Apart from questions over the availability of funds, the ₹102 lakh crore National Infrastructure Pipeline (NIP) plan unveiled by the Union Finance Minister Nirmala Sitharaman on the New Year’s eve, also raised federal issues that hold key to the success of the mega initiative.
The ambitious plan, spread over a period of five years, requires the Centre and the states to pitch in investments in an equal proportion of 39 per cent each while the private sector is expected to fill in the remaining gap of 22 percent.
“Given the slowing economy and falling revenue collections, how do you expect the states to make such huge investments? Where is the money going to come from? As it is, we are struggling to get our share that is due from the Centre,” wondered a senior official of the Telangana government.
Telangana became the first state to flag concerns over funding and highlighted the Centre-state angle in the big-ticket announcement by the NDA government.
The ruling Telangana Rashtra Samithi (TRS) has voiced concern over the tendency of the NDA leadership to ignore the states while formulating such mega projects. It has underlined the need to put an end to the over-centralisation of powers.
“We want the Centre to involve the states in a much more democratic way in tune with the federal spirit. The states must be consulted before finalising the infrastructure projects instead of choosing them on the basis of political considerations,” the Telangana Minister for Industries, IT and Municipal Administration K.T. Rama Rao said.
Of late, the TRS government has been more strident in flagging concerns over “deliberate neglect” of certain states on political grounds while the allocation of central funds. It has been arguing strongly in favour of greater powers to the states.
KTR, who is the son of Chief Minister K Chandrasekhar Rao, made a strong pitch for a southern corridor covering Hyderabad, Chennai, and Bengaluru, on the lines of Delhi-Mumbai industrial corridor.
“The economically stronger states like Telangana must be supported by the Centre to ensure a stronger economy for the nation. If the Centre decides otherwise, it will have an adverse impact on national economy,” says KTR who is also the working president of the TRS.
Despite repeated requests for establishing a defence production corridor in the South, covering Hyderabad, Bengaluru, and Chennai, the Centre had failed to respond because of “political considerations”, he claimed.
“The southern states are endowed with a good ecosystem due to presence of defence R&D institutions for the past a few decades. It makes immense sense to establish defence corridor here. Such a corridor will attract immediate investments due to conducive atmosphere prevailing in all these states and will boost the national economy due to industrial development,” the TRS leader contended.
He dubbed as “political decision” the Centre’s reported move to establish defence corridor in Bundelkhand. “It is a travesty that matters of investment coming to India in important sectors like defence have to be weighed on political or geopolitical considerations,” he said.
The Centre had recently proposed the establishment of 12 new textile parks across the country and asked the Telangana government to submit its proposals in this regard.
“Instead of a new textile park, we have requested the Centre to treat Kakatiya Mega Textile Park that we have set up in Warangal as a joint venture between the Centre and the state. We are still awaiting a response,” the minister said.
“We have been consistently requesting the Centre for over two years to transfer 160 acres of Defence land in the city for taking up two important infrastructure projects. Awaiting response,” KTR tweeted recently, in response to a media report that Nirmala Sitharaman has agreed to transfer 210 acres of Defence land in Bengaluru to facilitate taking up 10 infrastructure projects by the civic body.
The growing aggression on the part of TRS comes in the backdrop of BJP’s attempts to make inroads into Telangana which the saffron party considers as 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.
The unresolved issues emerging from the Andhra Pradesh Re-organisation Act, 2014 also form one of the sticking points.
“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,” KTR said in one of his interactions with the representatives of the local industry.
Telangana, the country’s youngest state, is peeved over the “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 the 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 the previous year, a reduction of ₹224 crore,” an official of the Finance Department said.
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 a 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 ₹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,” the official said.
Telangana might end up with a shortfall in Central taxes and grants to the tune of 15 percent 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 K Chandrasekhar Rao had said recently, while reviewing the financial situation.l concerns, pitches for greater role for States