In what can be termed as a shock to the States especially the Cash Strapped States like Andhra Pradesh, the Central Government has submitted a memorandum to the Fifteenth Finance Commission to decrease the Share of the States from the divisible pool of Taxes.
BJP led Central Government until now is boasting about increasing the Taxes Share to 42%. But now the Center is seeking a reduction to 33-34%. This is citing the prevailing economic slowdown, tax trends, and the fiscal situation. The State Governments are already registering a decline in Revenues for the Same Reasons.
This, if happens, will hit the States very badly. Moreover, the 15th Finance Commission is mooting Tax Division basing on the Population. The progressive States down the South which implemented strict Population Control Measures will now suffer. These two decisions will hit both the Telugu States very badly
Recently, Telangana Government has decreased its budget in the wake of economic slowdown. Andhra Pradesh and Telangana Governments have rolled out several populist schemes which will require massive economic resources. If the Central funds are also cut, the ruling governments will face a huge disruption.
