In a detailed memorandum addressed to the Chairman of the 16th Finance Commission, Dr. Arvind Panagariya, the Bharat Rashtra Samithi (BRS) party has laid out several recommendations aimed at securing greater fiscal autonomy and a fairer share of central tax revenues for the state of Telangana. The memorandum highlights Telangana’s remarkable progress since its formation in 2014 and seeks special grants to maintain key infrastructure projects critical to the state’s development. Today, former minister Harish Rao, along with MLAs Palla Rajeshwar Reddy and KP Vivekananda, attended the 16th Finance Commission’s meeting on invitation, representing the BRS party.
The party underscored Telangana’s significant economic progress under the leadership of the then Chief Minister, K. Chandrasekhar Rao. Overcoming initial challenges like power shortages, low GSDP growth, and widespread agrarian distress, the state’s economy has grown at an average annual rate of over 9% since its formation, according to a report by NITI Aayog. The BRS urged the Finance Commission to ensure the state’s continued sustainable development.
The memorandum outlined the imbalances in the Indian federation’s revenue distribution, noting that while states bear a larger share of expenditure (64%), they only collect 37% of general government taxes. Although the 15th Finance Commission recommended a 41% share of central taxes for states, the actual share has been reduced to 31% due to the Centre’s increased reliance on non-shareable cesses and surcharges, the BRS pointed out. The party called for a significant increase in the states’ share to 50%, proposing that the Centre reduce its spending on state and concurrent subjects by 20% to accommodate this adjustment.
The BRS further argued that non-tax revenues, which have seen a significant rise over the years, should be included in the divisible pool. Non-tax revenues have grown from ₹175 crore in 1960-61 to ₹5.46 lakh crore in 2024-25, and the party claimed that sharing these revenues with states would enhance their fiscal capacity.
The memorandum also expressed concern over the dominance of Centrally Sponsored Schemes (CSS) in resource transfers to states, which they argue undermines state autonomy. BRS called for the implementation of the recommendation to make CSS optional for states, a suggestion that was made by a sub-group of Chief Ministers, including K Chandrasekhar Rao.
On the issue of horizontal devolution, the BRS highlighted how progressive tax devolution disproportionately favors less developed states, widening income inequality between states. The party suggested reducing the weight assigned to the distance of per capita income from 45% to 30% and advocated for the creation of a non-lapsable Infrastructure Fund for backward states, funded by surcharges on income and corporation taxes.
The BRS urged the Commission to increase grants to local bodies by 50%, with a more balanced distribution based on population and area. They also recommended easing the conditions tied to these grants. On calamity relief, the party called for a 60% increase in the State Disaster Response and Mitigation Fund and for a reduction in the states’ contribution to this fund from 25% to 10%.
The memorandum focused heavily on Telangana’s key infrastructure projects, such as the Palamuru-Ranga Reddy Lift Irrigation Project and Mission Bhagiratha. The BRS requested ₹40,000 crore for the maintenance of lift irrigation projects and ₹20,000 crore for Mission Bhagiratha, which has successfully addressed water shortages and eliminated water-borne diseases in the state. Additionally, the party sought ₹10,000 crore for the establishment of super-specialty hospitals aimed at providing affordable healthcare to the poor.
The BRS emphasized the need for the Finance Commission to recognize states that have demonstrated better performance. Telangana, having completed Mission Bhagiratha ahead of the launch of the Central Government’s Har Ghar Jal scheme, was penalized by not receiving funds under the latter. The party urged the Commission to ensure that well-performing states are not left out of central schemes in the future.