Don't borrow for welfare schemes: FM Nirmala Sitharaman to TN Govt

CHENNAI: Union Finance Minister Nirmala Sitharaman on Thursday asserted that the Centre has released all funds due to Tamil Nadu and stressed that State borrowings should be channelled towards capital creation and economic growth rather than being spent predominantly on welfare programmes.

Talking to reporters in Kancheepuram, Nirmala Sitharaman welcomed the TVK government's stated commitment to work in coordination with the Union government and said such cooperation would benefit the State's development agenda.

"All funds due to Tamil Nadu have been released. Any assistance and statutory allocations to which the State is entitled will continue to be provided without fail. The Prime Minister has never differentiated between states or asked that any region be given less," she said.

Highlighting fiscal management, the Union Minister said that loans raised by governments must generate productive assets that strengthen the economy.

"If a State borrows to build schools, hospitals, industries and other public assets, it creates a positive economic impact. Borrowings should translate into investment and capital formation. They should not be used primarily for welfare expenditure," she said.

Nirmala noted that states are permitted to borrow up to three per cent of their Gross State Domestic Product (GSDP), adding that prudent utilisation of debt was critical to sustaining long-term growth.

Drawing a distinction between consumption spending and capital investment, she said infrastructure and asset creation generate economic returns and contribute to stronger State finances over time.

Responding to a question on Chief Minister C Joseph Vijay's criticism of former Chief Minister MK Stalin during the Assembly proceedings, the BJP leader defended political exchanges within the legislature.

"Where else can political criticism take place if not in the Assembly? The Opposition can respond, and the ruling party can present its position. There is nothing wrong with that," she said.

On demands for a medical college in Kancheepuram, Nirmala said the proposal must be formally pursued by the State government, adding that the Centre had already indicated its willingness to support such an initiative along with a hospital.