Jayalalithaa says a provision in draft CSIA 'completely unacceptable'

At the Inter-State Council meeting, through a written speech the Tamil Nadu CM welcomed various recommendations by Commission on Centre-State Relations

Tamil Nadu Chief Minister J Jayalalithaa said that the provision in the draft Centre State Investment Agreement (CSIA), which is proposed for effective bilateral investment protection, permitting the Centre to unilaterally deduct any dues that the Central Government transfers to States, is "completely unacceptable". While the Chief Minister did not attend the Inter-State Council meeting held in New Delhi, State Minister for Finance O Panneerselvam represented the State.

In a written speech circulated among the Chief Ministers of States, Union Territories and the Union Ministers participated in the 11th Inter-State Council Meeting, held for the first time after 2006, she said that the present central government is guilty of indiscriminately resorting to levying of cesses and surcharges.

She welcomed various recommendations of the Commission on Centre-State Relations under the chairmanship of Justice Madan Mohan Punchhi, former Chief Justice of India, to look into the issues of Centre-State relations in the evolving scenario.

While commenting on the Commission's recommendations on protecting the States' interests when the Centre enters into foreign treaties or agreements, she said the move for CISA is welcome since it involves the States in an area which had been exclusive of the Central government.

However, she added, "I am concerned that through the CSIA, the Government of India is trying to pass on some of the financial burden it may suffer from adverse arbitration awards under existing BIPAs or BITs."

"States were not party to such agreements and are not even aware of the contents of such agreements. To make states liable now under the CSIA mechanism for bilateral agreements entered into earlier is unfair," she said.

Bulk of the Central Government transfers are based on the recommendations of the Finance Commission and are the State's legitimate revenue and cannot be stopped or redirected to adjust such dues. The remaining transfers are made as the Central share towards the implementation of specific centrally sponsored schemes.

"Settling dues out of that amount would adversely affect the implementation of the schemes and should not be resorted to. The proposed summary mechanism for settlement of claims from the States should be deleted from the draft CSIA," she added.

Many of the recommendations of the Punchhi Commission on Centre-State Fiscal relations have been overtaken by subsequent developments including the recommendations of the 14th Finance Commission.