KCR on a collision course with BJP, flags federal concerns

At a time when the National Democratic Alliance (NDA) government is drawing flak for undermining federal spirit while dealing with states, the Telangana Rashtra Samithi (TRS) government has flagged concerns over “deliberate neglect” of certain states on political grounds while allocation of central funds.

The aggressive stance taken by the TRS comes in the backdrop of BJP’s attempts to make inroads into Telangana which the saffron party considers as a low-hanging fruit. Apart from intensifying the fight over local political issues, the regional party is stepping up its attack on matters having a bearing on the centre-state relations like the dwindling share of the states in the tax devolution, allocation of central funds and the pending projects.

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The unresolved issues emerging from the Andhra Pradesh Re-organisation Act, 2014 also form one of the sticking points.

The stunning gains made by the BJP in the Lok Sabha elections, bagging four out of 17 seats, had prompted the party to declare that Telangana would hold key to its “Look South” mission. The appointment of a former Tamil Nadu BJP state president Tamilisai Soundararajan as the Governor has introduced an element of frost in the relations between the top leaders of the two parties.

Political considerations

The TRS leadership has accused the NDA of ‘blocking’ investments into Telangana and neglecting the state on ‘political grounds’.

“It is a travesty that matters of investment coming to India in important sectors like defence have to be weighed on political or geo-political considerations,” Industries Minister KT Rama Rao said. He was referring to the Centre’s decision to set up a defence production corridor in Uttar Pradesh, overlooking Hyderabad and Bengaluru which are ‘ideal destinations’ for locating such a project.

“This is being done due to petty political and geo-political considerations. I was a bit baffled and wanted to know the grounds for this decision. They gave some reason which made no sense. Unfortunately, it appears to me, in matters of national importance and even in matters of strategic sectors like defence and aerospace, sometimes regional compulsions outweigh nationally important locations,” Rao said.

Raw deal

Telangana is peeved over “meagre” release of funds from the Centre. “In the 2019-20 Union Budget, ₹19,719 crore of Central taxes were earmarked for Telangana. This was 6.2% more than the ₹18,560 crore earmarked in 2018-19 Budget.

However, the state got just ₹10,304 crore under central taxes in the first eight months this year, while it got ₹10,528 crore during the same period previous year, a reduction of ₹224 crore,” Chief Minister K Chandrasekhar Rao said.

Also read: Hit by economic slowdown, Telangana downsizes budget by 20%

An increase of 6.2% was expected, but the state’s share fell by 2.13%. The State had to get ₹700 crore more than the previous year, but there is a cut of ₹224 crore. Thus, the State has lost ₹924 crore so far this year.

There is a growing sense in official circles that the state’s financial situation has become uncertain because of the Centre’s faulty policies.

Following a cut in Central taxes and grants to the state this year, the government has decided to prune its budget proportionately. The budgets for all the departments will be reduced and expenditure will be slashed over the next four months.

With further slowdown in the economy, there might be a further reduction in tax devolution. The slowdown has also impacted the GST collection.

As mandated under the GST Act, Telangana is due to get Rs 1,719 crore as compensation. “During the current financial year, we have received compensation for the first four months and the balance amount is due,” an official of the State Finance Department said. The state government is still awaiting its legitimate dues to the tune of ₹4,531 crore of GST.

Telangana might end up with a shortfall in Central taxes and grants to the tune of 15 per cent this year, which is likely to adversely impact various schemes in the state. The Finance Department officials estimate that the drop this year would be to the tune of ₹2,957 crore.

“The statements made by Union ministers in the Parliament don’t match the actual situation. If this behaviour of the Centre continues, the state could face serious financial problems,” the Chief Minister warned.

“The situation is such that if we (state) seek new clothes from them (Centre), they will even take away the clothes we are wearing,” KCR remarked at one of the review meetings with the officials.

The state had to get ₹1,719 crore in GST compensation as its revenues fell below 14% due to the economic slowdown.

CM to meet Modi, Nirmala

Under pressure to mobilise resources to fund his government’s welfare schemes, the Chief Minister is planning to visit Delhi next week to meet Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman and highlight the ”injustice” being meted out to the state in the release of grants.

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In February, Telangana presented a vote-on-account of ₹1.82 lakh crore. Due to the economic slowdown, this was slashed by 20%, and a full budget of ₹1.46 lakh crore was presented in September.

Now, with a further reduction in Central taxes and grants, the budget size is expected to be further revised later this month after assessing the financial situation.

“Despite the tall claims being made by the Centre on a daily basis both in the Parliament and outside, the economy has been decelerating at an alarming rate,” an official of the CMO said.

Bifurcation Blues

Over five years after the division of Andhra Pradesh, the new state is still grappling with bifurcation blues. The issues regarding distribution of assets of common institutions listed in the AP Reorganisation Act, including the division of employees of power utilities, are still waiting to be resolved. The Telangana government is also not happy with the recommendations of the Shiela Bhide Committee set up to make recommendations on division of assets.

Also read: Why Andhra Pradesh suffers from bifurcation blues

The promises made to Telangana under the bifurcation act including setting up of a steel plant at Bayyaram, a railway coach factory at Kazipet and Horticulture and Tribal University have not been fulfilled. Similarly, the required funds for the establishment of AIIMS institute in Telangana have not been released by the Centre.

Out of the total 91 common institutions listed under Schedule IX of Reorganisation Act, the issues pertaining to 44 had been cleared and disputes are still persisting with respect to 38 institutions.