State urges Centre to shift from ‘per capita income distance’ system in allocation of resources  

Deputy Chief Minister Mallu Bhatti Vikramarka has said that the State government has proposed to the Central government to usher in reforms by horizontal tax devolution, suggesting a shift from the current “per capita income distance” criterion.

Instead, the government recommended assigning 50 per cent weightage to the Gross State Domestic Product (GSDP) to ensure a more equitable allocation of resources for States driving national economical growth. The recommendation envisaged balanced development by fairly distributing financial resources to high performing States. Telangana, he said, remains committed to securing its rightful share from the Centre while effectively utilising economic resources to strengthen its financial stability and growth.

The Deputy Chief Minister, during his one hour fifty minutes budget speech, informed that the State government had submitted a comprehensive report to the XVI Finance Commission urging a fair share of central tax distribution for States. It had also requested greater financial assistance for debt stability, infrastructure development and social welfare programmes.

The State government sought increase in the Central tax devolution from the current 41 per cent to 50 per cent. It highlighted that the cess and additional charges imposed by the Centre had significantly reduced revenue allocation to States. The government had already expressed concern over the declining share of tax devolution to southern States including Telangana. The State received 2.437 per cent funds under the XIV Finance Commission which declined to 2.102 per cent in the XV Finance Commission.

“Our government represented that allocating fewer funds to well performing States is unfair and advocated a more rational tax distribution system that incentivises States contributing significantly to the nation’s growth.