VIJAYAWADA: Chairman of 16th Finance Commission Arvind Panagariya has said that Andhra Pradesh made a specific suggestion to increase the vertical devolution share from 41% to 50%. Speaking to the media after the meeting of Commission members with Chief Minister N Chandrababu Naidu, his Cabinet colleagues and officials at the State Secretariat on Wednesday, Panagariya said that regarding horizontal devolution criteria, the State has suggested reducing the weight given to population from 15 to 5%, besides giving weightage for environment.
Specifically regarding demographic performance, Panagariya said, “The Chief Minister has been making the argument that we need to look beyond just rewarding States for bringing down total fertility rates to replacement level. Southern States in particular, where fertility rates have fallen well below replacement levels, face problematic increases in dependency ratios and aging populations in the longer run.” Similar concerns were raised by Assam and Tamil Nadu.
On income distance, Panagariya explained, “The State has suggested reducing the weight given to income distance from 45% to 30% and introducing a 20% weight for the contribution of agriculture and allied sectors to gross state value added.” This would replace the 2.5% weight given by the 15th Finance Commission to tax and fiscal effort.
On Special Category Status, Panagariya said Niti Aayog replaced Planning Commission which was dealing with the subject. On post-bifurcation challenges, he said, “The Chief Minister talked at length about that, saying they inherited less resources, more people, less GSDP, more people, so all that had an impact on the long-run finances of the State. It also had an impact on the debt that the State inherited.”
The Commission would visit all States and submit its recommendations to the Centre, he said. Panagariya highlighted a historic aspect of the 16th Finance Commission’s mandate, saying that this is the first time that the Central government has not given any conditions to the Finance Commission, unlike previous ones. The 15th Finance Commission was directed to use 2011 population data instead of 1971, the current Commission has been given complete independence in formulating its recommendations. The Chairman expressed positive concerns acknowledging the State’s unique challenges while maintaining a balanced, professional stance regarding future recommendations.
Panagariya praised Naidu as a visionary Chief Minister who gave them a tour about the planned capital city Amaravati from inception and its history too with a beautiful video.
“Since he is a visionary leader, he spoke first about what he thinks India is going to look like in the next 20-25 years, the 2047 Viksit Bharat vision, and how within that Swarna Andhra Pradesh would look like in 2047,” Panagariya said.
He added that the Chief Minister’s presentation covered the evolution of AP’s economy, the impact of bifurcation, and the State’s future needs and recalled his association with Naidu since 2015.
Allocate more funds to state: YSRCP
A YSRCP delegation met the 16th Finance Commission Chairman Arvind Panagariya, and made a representation seeking allocation of more funds to the State. Speaking to the media, former Finance minister Buggana Rajendranath Reddy said they suggested increase in the State share of revenue to over 50% as a significant portion would go back to the Centre in the form of cess and surcharges.
While the 14th Finance Commission had increased the State share from 32 to 42%, the 15th Finance Commission had recommended 41%. “We sought 50% keeping the deduction in view,” Buggana said.
Continue existing tax devolution: BJP
BJP MLA Chadipirala Adinarayana and 20 Programme Implementation Chairman Lanka Dinakar submitted a representation to the 16th Finance Commission seeking financial support for AP’s holistic development. Acting on the directions of AP BJP president D Purandeswari, the leaders met the 16th Finance Commission, and underlined the need to continue the existing 41% tax devolution.
It also called for revenue deficit grants, sector-specific grants for health (fluoride-affected areas), school and higher education (with emphasis on Indian culture), agriculture (natural farming, FPOs), and PMGSY road maintenance.
Congress seeks Special Category Status
On the instructions of APCC president YS Sharmila Reddy, senior Congress leaders Sheikh Mastan Vali and Narapareddy Kiran Kumar Reddy met the 16th Finance Commission seeking release of crucial funds to the State. They raised three key issues, which included non-release of State Finance Commission (SFC) grants to local bodies for the past decade, funds for rehabilitation of the Polavaram Project Displaced Families, and a judicial probe into the construction lapses. Lastly, they pressed for Special Category Status for Andhra Pradesh as promised under the AP Reorganisation Act.
Allocate 50% of taxes to States: CPM
The CPM submitted a representation to the 16th Finance Commission, urging stronger financial support for States to uphold India’s federal structure.
It demanded allocation of 50% of total taxes, including cess and surcharges, to States facing financial strain due to economic reforms.