Finance Commission decides distribution of net tax revenue to states: Nirmala

HYDERABAD: Union finance minister Nirmala Sitharaman on Saturday slammed the Telangana government for claiming that taxes paid by the state were driving development elsewhere in the country and that the state was not getting recognition on this front.

Addressing a press conference after a two-day visit to the Zaheerabad Parliamentary constituency under the BJP’s Lok Sabha Pravas Yojana, she said that the TRS government was levelling baseless allegations against the Union government over allocation of funds. The distribution of net tax revenues among the states was decided by the Finance Commission based on a devolution formula and not by the Centre, she clarified adding that “there is no space for me to either favor or deny any state in allocation of funds.”

If the state believed that it was getting less than what it gave the Centre, then the question arose as to why the Telangana government did not say that tax revenues from Hyderabad, which account for more than 50 per cent of the taxes generated in the state, were used for development works, say in Adilabad which generated lesser revenues.

Sitharaman said that the state finance minister T. Harish Rao, who asked if the Centre was willing to paste Chief Minister K. Chandrashekar Rao’s pictures in other states as Telangana was paying more to the country than it was getting back, was twisting statements and seeking to heat up the political situation. He should note the people would take the final decision, she said.

On FRBM limits on state borrowing, she said, though the states would abide by the limits the problem arose from state-owned entities raising loans on their own, which they were in no position to repay. This was the case with Telangana, she said, adding that the state government had finally admitted that every newborn in the state started with a loan burden of around Rs 1.1 lakh. On freebies, states must be able to show in their budgets where the additional money comes from, she said. 

Sitharaman said that loans were borrowed at nine per cent interest for the Kaleshwaram project.  BJP state president Bandi Sanjay and general secretary G. Premender Reddy and others were present.