State Sustainability

Finances: 

One of the doubts expressed about Telangana, if it is made a separate state, is regarding its financial viability.   The fact is that the financial viability of state of Andhra Pradesh itself is dependent  on  the  contribution  of  Telangana  to  the  revenues  of  the  state. It might sound incredible to those who entertain doubts about the viability of Telangana as a separate state.  It is, therefore, necessary to know the region-wise contribution to the state’s exchequer under major heads of revenue.  It is also necessary to have a look at the conditions prevailing at the time of formation of Andhra Pradesh in 1956.  For this purpose one has to once again look at the report of the States Reorganisation Commission which had categorically started: 

"The existing Andhra state has faced a financial problem of some magnitude ever since it was created; and in comparison with Telangana, the existing Andhra state has a low per capita revenue.  Telangana, on the other hand, is much less likely to be faced with financial embarrassment… Whatever the explanation may be … the result of the unification will be to exchange some settled  sources  of  revenue,  out  of  which  development  schemes  may  be financed, for financial uncertainty similar to that with which Andhra is now faced.  Telangana claims to be progressive and from an administrative point of view, unification, it is contended, is not likely to confer any benefit on this area” (SRC Report: para 376)

What had happened to Telangana because of its merger with Andhra is precisely what was predicted by the SRC.  Even now the contribution of Telangana to the state’s revenues under some major heads continues to be far higher than the contribution of other two regions. For instance, sales tax and excise collections constitute about 43% of total revenue of the state.  The region-wise contribution is explained in Table VII.

 TABLE VII

Important Sources of State's Income - Region-wise 2000 - 01

(Rs. in Lakhs)

Note:    Figures shown in brackets are percentages of total receipts of the state under the heads concerned. Source:  Bureau of Economics and Statistics, A.P.

These figures clearly show that nearly 75% of receipts under the head ‘sales tax’, the single largest source of revenue, and more than 55% of excise collections are contributed by Telangana to the state’s exchequer.

The other major head of revenue consists of state’s share in central taxes and grants-in-aid.  In determining  this  share,  backward  regions  of  the  state  facilitate  higher  allocation  by  the successive Finance Commissions.   Therefore, Telangana is entitled to a higher share in these revenues as well.   Even if population, and nothing else, is taken as the criterion Telangana’s share would be more than 40%.

It is evident that the overall contribution of Telangana to the state’s revenue will in any case be more than 50%.  But, the expenditure incurred on this region has never been more than 25% to

30%. 

Major Irrigation:

Expenditure incurred in different regions on construction and maintenance of major irrigation projects should be normally in proportion to the potential created in the respective regions. Telangana’s share on this score is just 18.20% (by the end of 2001).

Education:

Revenue expenditure on education consists mostly of salary component paid to the staff working in government institutions and private aided institutions.  The share of Telangana as a percent of the total expenditure of the state on salaries of staff in educational institutions in 2001 is as follows:

These are only samples.  The situation in other sectors is also more or less the same.

The state has been borrowing heavily from the World Bank and other international and national agencies said to be for developmental activities. The quantum of loan has already exceeded

50,000 crores of rupees.  But there is no transparency with regard to region-wise allocation of these funds, atleast broadly,  for the development of those regions. Even if 1/5 of these borrowings were spent on irrigation projects most of the projects would have been completed by now.

Demographic Variation and Colonization:

The rate of growth of population of the state during the decade 1991-2001 was significantly low (13.86%), as compared to many other states and also the national average (21.36%).  So far so good.  Where  does  Telangana  stand  in  this  regard?                                                          It  makes  an  interesting  -may  be  an intriguing- study.  During this decade, Telangana registered a growth of 17.66% against 9.88% by Coastal Andhra and 15.19% by Rayalaseema.  The rate of growth in Telangana is also higher as compared to other south Indian states, namely, Kerala (9.42%), Tamil Nadu (11.19%) and Karnataka (17.25%).  In fact, the rate of growth of population of Telangana has all along been higher than the rate of the other two regions during the last five decades.  The details are given in Table VIII. 

TABLE VIII

Population: Decade/Region-wise Growth (1951-2001)

Sources: 1. Directorate of Census Operations, A.P.

2. Bureau of Economics and Statistics, A.P.

This phenomenon has been causing demographic imbalances between Telangana and other regions of the state. At the time of formation of Andhra Pradesh, Telangana region accounted for 34.40% of total population of the state.  It has now gone upto 40.54%. During this period, the component of Coastal Andhra has gone down from 44.17% to 41.69% and of Rayalaseema from

19.43% 17.77%.  It is happening not because of a higher rate of fertility or a lower rate of mortality in the Telangana region. It is the result of a continuous influx of Andhra migrants to this region. To put it the other way, it is the result of a planned process of colonisation.   In addition to socio-economic factors there is also a political dimension to it. These migrant settlers are so deeply entrenched in the region that they are able get elected as the representatives of people of this region. Nearly 10% of the members elected from Telangana to the state assembly and union parliament belong to this category. Quite a few of them also become ministers claiming to represent Telangana region. There may not be anything wrong about it under the constitution of the country. But there is a moral dimension to it, which cannot be ignored. If they are loyal to the people and the area responsible for their induction into the power structure, nobody can find fault with them.  But the problem with this brand of leaders is that their loyalties are always with the place of their origin and not with the place that has facilitated their growth in political field.  Most of them do not like to even utter the expression‘Telangana’.