Centre should share surcharge collections with States: Bhatti

Deputy Chief Minister and Finance Minister Bhatti Vikramarka proposed merging surcharges with basic tax rates to expand the divisible pool or crediting the entire surcharge collections, estimated at ₹1.55 lakh crore in 2025-26, to a non-lapsable infrastructure fund for State grants.

Addressing the pre-Budget meeting convened by Union Finance Minister Nirmala Sitharaman in New Delhi, Mr. Vikramarka pointed out that although the 15th Finance Commission recommended 41% tax devolution to States, the effective share has dropped to about 30% due to the exclusion of cesses and surcharges from the divisible pool.

Mr Vikramarka made a strong pitch for enhanced fiscal space for States, greater devolution of resources and early sanction of major infrastructure projects. Telangana, he said, aims to raise its capital investment rate from 37% to 50% of GSDP. He urged the Centre to enhance States’ fiscal deficit limit to at least 4% of GSDP annually, convert the existing 50-year interest-free loans into grants and double the assistance provided to States.

He said Telangana currently contributes 5.1% to the national GDP and plans to increase it to 10% growing into a USD 3 trillion economy by 2047. The Minister also sought relaxation of FRBM limits to enable States to raise resources specifically for education and healthcare.

He also appealed to the Centre to accept recommendations of the 16th Finance Commission in entirety, noting that Telangana lost over ₹5,300 crore due to the non-acceptance of State-specific and sector-specific grants recommended by the 15th Finance Commission.

Mr. Vikramarka reiterated the demand for early sanction of the Regional Ring Road (RRR), approval for the second phase of the Hyderabad Metro Rail, establishment of an IIM in Hyderabad, new Kendriya Vidyalayas and Jawahar Navodaya Vidyalayas, and airports at Peddapalli, Warangal, Adilabad and Kothagudem.

The State also sought approval for a semiconductor project, an Electronic Manufacturing Cluster near Thatiparthy village, and funding for major road, rail, urban infrastructure and irrigation projects, including declaration of the Palamuru–Rangareddy Lift Irrigation Scheme as a National Project.