HYDERABAD: Deputy Chief Minister Mallu Bhatti Vikramarka on Thursday criticised the Centre for creating an unjust financial situation where fiscally responsible states face restricted borrowing capacity, while the Centre enjoys greater financial flexibility.
Participating in a meeting of finance ministers from non-BJP ruled states, organised by the Kerala government in Thiruvananthapuram, he said: “States need the Centre’s consent for borrowing if they are indebted to it. Yet, the Centre often exceeds its own fiscal deficit targets, which are currently at 5.6% of GDP. Article 293 of the Constitution should be upheld, and the powers of the Centre should be redefined to favour state fiscal autonomy.”
Vikramarka called for greater borrowing autonomy for fiscally prudent states and resistance to the Centre’s increasing use of cesses and surcharges.
He said that states’ share in Central taxes should be increased from 41% to 50% and pointed out delays in GST compensation, which have strained state finances, creating uncertainty and hindering budget planning and development initiatives.
“The framers of the Constitution did not intend for centralised financial control. The Finance Commission was established to ensure a fair and equitable distribution of resources between the Centre and states. I suggest that we study the impact of devolving more funds to poor states so that we can explore changes if necessary. It is time to adopt a composite index that includes not only per capita income but also other relevant criteria like rate of development and index of equity. Funds for fiscal efficiency should be raised from a meagre 2.5% to encourage performing states.”
He noted that despite their significant contribution to GDP (over 30%) and population (19.6%), Southern states have seen their share in tax devolution decrease from 21% under the 11th Finance Commission to just 15.8% under the 15th Finance Commission. The use of 2011 population figures for determining devolution penalises states with effective population control policies, which discourages social development and good governance.
Bhatti also expressed concern that the upcoming delimitation exercise, based on 2011 population data, might reduce the political representation of southern states in the Lok Sabha.
He said: “This threatens to marginalise southern states and undermine their political voice in national decision-making. States that have prioritised population control and social development might be unfairly penalised, while those with higher population growth could gain disproportionate representation. We need to follow the American system where the number of representatives in the House of Representatives has been fixed at a maximum of 435 for the past one century.”