Gross injustice to emerging states like Telangana

Finance Minister Nirmala Sitharaman while presenting Union Budget 2024 emphasised that it reflects Centre’s sustained efforts for ‘Viksit Bharat’ (Developed India). The focus of the Budget as outlined by her is on four major groups, the Poor (Garib), Women (Mahila), Youth (Yuva), and Farmers (Anna data). It basically underscores employment, skilling, support for MSMEs, and middle class, with significant allocations. In addition, the Finance Minister prioritised nine areas in the Budget, namely, Agriculture, Employment, Human Resource Development, Manufacturing, Services, Urban Development, Energy Security, Infrastructure, Innovation, Research and Development, and Next-Generation Reforms.

Substantial, special fund allocations for Bihar and Andhra Pradesh States are a noticeable development in the Union Budget. Both Congress and BRS leaders including CM Revanth Reddy and BRS Working President K T Rama Rao strongly criticised and voiced disappointments on a few states receiving substantial benefits, and Telangana being entirely neglected and overlooked, contrary to the AP Reorganization Act. Revanth Reddy alleged in the Assembly that southern states are discriminated against in getting their due. Significantly, the Telangana State Assembly passed a unanimous resolution against the injustice and discrimination done to the State in the Union Budget, demanding suitable amendments. The CM announced abstaining from NITI Aayog meeting.

Allocation to Bihar and AP could be to address specific developmental needs and commitments, potentially leading to balanced regional development, besides political considerations. For instance, in the case of Bihar, the reason could be in consideration of it being one of the most underdeveloped states. With respect to AP, the expedient excuse to allot funds may be that the state was promised ‘Special Status, Special Assistance, and Special Funds’ post-bifurcation. Another possible reason may be that the ‘Political Leadership’ shrewdly lobbied for additional funds, if not Special Status, leveraging its political alliances.

‘Neglect of Telangana’ may be due to ‘Perceived Self-Sufficiency’ and considerable economic growth and industrial development of the state, since its formation, thanks to KCR. Endorsing this, the Socio-Economic Outlook released by the State government in the Assembly has disclosed that Telangana’s GSDP in 2023-24 is Rs 14,63,963 crore, which is 11.9% higher than the previous year, as against the growth rate of 9.1% at the national level. Similarly, the per capita income is Rs 3,47,229 as against country's Rs 1,83,236, higher by Rs 1,64,063.

Telangana’s current and previous political dynamics including its relationship with the Central government may have been prejudiced, leading to lesser fund allocation. Satisfying the demands of ‘Friendly States’ may contribute to political stability and support to the Modi government, but neglect of emerging states like Telangana despite their growth, which still require continued support for sustained development is against the natural justice. “Perceived political motivations behind fund allocations lead to accusations of bias and unfair treatment.

This way of higher allocations to a few states, and neglect of other states, reflects a complex interplay of developmental needs, political considerations, and unethical strategic priorities. It may be crucial to ensure a balanced approach, but that does not mean to overlook emerging states like Telangana. Achieving equitable and inclusive growth requires careful consideration of both immediate developmental needs and long-term regional development goals. While Uttar Pradesh, Maharashtra, Karnataka, Gujarat etc., are favored in allocations, states ‘Worse Off or Neglected’ are West Bengal, Kerala, Jharkhand, not to speak of Telangana.

INDIA bloc MPs led by Leader of Opposition Rahul Gandhi protested on Parliament premises over the discrimination against opposition-ruled states in the ‘Kursi Bachao Union Budget,’ describing it as an assault on India's federal structure. Congress MP from Telangana, Mallu Ravi, and seven other MPs addressed a letter to PM Modi, objecting to the injustice done to state in the Union Budget

Allocating significant funds to infrastructure, health and education sectors has clear benefits in terms of economic growth, improved public services, and human capital development. For instance, significant allocations to roads, highways, railways, and urban development are aimed at economic stimulus and job creation. The long-term benefits include enhanced connectivity, benefiting businesses and consumers, and to attract domestic and foreign investments, boosting economic activity. Increased allocations to health sector will lead to improved public health outcomes, ensure better pandemic preparedness for future health crises, and human capital development, though effective utilisation of funds remains a challenge.

An objective and impartial analysis of the Union Budget including its salient features, as expressed by a cross-section of economic, social, and political experts, rationally, without going into the figures, is interesting. It is the shared view of many, though with a quantum of difference, that focus on “Economic Growth and Recovery; Significant allocation for Infrastructure Development; Increased allocation for the Health Sector; Investments in Education and Skill Development Initiatives; Enhanced support for the Agricultural Sector to boost Rural Incomes; Moderate Reforms in Taxation and Efforts to maintain Fiscal Discipline; Promotion of Digital Economy Initiatives; Increased allocation for Social Welfare Schemes; Initiatives aimed at promoting Sustainable Development’ etc. are unique in the Budget.

A SWOT analysis that provides an overview of the Budget's key aspects, aimed at offering a balanced perspective beyond political interests, reveals that the strengths of the Budget include focus on sectors critical for “Post-Pandemic Recovery, Fostering Balanced and Sustainable Growth Trajectory; Long-Term Benefits by Significant Capital Allocation to Infrastructure, including job creation and improved logistics; Addressing Foundational Aspects of Human Development through Enhanced spending on Health and Education which is crucial for long-term economic prosperity; and Efforts to maintain Fiscal Discipline and manage the Fiscal Deficit.”

The weaknesses are basically implementation challenges, tax compliance, sectoral imbalances etc. Execution of ambitious projects, especially in infrastructure and social welfare, often faces bureaucratic delays and inefficiencies. While tax reforms are positive, the actual increase in compliance and revenue generation may take time to materialize. Overemphasis on certain sectors may lead to neglect of others, creating imbalances in economic development.

The opportunities are mainly private sector participation, global investments, sustainable development etc. The threats include global economic uncertainty, inflationary pressures, political and social instability etc. Global economic fluctuations and geopolitical tensions could impact growth projections and external trade. Increased spending, especially in infrastructure and social welfare, could lead to inflationary pressures, if not managed properly. Social unrest or political instability could undermine economic progress and deter investment.

The Union Budget allocations reflect a combination of economic priorities, political considerations, and the perceived effectiveness of fund utilisation. States like Uttar Pradesh, Maharashtra, Karnataka, Bihar, and Gujarat have received favorable allocations due to their economic significance, development needs, and political influence. On the other hand, states like West Bengal, Telangana, Kerala, and Jharkhand have been less favored, possibly due to political dynamics, previous fund utilisation concerns, and varying economic priorities. Balancing regional development needs with national growth objectives remains a critical challenge for the central government.

The Union Budget’s focus on ‘Infrastructure, Health, Education, and Targeted Sectoral Support’ is poised to have a positive impact on the Indian economy by boosting GSDP and per capita income. While large and medium businesses are likely to benefit from increased investments and improved business environments, small businesses and low-income groups may gain from targeted support and social welfare schemes. However, effective implementation and addressing challenges such as inflationary pressures and regulatory compliance are crucial for realising these benefits.

As a nation, it is time to introspect where India stands in comparison to contemporary nations. Piecemeal and half-hearted measures being taken sporadically will not suffice. There needs to be a paradigm shift in institutional structure. India precisely needs economic reforms to improve ease of doing business, attract foreign investments, and resolve issues that hinder growth. There is a need for structural reforms for higher FDI inflows. Bringing out an attractive and practical tax amnesty scheme for bringing black money to the country and to invest it in infrastructure is indispensable. Cooperative federalism should be adhered to in letter and spirit in budget allocations, not political considerations.