TN CM suggests 50 per cent share of central taxes for projects

Expressing concern over the decrease in devolution of central funds and increasing financial burden on Tamil Nadu to bear additional expenses for Centrally-sponsored projects, chief minister M.K. Stalin on Monday, 18 November, sought the union government to provide a 50 per cent share of central taxes to Tamil Nadu.

Additional funds should be allocated to performing states like Tamil Nadu, considering the overall development of the country.

"A new approach should be adopted so that developing states like Tamil Nadu are not affected by decrease in Central allocation. Steps should be taken to strengthen the federal structure of India," Stalin said during his meeting with the Chairman and members of the 16th Finance Commission at the secretariat in Chennai.

He said the commission's recommendation should fulfill the needs and meet the aspirations of Tamil Nadu and ensure its greater contribution towards making India an economic superpower.

Only the states formulate and execute programmes for the development of sectors like health, education, social welfare and agriculture. But, states have less powers to enhance revenue to implement the schemes. Though the 15th Finance Commission's recommendation of providing 41 per cent tax revenue share was appreciated, since the last four years, contrary to the recommendation, the Centre's total tax devolution only accounted to 33.16 per cent, he claimed.

An increase in the state's share in the projects jointly being implemented with Centre, and decrease in fund allocation has affected the fiscal conditions of Tamil Nadu, the chief minister said.

"This has imposed a burden on states. Hence, it would be appropriate to increase the Centre’s share to 50 per cent, acceptable to all states," he said.

Such a move would place Tamil Nadu in a better position to execute developmental projects as per needs and also enable functional autonomy with regard to financial management, Stalin said, and stressed the need for equitable allocation to states.

Decrease in central allocation will not only make sustenance of development difficult but also affect the economic growth of the entire country, Stalin emphasised.

He urged the commission to adopt a strategy that could fund more to the states to sustain the latter’s development trajectory.

He argued that Tamil Nadu had to go the extra mile in making huge fiscal allocation in rebuilding infrastructure that was damaged due to natural calamities and in meeting several challenges like providing funds for implementing social security schemes.

Chairman of Sixteenth Finance Commission Arvind Panagariya, who led a 12 member team that includes Ajay Narayan Jha, Annie George Mathew, and Manoj Panda, arrived here on Sunday. The Commission is scheduled to hold separate consultations with representatives of political parties, and trade associations and is likely to visit the Nemli desalination plant near Chennai.