Naidu leads revolt on revenue sharing

Chautala has also been active on this issue and has written a letter to Prime Minister Atal Behari Vajpayee, protesting against the reduced revenue allocation to his state.

This is the first time since Independence that the states have challenged the decisions of the Finance Commission and it reflects the growing schism between the more prosperous states in the western belt of the country and the BIMARU states in the eastern half.

The TDP’s main grouse is that states with higher human and economic indicators are being “punished” for their development and prosperity with revenue cuts from the Centre while those languishing in poverty are being “rewarded” with hefty hikes in allocations.

“We are not saying that backward states should not be helped by the Centre. But we are against providing incentives to these states to perpetuate their backwardness,” said TDP MP Ummareddy Venkateswarlu. “If this continues, it will end up curbing the initiative of states which have taken hard decisions for development.”

According to Venkateswarlu, the Eleventh Finance Commission has recommended a cut of Rs 940 crore per annum for Andhra as compared to the allocation under the Tenth Finance Commission. Haryana faces a reduction of around Rs 200 crore per year while Punjab’s cut is in the region of Rs 250 odd crores per year.

Significantly, the issue cuts across political lines, underlining the growing force of regional interests. The chief ministers of two Congress-ruled states, Maharashtra and Karnataka, are believed to have accepted Naidu’s invitation to attend Monday’s meeting and so has the Chief Minister of CPI(M)-ruled Kerala, E Nayanar.

In fact, Karnataka Chief Minister S M Krishna has sent a protest letter to the PM, complaining that his state had not been given a fair deal. These states also face budgetary cuts with Kerala being almost as badly hit as Andhra. It will receive Rs 733 crore less every year under the Eleventh Finance Commission’s decision as against what it was getting from the Tenth Finance Commission’s allocations.

Interestingly, the Congress appears to have abdicated its role as a national party by allowing the regional dictates of its governments to override the broader perspective. Congress circles are not even sure whether Krishna or Maharashtra’s Vilasrao Deshmukh sought permission from the party high command before accepting Naidu’s invitation.

The issue is threatening to become a major embarrassment for the Vajpayee Government which has already accepted the Eleventh Finance Commission’s recommendations. The report was tabled in Parliament along with an Action Taken Report on July 27.

Since the allies are in the forefront of the protests, the BJP has chosen to keep quiet. However, it is believed to have told its Chief Minister, Keshubhai Patel of Gujarat, not to attend Monday’s meeting. Gujarat, with its growing economy and rising per capita income, falls in the same category as the other prosperous states Naidu is trying to bring together on one platform.

Venkateswarlu said the TDP’s effort is to get a national debate going, starting with Parliament, on the need to revise the criteria for deciding revenue allocations from the Centre. He said the TDP also has reservations about the Lakrawala Commission’s parameters for determining poverty levels in the states.

Why states are protesting

Under the Eleventh Finance Commission’s recommendations, Andhra Pradesh will get Rs 940 crore less per annum as compared to the allocation under the Tenth Finance Commission; Haryana will get around Rs 200 crore less; Punjab about Rs 250 crore less; and Kerala Rs 733 crore less.