Both the Telugu states of Telangana and Andhra Pradesh are disappointed with the central budget following massive cut in central funds. But, their response presents a picture in contrast.
While Telangana Chief Minister K Chandrasekhar Rao has been combative in his criticism of the Centre’s ‘atrocious’ economic management, his Andhra Pradesh counterpart YS Jagan Mohan Reddy has chosen to remain silent.
Political compulsions appear to be guiding the responses of the two Chief Ministers. The ruling Telangana Rashtra Samithi (TRS) is locked in a fierce political fight with the BJP which is desperately trying to emerge as the main opposition player in the wake of Telangana virtually becoming Congress-mukt.
On the raging issues of CAA and NRC, the TRS has taken a more strident stand and came out strongly against the new citizenship law.
On the other hand, Jagan is keen on keeping the central BJP leadership in good humour. With the CBI case on the alleged illegal assets hanging over his head, the YSR Congress Party supremo can ill-afford to rub the Centre on the wrong side.
None of the assurances given to the two States under the AP Reorganisation Act, 2014, found a mention in the central budget for 2020-21. The demand for special category status for AP is long-forgotten now and there is not even a whimper of protest against this.
Slash in central funds
Telangana, India’s youngest State, feels let down by the Union Budget on several counts.
The State’s share in the Central taxes has gone down by an unprecedented 18.9%. None of the assurances made in the Andhra Pradesh Reorganisation Act, 2014, found a mention in the budget nor was there any promise of assistance for Telangana’s flagship initiatives ‘Mission Kakatiya’ (rejuvenation of village tanks) and ‘Mission Bhagiratha’ (piped drinking water supply to every household), despite NITI Ayog recommending central assistance of ₹24,000 crore for these schemes.
“We are extremely disappointed. This massive cut in funds to the state is discriminatory and atrocious. This will adversely impact our welfare and development programmes,” the Chief Minister K Chandrasekhar Rao said.
Telangana was due to get ₹19,718 crore from the Centre in 2019-20. But, in the revised estimates, it was reduced to ₹15,987 crore.
Following the approval of the 15th Finance Commission’s report, which recommended reduction of the central tax share to the states from 42 per cent to 41 per cent, the share of Telangana has now come down to 2.437 per cent to 2.133 per cent. This will result in a decrease of ₹2,381 crore to the state in the divisible pool of central taxes.
Impact on state budget
“The inept economic management by the Centre is adversely impacting the states. Despite our welfare schemes becoming a role model for the rest of the country, we are made to suffer because of the faulty policies of the Centre,” KCR, as the Chief Minister is popularly known, said.
Following reduced central allocations, the Telangana Rashtra Samithi (TRS) government is expected to further prune its annual budget to be presented in the first week of March.
In February last year, Telangana had 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.
In March 2015, the Chief Minister had estimated that the budget size of Telangana for the next five years would touch ₹6 lakh crore on the basis of its economic growth rate. But, he is now forced to pare down the budget further due to dwindling government earnings, unexpected cuts imposed by the Centre and non-release of the promised grants.
The promises made to the State 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.
Telangana’s request on supporting industrial corridors between Hyderabad-Bengaluru, Hyderabad-Nagpur, Hyderabad-Warangal have been ignored in the union budget.
“None of the pending promises of the AP Reorganisation Act has been kept and our request to declare national project status for Kaleshwaram or Palamuru project has been ignored again,” the state Industries Minister KT Rama Rao said.
In 2019-20 central budget, ₹1,037 crores were allocated for urban development in Telangana. But, in the current budget, it has been reduced to ₹889 crores.
“This is going to adversely impact our development plans. While we have sent proposals to extend financial assistance for various irrigation projects and welfare initiatives, the Centre, on the contrary, has resorted to massive budget cuts for various sectors like agriculture, education, healthcare, rural development,” Rao, who is Chief Minister’s son, said.
While ₹1,137 crore is due to Telangana from the Centre pertaining to GST compensation, there is no clarity about it in the budget.
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 geopolitical considerations,” 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 geopolitical 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,” the Minister said.
Though Andhra Pradesh is equally disappointed with the union budget, the Chief Minister has preferred to remain silent, apparently due to political compulsions. This is in tune with his earlier assertion that he would adopt a non-confrontationist approach towards the Centre.
Despite the growing criticism of his government’s policies by the state BJP leaders, the YSRCP supremo has so far remained silent.
“The special category status is our right, but the Centre is not doing anything about it,” the State Finance Minister B Rajendranath said in a rather muted reaction.