Naidu is unhappy with 14th Finance Commission
Naidu is unhappy with 14th Finance Commission

It was easy to see it coming. While the 14th finance commission’s dole out of Rs 22,000 crores to AP looked good to begin with, one look into the fine print revealed that the 14th FC simply ignored AP’s special difficulties post bifurcation. It is an irony that it was headed by Dr YV Reddy who must have been aware of all the financial problems of residuary AP. It is even more ironic that another member of the 14th FC, Dr M.Govinda Rao too was well versed with the state. Still the 5 member 14th FC just could not do any justice to AP and went ahead with the theme  “Business as usual”.

This disappointment was clearly expressed by none other than Chandrababu Naidu who clarified the official reaction to this. He Said “The 14th Finance Commission was constituted in  2013 and AP was bifurcated in 2014. Yet, the panel did not factor in the bifurcation and compensate the residuary state for that. As a result, AP has been put at a disadvantage as it has been denied i a level playing field“

According to Naidu, while the Rs 22,113 crore grant over a period of five years is welcome, it does not address the revenue deficit. “The finance commission has not addressed the Rs 16,000 crore revenue deficit that AP is facing in this financial year. The commission has treated AP on par with other states, both for the purpose of tax devolutions and revenue deficit grant,“ he added.

Even the grant of Rs 2,429 crore for the National Disaster Relief Force (NDRF) and State Disaster Relief Force (SDRF) for the next five years is insufficient as AP is in the seismic zone, he said. He added that the commission’s estimates clearly indicate that AP would be the only state in the country (other than special category states) that would have a revenue deficit even in 2019-2020 fiscal while several other states will have a surplus budget.

AP communication advisor Parakala Prabhakar said at the end of the five-year period, while the other states, including Telangana, would have a surplus revenue ranging from Rs 60,000 crore to Rs 1 lakh crore, AP will be faced with a deficit of at least Rs 2,500 crore. “Despite the President directing the commission to take into account the bifurca tion while making allo cations, AP’s precarious financial position has been ignored. It is a big letdown for AP ,“ he said.

While the Commission’s increased devolution to states is a welcome move, Naidu said that the award of Rs 2,06,819.24 crore over the next five year period only addresses the revenue expenditure needs (administration and maintenance costs of governance). It does not take into consideration the development challenges of an agrarian state that does not have adequate space for revenue elasticity, lacks a capital city and is devoid of major growth engines. This clearly illustrates that AP, despite being the eighth largest state in terms of population, would be at the bottom in the next five years in terms of fiscal performance.