. Shekhawat, yesterday, the State Government sought to lay part of the blame for this situation at the Centre's doorstep. It held that availing loans had become inevitable for the States because the Centre did not fulfil its devolution targets.

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