HYDERABAD: Blaming the Central government for the slowdown in the Indian economy, Telangana Finance Minister T Harish Rao on Wednesday said there were several contributing factors including improper implementation of GST. Participating in the pre-Budget 2020-21 meeting held by Union Finance Minister Nirmala Sitharaman in Delhi on Wednesday, he advised the Centre to realise that the only way to address the economic slowdown was to empower States in terms of both financial resources and autonomy.
“The states are the drivers of economic activity. The Centre should implement the CM’s sub-committee report submitted in 2016 for implementation of Centrally-sponsored schemes (CSS),” he pointed out. As for the root cause of the slowdown, Harish Rao said the growth has taken a backseat on account of domestic developments, including stalled investments, improper implementation of the GST, the collapse of the NBFC sector and higher rates of unemployment.
“All these factors together led to a decline in consumption. Accumulation of non-performing assets in public sector banks and low credit growth proved to be a drag on the economy,” he said.
‘Empower states, make India $5 in economy’
Harish Rao added that the decline began with a loss of confidence not among foreign investors, but among domestic investors and consumers. “I am confident that the Union Government will consider our suggestions in the spirit of cooperative federalism and make India a $5 trillion economy by 2024-25 by empowering the States,” he said.“One of the mandates of NITI Aayog is to foster cooperative federalism through structured support initiatives and mechanisms after recognising that strong States make a strong nation and build ‘Team India’. There is no action in this direction even after five years,” Harish Rao alleged.
He recalled that the sub-group of chief ministers on rationalisation of CSS had recommended in 2016 that the focus of CSS should only be those schemes that comprise the National Development Agenda where the Centre and the States would work together in the spirit of Team India and that the list of CSS should be pruned.
Funds for optional schemes should be allocated to States, as per the NITI Aayog’s recommendation. “There are practically no optional schemes till now,” he pointed out and urged the Centre to implement the recommendations of the NITI Aayog in their true spirit in 2020-21 Budget.
‘GST subsumed revenue’
Harish Rao pointed out that the GST had subsumed around 31 per cent of the gross tax revenue of the Centre and 47 per cent of States’ own tax revenue. Thus, States had lost more flexibility, he said.
“Acknowledging the receipt of GST compensation two days ago, I request the Union Finance Minister to settle the dues in future without delay,” Harish Rao said.
He recalled that there was a balance of Rs 1,76,688 crore in IGST at the end of the year. “The Centre had distributed Rs 67,998 crore under IGST to the States/UTs, instead of 50 per cent but by adopting Finance Commission formula for devolution of Central taxes. This was against the provisions of the Constitution as Article 270 (1) excludes IGST from the list of taxes and duties to be devolved to the States,” he said.
Harish Rao also stated that there were a number of concerns with regard to the implementation of GST, which need to be addressed urgently. The expenditure by the Centre on subjects in the States’ list increased from an average of 14 per cent to 20 per cent and on subjects in the Concurrent List from an average of 13 per cent to 17 per cent between 2002-05 and 2005-11. This was indicative of the fiscal space available with the Centre vis-a-vis the States, he said.
STATE’s DEMANDS
Rs 450 cr is the amount Telangana wants Centre to release for 2019-20 under Backward Regions Grant Fund
Rs 19,205 crore for Mission Bhagiratha and Rs 5,000 crore for Mission Kakatiya as recommended by NITI Aayog
Treat Kaleshwaram as a national project, with adequate funding from the Centre