Telangana raises concerns over Centre cutting budgetary allocations

Telangana on Friday raised serious concerns over the Union government reducing budgetary allocations to States by increasing levy of cesses and surcharges, that would deny a share in them to the States.

The State government also demanded the Centre to fulfill its commitment to the State as well as sanction new projects including the second phase of Hyderabad Metro Rail in the upcoming Union Budget for 2023-24.

During the pre-budget meeting convened in New Delhi on Friday, Finance department officials led by Secretary Ronald Ross raised various issues of concern with the Centre. They also made several suggestions and sought the Union government to support Telangana which was progressing rapidly, contributing to the nation’s economy.

In a 14-page representation, the State government suggested reduction of cesses and surcharges on petrol and diesel to correct the duty structure and moderate the inflation. This will result in reduction of the State VAT automatically as it is levied on an ad valorem basis. The Centre was also asked to scale up the capital expenditure to meet the budget estimates for 2022-23.

As the States are at the forefront of providing infrastructure and conducive ecosystem for attracting investment, Telangana sought extension of the scheme of Special Assistance to State for Capital Expenditure for five more years with an enhanced allocation of Rs 2 lakh crore per annum.

The Centre was asked to treat offbudget borrowings raised by the State Public Sector Corporations serviced out of the State budget, as borrowings made by the State prospectively from 2023-24 rather than 2021-22 as was decided earlier.

The State government strongly



pitched for restricting the share of cesses and surcharges not exceeding 10 per cent of the gross tax revenue, as the States’ interests were at stake. The share of cesses and surcharges in the gross tax revenue of the Union government increased from 2.3 per cent in 1980-81 to 20 per cent in 2022-23.

For effective implementation of the Centrally Sponsored Schemes (CSS), Telangana sought reduction of the number of schemes and to allow the States to select a few schemes from the bouquet of CSS, which suit their respective requirements, as per the recommendations of the sub-group of the Chief Ministers constituted by the Niti Aayog.

The State government demanded for releasing the pending amount of Rs 1,350 crore towards development of backward areas as per the Andhra Pradesh Reorganisation Act and to also extend it for next five years.

As per the Act, it has also sought tax incentives to promote industrialisation, accord national project status to Kaleshwaram project, revive the Information Technology Investment Region (ITIR) project and allocated necessary funds as well as resolve pending issues in this regard.

Further, the authorities wanted the Centre to allocate funds in the Union Budget 2023-24 for the second phase of Hyderabad Metro Rail between BHEL and Lakdikapul to be taken up as a joint project of the Central and the State government at Rs 8,453 crore.

They also sought grant funds for the Mission Bhagiratha scheme as per recommendations of the 15th Finance Commission. The State government wanted the Union government not to impose too many restrictions on taking up works under Mahatma Gandhi National Rural Employment Guarantee Scheme.