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While expressing happiness with several recommendations of the Fourteenth Finance Commission, such as the increase in devolution from 32 per cent to 42 per cent, Andhra Pradesh Government has expressed concerns that the problems faced by the State post the division were not factored.
The State sought liberal Central support for a level playing field with other developed States.
Given the State’s financial situation, the commission had recommended an award of Rs 2,06,819 crore for the next five years (2015-16 to 2019-2020) to AP by way of devolutions, revenue deficit grants, grants to local bodies among others. While this addresses only the revenue expenditure needs of the State, it had failed to factor the massive fund requirement of the new State without a capital city.
The State feels aggrieved by the commission not recommending specific award as it has suffered fiscal damage as a result of reorganisation and has treated it on par with other states and it would have to contend with revenue deficit for at least five years.
As against the State’s request for Rs 1,41,467 crore as grants-in-aid to create a level playing ground, there has been no award. While the State is faced with a resource gap of Rs 15,000 crore during the current fiscal, the Centre has sanctioned only Rs 500 crore.
The Commission has estimated that AP will have gross revenue deficit of Rs 1,92,798 crore over next five years and Telangana would have a surplus of Rs 21,972 crore prior to devolution. Even after 42 per cent devolution, AP would have a deficit of Rs 22,112 crore but Telangana would end up with a surplus of Rs 1,18,678 crore over next five years.
The State sees the award of 42 per cent of the divisible pool is likely to disrupt the ongoing Central support to plan schemes. The higher fiscal responsibility is seen to impose greater financial burden, requiring diversion of funds.
Factoring all these concerns, AP wants the Centre to support with necessary funds required to develop a new capital and create infrastructure and thereby help create a level playing field.
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