At a time when the central government itself is forced to do a rethink on viability of Union Territories, the demand for making Hyderabad an Union Territory will throw up more problems that would be difficult to solve.
This is the dominant view of senior government officials here on the issue of granting UT status to Hyderabad, an option that is said to be under consideration by the UPA government to placate the Seemandhra lobby. The senior bureaucrats feel that making the city a Union Territory will not bring in any advantage to its residents in terms of additional development activities as the administration would have inadequate revenues. In fact, the move would have an adverse impact on the development of the city in terms of infrastructure and amenities.
“Already, there is a thinking in the central government circles that the Union Territory model of administration should be done away with because it has become a burden,” a senior official observed. He said that the Centre was finding the expenditure on UTs burdensome and would not be able to monitor their day-to-day activities, leaving the residents in a lurch. Adding more UTs would not serve any great purpose.
Painting a gloomy picture, another officer said that the adverse fallout of making Hyderabad a Union Territory would be that both the new states would stand to lose as the revenues generated here would go to the Centre.
Hyderabad will have to forego lot of revenue in the form of reduction in VAT collections, since both states would insist on the companies to pay the tax in their states. The state capital contributed Rs 11,000 crore in the form of VAT in the last financial to the state’s treasury.
A major chunk of the present revenues from Hyderabad would go to the new states and the city would end up with far reduced VAT collections. According to the official records, Hyderabad is generating Rs 18,000 crore in the form of VAT, liquor sales, land registrations and through various other revenue sources.
It may fall to Rs 10,000 crore, if it is made a Union Territory. As far as the revenues to the Central departments are concerned, the city is contributing Rs 6,000 cores in the form of income tax, professional tax, customs and central excise duties. So, the total income accruing to Hyderabad in the form of state and central taxes is Rs 16,000 crore per year.
After becoming a UT, the administration here has to bear various expenses like salaries to police, teachers, hospitals staff and other employees of other departments. The revenue from Hyderabad may not be enough to meet this expenditure and it has to depend on the Centre for financial support.
