Central government has agreed to release 7000 Crore to Andhra Pradesh as the compensation for Central Sales Tax for the year 2010-11. The Center has to pay 13,000 crore for the Erstwhile Andhra Pradesh as CST compensation from 2010-11 to 2012-13. Andhra Pradesh will be getting 7,000 crore as their share and the rest would go to Telangana.
A sum of Rs 1300 crore will be released to both the states by February and the balance after the Union Budget. However the Center just replied with ‘We will be complaint to AP Reorganization Act’ when quizzed about the revenue deficit caused by the bifurcation of the state. The center did not commit on a particular time frame for these funds of 17000 Crore revenue deficit.
It is known that according to the Andhra Pradesh Reorganization Act, the Central government will have to bear the fiscal deficit in Andhra Pradesh budget for the first year as it lost the cash cow, Hyderabad to Telangana in the state bifurcation.
