Andhra Pradesh Finance Minister Yanamala Ramakrishnudu has stressed the need for special dispensation to the state of AP to address several financial problems, being faced after bifurcation of the State.
Speaking in the meeting held by the Empowered Committee of State Finance Ministers with 14th Finance Commission at Vigyan Bhavan here on Wednesday, Yanamala urged the 14th Finance Commission to recommend to the Centre to provide sufficient financial resources to relieve the fiscal stress of the Andhra Pradesh.
Welcoming the tax reforms, Yanamala demanded that loss of revenue due to implementation of GST (Goods & Service Tax) should be fully compensated by the Union Government. The estimated loss of revenue is roughly Rs.4,000 crores. He also demanded that the compensation mechanism should be such that there should be an independent body to release the compensation and it should not leave any scope for whims and fancies of the union. If possible, it should be made part of the constitutional provisions.
"The agricultural products should not be exempted under GST, as the loss of revenue would be considerable. In case they are exempted, permanent production linked compensation to the state should be provided and the successive Finance Commissions should be asked to make recommendations thereof. Unless Revenue Neutral Rate is decided, the quantum of loss of revenue cannot be determined with a degree of definiteness. However, the rough estimate of loss, assuming that the present rates of tax continues, would be around Rs.4,000 crores," he said.
The Minister further demanded the Petroleum products should be kept outside the GST, as the states should continue to levy taxes on them at the present rates.
"As a measure of building confidence among the states in promise of the Union Government to compensate GST loss, the Centre should release the amount of loss of revenue due to phasing out of CST. The compensation should be released in full for the entire period and such loss to the state of Andhra Pradesh is around Rs.7,200 crores," he said.