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The 14th Finance Commission is expected to face a tough time in determining the financial allocations to Telangana and residual Andhra in the midst of several uncertainties.
"This is the first time new states are formed when the Finance Commission is in the process of formulating its recommendations. They have to work out the allocations without a separate data available for the 13th Finance Commission period pertaining to these just born states," a senior finance department official said.
The secretary and members of the commission today held a preparatory meeting with the officials of Telangana ahead of its chairman YV Reddy's visit to the state in August. They are holding a similar meeting with the officials of the residual Andhra Pradesh on Tuesday.
The commission is scheduled to give its recommendations in October and these would come into effect for the next five-year period from April, 2014. It has to decide the allocations for Telangana and Andhra even though it is unlikely to get the real picture of the finances and the priorities of the two states in this short span, officials feel.
As the Planning Commission questioned the eligibility of a special category status promised to Andhra, the commission would not be able to know what the residual state is going to get from the Centre before it finalises the allocations, they say.
On the central devolutions, the governments of the undivided state had asked for 32 per cent share for the states in the central resources as compared with the present 30 per cent while others demanded it to be 50 per cent. Telangana is the 27th state in the list of the Finance Commission's visits. While the next is going to be Andhra, the only state left to be covered by the ongoing exercise is Arunachal Pradesh, according to the officials.
