By IANS,
Hyderabad : Thirteenth Finance Commission Chairman Vijay Kelkar Monday voiced concern over subsidies provided by Andhra Pradesh, saying these could potentially jeopardise the state’s recent impressive fiscal achievements.
While acknowledging the need for ensuring food security to the poorest of the poor, he told Chief Minister Y.S. Rajasekhara Reddy that this aim can be best secured through improvements in the income and human capabilities of all citizens.
“Subsidies detract scarce resources towards the development of these capabilities and their prudent control and management is therefore essential,” he said while addressing a meeting with chief minister, his cabinet colleagues and senior officials.
Andhra Pradesh is the biggest consumer of central food subsidy. “In addition, the state government subsidises the consumer price of rice, the fiscal burden of which is projected to be Rs.1,900 crore in 2008-09 BE (budget estimate). In the same years the state also intends to subsidise AP Transco (electricity utility) to the tune of Rs.2,385 crore, again for providing subsidised power to agriculture,” he said.
Kelkar made the observations after the chief minister sought higher transfer of resources from the centre for continuing various programmes like free electricity to farmers, farm loan waivers, “Arogyasri” or community health insurance and massive irrigation programme “Jalayagnam”.
Kelkar said the fiscal projects presented by the state for the period 20010-15 prima facie indicate a worsening in the state’s fiscal management.
Kelkar also voiced concern over intra-state disparities in income. “The per capita income of the poorest districts is less than half of the richest district. There are also wide variations in literacy rates and in per capita availability of education and health facilities,” he said and wanted to know from the government the time frame within which these disparities will be addressed.
Referring to Goods and Services Tax (GST) coming into effect from April 1, 2010, the finance commission chairman said this was necessary if Indian industry was to survive in this age of globalisation.
Reacting to the chief minister’s request for compensating states for possible loss of revenues in first few years after migration to GST, Kelkar said the commission would explore how it could encourage a grand bargain between the centre and the states.