HYDERABAD: The Telangana government has sought the support of the 16th Finance Commission for restructuring loans and for providing additional assistance to help free up resources for further development.
A delegation led by Chief Minister A Revanth Reddy and Deputy Chief Minister Mallu Bhatti Vikramarka met members of the Commission at the Praja Bhavan on the second day of its two-day visit to the state.
In its presentation, the state government said: “Telangana is at a critical juncture. While the state has made rapid strides in economic development, we are currently grappling with a debt burden exceeding `6.85 lakh crore, as of the end of the previous financial year. This is the result of significant investments in infrastructure, but a large portion of our resources is now being diverted toward debt servicing. We request the Commission’s support in either restructuring this debt or providing additional assistance to help free up resources for further development.”
During the meeting, the CM pointed out that Telangana was an economically growing, rapidly transforming state that has made immense contributions to the country. “Despite strong advantages and a good economy, we are facing huge challenges,” he said.
Expressing concern over the debt burden, he said that huge loans taken over the last 10 years have now created a situation where a significant part of the revenues is used just to repay debt. “If we don’t manage loans and interest payment, it will slow down progress,” the CM said.
He added: “I strongly place my demand and I speak for all states — increase allocation of Central funds to states from 41% to 50%. If you can do this, I promise you that I will take huge responsibility of Prime Minister Narendra Modi’s vision to make India a $5 trillion economy. I will make Telangana a $1 trillion economy. Help Telangana so we can in turn help India become the third largest economy of the world.”
Bhatti for autonomy to tailor central schemes to state needs
The deputy chief minister urged the 16th Finance Commission to ensure that states are given the necessary autonomy to tailor Central Sector Schemes (CSS) to their specific development needs. He said that harsh conditions are often imposed on states to even access these schemes, thus restricting the ability of the states to deliver at the grassroots.
Vikramarka also proposed increasing the share to states in Central taxes from 41% to 50%. He said: “Over the years, cesses and surcharges that are not shared with states have increased, leaving states with a smaller share of total gross tax revenue. Increasing the vertical devolution will give states the fiscal space they need to strengthen welfare programmes, address infrastructure gaps, and prioritise local development.”
Mentioning that there was a large gap in wealth and income distribution in Telangana, the deputy chief minister said that if a formula that reduces devolution to the state like Telangana due to its per capita income is adopted, it will severely handicap the state in taking measures for reduction of disparities. In this context, he urged the commission to reconsider the use of per capita income distance as the primary indicator in determining horizontal devolution.
“Measuring prosperity and well-being solely by per capita income would deny Telangana the resources needed to address the inequities that exist within the state. We propose that the weightage accorded to income distance be reduced drastically,” Vikramarka said.
He said that certain expenditures, often mislabeled as freebies, are, in fact, essential welfare programmes. Initiatives like Rythu Bharosa, farm loan waivers and food subsidies are lifelines for our vulnerable communities, ensuring economic stability and social security, he said, urging the Commission to recognise these programmes as necessary investments in the welfare of the people.