The Union Finance Minister Nirmala Sitharaman got back with numbers on allegations that the States were not getting their rightful share of tax devolution.

Responding to media on the issue at DD Dialogue #AmritkaalBudget Conclave, she said that ₹1.3 lakh crore tax had been devolved to the State of Telangana in the past few years. The Centre had released ₹17,165 crore in 2021-22 and ₹19,668 crore in 2022-23 and it was budgeted to release ₹21,470 crore in the next financial year. This was in addition to grants in aid of ₹1.39 lakh crore and around ₹7,400 crore for railway infrastructure and safety during the current and the next financial years.

More distributed than collected

The Minister pointed out that in many cases more funds have been disbursed to the States than what was collected from them. Explaining she said, “If ₹1,000 crore was collected from the States, for instance, the Centre was giving them ₹2,000 crore. Drawing from the consolidated fund, we give allotments to the States and I have clarified the issue in the Parliament itself. Parliament is not a place where you can forget the answers given.”

She dismissed the allegations of the Telangana Government that the Centre had stifled the States imposing restrictions on their borrowing limits.

“The Constitution allows the Central Government for overall supervision of borrowings and the limits are equally applicable to all States. This is not new, not something that has started after 2014. Article 293 of the Constitution provides for supervision, as borrowings should be under someone’s control,” she stated.

Sitharaman was responding to queries on the State Chief Minister K Chandrasekhar Rao being repeatedly criticical of the Centre for imposing restrictions on borrowings even on progressive States like Telangana which was committed to making capital expenditure through borrowings.

Rao had asserted that the Centre was collecting more taxes from the States while the devolutions were far less as compared with them.

According to Sitharaman, the borrowings of Telangana are far more than allowed. “From around ₹60,000 crore in 2014, the year of State formation, the total liabilities have gone beyond ₹3 lakh crore,” she pointed out.

On comments by the Chief Minister that the goal of achieving $5 trillion economy set by the Centre was a “big joke”, she said there has to be a goal and the Centre as well as the States should contribute to achieving it.

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