Andhra CM Naidu urges 16th Finance Commission to raise central taxes devolution to 50%

Amaravati: Andhra Pradesh Chief Minister N Chandrababu Naidu on Wednesday appealed to the Sixteenth Finance Commission to raise the vertical devolution of central taxes from the existing 41 per cent to 50 per cent, besides support in rebuilding the state through special financial assistance.

Naidu’s appeal assumes significance as the TDP, which the AP CM heads, is a key ally in the BJP-led NDA government at the Centre. The support of TDP’s 16 Lok Sabha members is crucial to Prime Minister Narendra Modi’s government.

"Increase the vertical devolution share from 41 per cent to 50 per cent. Address the decline in horizontal devolution to southern states—from 24.3 per cent (10th Finance Commission) to 15.8 per cent (15th Finance Commission)," an official release quoted Naidu as requesting the commission.

Andhra Pradesh’s share in horizontal devolution is below its share in the national GDP and population, causing a "fiscal disadvantage", claimed Naidu.

The Sixteenth Finance Commission, headed by Chairman Arvind Panagariya, embarked on a four-day visit to Andhra Pradesh from April 15 to 18.

The CM emphasised that rebuilding the state is crucial not only for its future but also for the nation’s progress.

"If you help us stand today, we will play a key role in India’s success tomorrow," Naidu said, urging the commission to understand the state’s unique challenges and support its vision for ‘Swarna Andhra 2047’ (Golden Andhra).

By 2047, Naidu aims to transform the state to achieve a GSDP of USD 2.4 trillion and a per capita income of USD 42,000, among other targets.

Given the post-bifurcation challenges, the chief minister urged the Finance Commission to recommend special allocations and financial support from the Centre.

Naidu listed six key proposals requiring Central support, including the Polavaram–Banakacharla river interlinking project, drinking water projects, five tourism hubs, a quantum valley, extensive logistics infrastructure, and regional growth centres.

Under logistics, he highlighted the need for support from the Centre in developing ports, fishing harbours, multi-modal logistics parks, greenfield airports, inland waterways, and road networks.

He also sought assistance for skill development, setting up the Ratan Tata Innovation Hub, achieving 100 per cent literacy, and establishing regional growth centres in Amaravati, Visakhapatnam, and Tirupati.

Naidu informed the commission that rural local bodies need nearly Rs 70,000 crore and urban local bodies about Rs 20,000 crore to provide essential services like water, sanitation, roads, and transport.

Outlining key concerns of the state, Naidu informed the commission that the loss of Hyderabad following the bifurcation of united Andhra Pradesh "dealt a major blow to the residuary state".

Stressing the importance of a city like Hyderabad, he said it contributes 75 per cent of Telangana’s income, and alleged that fiscal mismanagement and neglect between 2019 and 2024 caused "severe economic setbacks" to the state.

He highlighted that the revenue deficit could worsen to Rs 1.43 lakh crore by 2030–31 from the current Rs 1.28 lakh crore.

Delving into the greenfield capital city of Amaravati, the CM said it needs Rs 77,249 crore for its construction, out of which Rs 31,000 crore has been secured from the World Bank, HUDCO, and Kfw Development Bank.

He said another Rs 47,000 crore is needed for Amaravati.

Naidu on Wednesday made a presentation on the TDP-led NDA government's plans for the greenfield capital city, Amaravati, to the Sixteenth Finance Commission.

The CM played a video to showcase the state's plans for the greenfield capital city.

Naidu’s presentation comes in the backdrop of the Andhra Pradesh government mulling the acquisition of 30,000 acres of additional land through the land pooling mode around Amaravati to create a ‘mega city’ with its own ‘international airport’.

Strategically located near Hyderabad, Bengaluru, and Chennai, Amaravati’s development is part of a larger plan to transform South India into a major growth engine contributing to the Viksit Bharat (Developed India) goal, said Naidu.

The chief minister is keen to create a ‘mega city’, combining adjacent Mangalagiri, Tadepalli, Guntur, and Vijayawada with Amaravati.

Further, Naidu apprised the commission that Andhra Pradesh acts as a gateway to Eastern countries with the longest coastline and also hosts three major industrial corridors.

Likewise, a photo exhibition on the construction of Amaravati, the Polavaram Project, and the Polavaram–Banakacherla interlinking project was arranged for the commission.

In addition, Naidu made presentations to the commission on funds due from the Centre, the Swarna Andhra 2047 vision, state policies, and the conducive environment for investments, among other things.

The commission members arrived on Tuesday night and were received by State Finance Minister P Keshav.

After engagements with the CM today, the commission will meet representatives of political parties, followed by an official dinner at Berm Park in Vijayawada.

The commission will leave for Tirupati on Thursday to meet representatives from local bodies, industry, and trade.

Following an early morning visit to the Lord Venkateswara temple at Tirupati on Friday (April 18), the commission will depart for Delhi, culminating its trip.