Chief Minister seeks Rs 71 Thousand crore grant, wants 14th Finance Commission loss undone

“To compensate for the revenue loss faced by Tamil Nadu due to unfair recommendations of the 14th Finance Commission, the state had sought the fund,” said Palaniswami in the memorandum. 

He also said that Tamil Nadu is the only state which has seen its share in devolution decline in every single Finance Commission since the 9th Finance Commission. “Criteria have come and gone, but regardless of the criteria adopted by successive Commissions, Tamil Nadu always ended up with a reduced share of devolution which has led to a crisis of confidence in the polity and among the people, in the core institutions of fiscal federalism,” said Palaniswami. All 78 million people of Tamil Nadu are looking forward for the Commission to undo the unfair and unscientific treatment the state received from the 14th Finance Commission and other earlier Finance Commissions, said Palaniswami. 

He also said that in the GST regime, the resources are less predictable due to instability in the taxation and collection system. 

Being closer to the people and having a greater responsibility to protect them from economic fluctuation, the state government is forced to balance between fiscal prudence and welfare measures.

“It is a tragedy that successive Finance Commissions assessed Tamil Nadu as having a post devolution surplus based on undue assumptions of a higher rate of revenue growth, whereas the actual scenario turned out to be different,” said Palaniswami. 

Despite the deficit, the state has not received any compensation or revenue deficit grant during the entire period of the 14th Finance Commission. 

It is, therefore, clear that the 14th Finance Commission has erred seriously in making its projections relating to Tamil Nadu which had a debilitating effect on the state’s fiscal stature, said Palaniswami. 

“Tamil Nadu has not benefited from the increase in the share of central taxes from 32 per cent to 42 per cent by the 14th Finance Commission because of the drastic cut in the horizontal share among states to the tune of Rs 6,000 crore per annum in the 14th Finance Commission alone,” added Palaniswami. 

Finance Commission will provide a serious note to the Centre on better allocation of resources to the state government, said NK Singh, Chairman, 15th Finance Commission, in Chennai, on Thursday. 

“Better performing states will be rewarded and not penalised. The major concern of the state is to increase the horizontal allocation of resources. The issue will be taken seriously and will be made sure that Tamil Nadu does not suffer with the shortage of allocation of resources,” said Singh, while responding to a question on state’s concern on successive Finance Commission allocating lower resources for the state. 

When asked about the apprehension of the southern states whether Finance Commission is allocating more funds to northern states vis-à-vis to southern states, Singh replied that north-south divide is misleading in this case as even West Bengal, Punjab and Odisha have raised similar complaints. 

When asked about the Commission’s stand on welfare measures implemented by the state government, Singh replied that not all populist policies are popular but some in the past have proved to be genuine. “Take for instance the noon meal scheme of the state government which is now a universal scheme. It is not just implemented in India but throughout the world and is accepted as a welfare scheme,” said Singh. “However, all the populist policies cannot be blindly accepted and they should be reviewed before submitting the report,” he added.

When asked when the report would be ready, Singh replied that their report would be submitted towards the end of October 2019, after visiting all the states and the Union government will act on the basis on their recommendations. 

Earlier, Singh said that Tamil Nadu had performed exceptionally well in bringing down the poverty levels in the state and increasing per capita income. 

The state has also performed well in the fiscal management front and in maintaining debt ratio well below the national level. 

However, there are few challenges lying before the state such as improving few parameters in Human Development Index (HDI) and to tackle the problem of migrant labourers. 

“Tamil Nadu has close to 50 percentage of urban population and though urbanization fuels the growth engine it is also accompanied by various challenges,” said Singh. 

Rise in the number of aging people in the state is yet another problem in the state as the state government is forced to spend more on their medical attention which again is a stress on the resources of the state government, said Singh.