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By JR Janumpalli

Telangana on June 2, 2014, became the 29th State of India. Many new States were created after independence — some on a linguistic basis and some on tribal identities, geography and culture. The statehood of Telangana was different from other new States. It was for political freedom. It was a demerger of the earlier coercively merged State, after a prolonged struggle for 58 years.

It was felt that it will be difficult for Telangana to sustain itself as a separate State. But all the hypothetical in-certitudes proved incorrect. On the contrary, Telangana not only vindicated its statehood but also established itself as the fastest-growing new State in the country.

Revenue Generation

The potential of the region was grossly underestimated by the critics in their actuated thinking. For, Hyderabad state, the forerunner of Telangana, was sufficiently large and had a self-sustaining revenue. In 1956, as estimated by the State Reorganization Commission (SRC), the per capita revenue of Telangana and Andhra regions was Rs 15.54 and Rs 10.53 respectively in a ratio of 1.43:1.00. The trend has continued in the same vein. It was 1.58:1.00 in 2015-16 and 1.59:1.00 in 2020-21 in the CAG audited accounts. This underlines the comparative revenue generation capability in the two regions.

But, the central tax devolution and grants configuration was different. AP being a larger area with a higher population is garnering more of them. It was in the ratio of 1.00:0.75 in 2015-16 and 1.00:0.64 in 2020-21 in favour of Andhra. In addition, AP got about Rs 52,000 crore deficit grant from the Centre from 2015 to 2026. As per the State Finance Minister, the taxes collected by the Centre from TS from 2014-15 to 2020-21 amount to Rs 3,65,797 crore, of which the State has got back Rs 1,68,647 crore only as devolution. It is the reverse for AP. The Centre collects less tax but remits more devolution to the State.

Economic Resilience

Despite this handicap, TS balanced its budget from 2014-15 to 2018-19 with some surplus revenue. During the two Covid years of 2019-20 and 2020-21, it reported a revenue deficit like all the States but within the stipulated limits. Whereas AP registered deficit all the years from 2014-15 to 2020-21 despite higher Central devolution and grants, including deficit grant every year. TS has about 74% of its State’s own tax revenue (SOTR) in its total revenue, which is among the highest in the States. AP has about 51% and the States’ average is 54%. This shows its revenue potential and the inherent economic resilience.

Among about 15 new States created in India after independence, Bombay-Gujarat (1960) and Punjab-Haryana (1966) have some similarities with the Andhra-Telangana division. Both Gujarat and Haryana surged ahead after separation and are now on the frontline. It is the same case with Telangana. Separation gave it political freedom and full use of its resources for itself. Telangana followed Gujarat and Haryana, the two very successful States post-bifurcation. The compound annual growth rates of GSDP and per capita GSDP of Telangana are better than these States. That makes Telangana the fastest-growing new State. These two States which were kept bilingual post-1956 and were bifurcated subsequently, realised their potential after separation. If Telangana and Andhra were kept separate as recommended by the SRC in 1956 or divided in 1969 when the opportunity came, they would have developed like other premier States in the country.

But all new States formed did not get that kind of progress. In the three States formed in 2000, Uttaranchal did very well, Chhattisgarh is making steady progress but Jharkhand is yet to make that grade. Many northeast States continue to be overly dependent on the Centre’s dole-outs. So it depends on the States’ inherent economic strengths and political leadership. Strategisation, bold conception and execution of projects, and the prudential management of the State Budget are important. For the good fortune of TS, all these things have come into play in the last 8 years to make the desired progress.

Praise for Progress

There is wide recognition and appreciation for the progress made by Telangana. NITI Aayog’s publication ArthNITI in its 7th volume, 31 August 2021, wrote a special feature on Telangana. NITI Aayog also said, “Telangana has clocked a CAGR (compound annual growth rate) of more than 11 per cent, since 2015-16. The State’s economy has grown at an average annual rate of more than nine per cent since its formation, significantly higher than the growth rate before its formation”. NDTV made an exclusive documentary titled ‘Telangana, a Phoenix rises’. These reports lend great credence to TS’ progress.

Critics may say whatever, the statistics provided by CSO, CAG, RBI, and NITI Aayog reveal the facts. In the power sector, TS which was struggling with 7,600 Mw inadequate power in 2014, increased it to 17,300 Mw in 2020-21 and is reaching 25,000 Mw by 2023. Spending Rs 1,28,000 crore, irrigation was increased to 90 lakh acres with 190% gross cropped area. Through the ease of doing business, the State attracted Rs 2,32,000 crore in investments. In the IT sector, exports reached Rs 1.5 lakh crore in 2020-21. About 450 welfare schemes have been implemented, making it a well-balanced infrastructure and welfare spending. This has been done without extra help and in uneasy political relations with the Centre.

It is a stellar performance by the Telangana government. Yet, there is a long way to go. Though on the macroeconomic side it is doing very well, at the micro-level, there are several censorious issues like in other States. There is a need to take good governance to the lower rungs enabling the progress made at the top to percolate to the ground level. The revenue deficit which has crept into the Budget during the Covid years needs to be corrected. The State-Centre relations need to be improved for better coordination and financial support. There is a need to consolidate the ongoing schemes before embarking on new mega capital investments for better budgetary management like in the past years.

(The author is a freelance journalist)

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Author: Howard Caldwell