Mumbai: Telugu Desam Party (TDP) member of Parliament Jaydev Galla, while moving a no- confidence motion against Prime Minister Narendra Modi’s National Democratic Alliance government on July 20, 2018, alleged that various cesses and surcharges–Rs 2.35 lakh crore ($34.5 billion) in 2016-17–were not shared with the states, thus reducing the revenue due to them.
“The government has increased devolution of funds from 32% to 42%,” Galla said. “But you also have to remember there are cesses, such as the Krishi Kalyan (farmers benefit) Cess, the Swachh (cleanliness) Cess, the Higher Education Cess and other cesses…. Rs.2.35 lakh crore has been collected under cesses. But there is no share for states in these cesses. So, effectively, it is not 42% but it is somewhere closely to 36-37% of funds were actually going to the states.”
The sharing of taxes between the Centre and states is decided by the Finance Commission, a constitutional body formed every five years by the President. The money that the Centre and states can share includes all taxes, except surcharges and cesses, after adjusting for collection charges.
In 2015, the 14th Finance Commission recommended increasing devolution–the official term for revenue sharing–to 42%, between 2015-16 and 2019-20, against the 32% suggested by the previous commission in 2009.
Galla is right. The Centre collected Rs 2.35 lakh crore as cesses and surcharges in 2016-17, according to minister of state for finance Santosh Kumar Gangwar in this reply to the Lok Sabha (lower house of Parliament) on July 28, 2017.
MPs from various parties said states were being shortchanged by the Centre, despite the Centre’s assertion of devolving 42% revenues to states, columnist Shankkar Aiyar wrote in the The New Indian Express on July 22, 2018.
A cess is a tax levied by the government to raise funds for a specific purpose. The Centre abolished 13 cesses, such as the Swachh Bharat Cess and Krishi Kalyan Cess, with the introduction of the goods and services tax (GST). A surcharge is generally added to an existing tax and is also not shared with states.
No money to build new capital city Amaravati: Galla
Galla also claimed the Centre had given no more than Rs 1,500 crore to build Amaravati, the new capital city of Andhra Pradesh. The first phase of infrastructure is estimated to cost around Rs 51,000 crore ($7.5 billion).
“The Prime Minister is on record saying that if voted to power, he would build us a capital bigger and better than Delhi itself,” Galla said in his statement.
“Main Chandrababu Naidu se kahta hoon ki aisi rajdhani banaye ki Delhi bhi usske samne chota lage (I want to tell Chandrababu Naidu to make a capital city that would be bigger than Delhi),” Modi had said during an election campaign in Tirupati on April 30, 2014.
“How can Amaravati be built with Rs 1,500 crore?” asked Galla. “More than 30,000 farmers have given up their land and they are counting on our government and the government of India. We have waited for four long years and five budgets of the central government. No justice has been done to the state of Andhra Pradesh”.
Galla is right about the money given thus far by the Centre to Andhra for Amravati, which is supposed to be funded by the Centre, state government and external agencies. The Centre released Rs 1,500 crore for the construction of the legislative assembly, legislative council and the Andhra Pradesh government transitional headquarter building complex, urban affairs minister Hardeep Singh Puri informed the Rajya Sabha (upper house of Parliament) on July 19, 2018.
The Centre had earlier released Rs 1,000 crore as “one-time special financial assistance” in March 2015 for infrastructure projects in Vijayawada and Guntur, part of the capital region of Andhra Pradesh, Puri said.
“Amaravati has been given Rs. 2,500 crore, but out of this Rs 1,000 crore were given to Vijayawada and Guntur for underground drainage systems,” Galla said. “When the underground drainage system in my city of Guntur, which is a small town, itself costs Rs 1,000 crore, can we build a world-class capital for Rs. 1,500 crore? It is ridiculous!”
Andhra Pradesh chief minister Chandrababu Naidu had said in 2017 that the Centre had already released Rs 2,500 crore “for construction of the capital city Amaravati and another Rs 1,000 crore would be paid in the coming years”, The Hindu reported on December 1, 2017.
The Naidu government is planning to spend over Rs 51,000 crore ($7.5 billion) on the first phase of development of Amaravati, Mint reported on May 25, 2018.
Andhra Pradesh Capital Region Development Authority, which is building the capital city, has already received close to Rs 27,000 crore ($3.9 billion) from the World Bank and the Housing and Urban Development Corporation Ltd (HUDCO), Mint said.
Amaravati is expected to house nearly 3.55 million people by 2050.