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AP Seeks Special Funds From Centre

Finance Minister Yanamala Ramakrishnudu demanded a special disbursement to address the acute financial problems being faced due to the bifurcation of the State.
Hyderabad | 10th September 2014
Andhra Pradesh Finance Minister Yanamala Ramakrishnudu stressed the need for a special disbursement to the State to address several financial problems being faced due to the bifurcation of the State.

Speaking with the 14th Finance Commission in the meeting held by the Empowered Committee of State Finance Ministers at Vigyan Bhavan in New Delhi on Wednesday, Yanamala urged the Finance Commission to recommend to the Centre to provide sufficient financial resources to relieve the fiscal stress of Andhra Pradesh.

Welcoming the tax reforms, Yanamala demanded that the loss of revenue due to the implementation of the GST (Goods & Service Tax) be fully compensated by the Union Government. The estimated loss of revenue to AP was roughly Rs. 4,000 crores.

He also demanded that the compensation mechanism should be such that there would be an independent body to release the compensation, and that there would not be any scope for the whims and fancies of the Union government to come into play. If possible, the body should be made part of the constitutional provisions, he suggested.

"Agricultural products should not be exempted under GST, as the loss of revenue would be considerable. In case they are exempted, permanent production-linked compensation to the State should be provided, and the successive Finance Commissions should be asked to make recommendations thereof. Unless Revenue Neutral Rate is decided, the quantum of loss of revenue cannot be determined with a degree of certainty. However, the rough estimate of loss, assuming that the present rates of tax continue, would be around Rs. 4,000 crores," he said.

The Minister further demanded that petroleum products be kept outside the GST, so that the States could continue to levy taxes on them at the present rates.

"As a measure of building confidence among the States in the promise of the Union Government to compensate for the GST loss, the Centre should release the amount of loss of revenue due to the phasing out of the GST. The compensation should be released in full for the entire period, and such loss to the state of Andhra Pradesh is around Rs. 7,200 crores," he said. (INN)
filed in:  Finance, GST, AP Bifurcation, Andhra Pradesh
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