Tamil Nadu seeks sizeable allocation from NITI Aayog

The Union Budget 2015-16 has earmarked Rs 20,000 crore spending for schemes approved by the NITI Aayog

Tamil Nadu chief minister O Panneerselvam has urged for a sizeable allocation from the Rs 20,000-crore earmarked for the schemes approved by the NITI Aayog in the Union Budget .  

In a letter to the Prime Minister, Panneerselvam said, “We find the Union Budget has a provision of Rs 20,000 crore to be allocated for schemes approved by the NITI Aayog. I strongly urge you to ensure that the unfair treatment meted out to Tamil Nadu by the 14th Finance Commission is at least in part redressed by a sizeable allocation to Tamil Nadu out of the funds set apart for schemes to be approved by the NITI Aayog.”

“We have a ready-shelf of large schemes that could be funded out of this allocation, including the package of measures required to encourage deep sea fishing, including replacing trawlers with tuna long-liners; desalination projects along the coast, including near Chennai, and the viability gap funding for the Chennai mono rail project. I request you to issue necessary directions to the NITI Aayog to consider funding such specific projects from Tamil Nadu from their special allocation,” he added.

Tamil Nadu has been singled out for the sharpest reduction in its share in the divisible pool of taxes. As against a 4.969 per cent share in the divisible pool of central taxes recommended by 13th Finance Commission, the state’s share had come down to 4.023 per cent in the latest 14th Finance Commission’s recommendations, he said, adding the state had lost out on all counts and was doubly penalised for its prudent fiscal management.

The observations of the Finance Commission regarding the use of 1971 population as the basis for determining allocations pose long-term implications for states like Tamil Nadu, which had moved to a small family norm as part of the national goal. The non-inclusion of fiscal discipline criterion had hurt the state, Panneerselvam said.

According to him, the drop in Tamil Nadu’s share in the divisible pool was barely compensated by the increase in the overall devolution pool by 10 per cent. Tamil Nadu’s overall share in central taxes has increased just 0.1 per cent, from 1.59 per cent to 1.69 per cent, he said.

Tamil Nadu had received Rs 4,669 crore during the 13th Finance Commission period. However, the 14th Finance Commission had recommended no such special purpose grants and state-specific grants to the state.

“The loss to Tamil Nadu due to the reduction in its share in the divisible pool and the discontinuance of special purpose and state-specific grants is estimated at Rs 6,000 crore per annum,” said Panneerselvam.

Besides, various decisions in the Union Budget 2015-16, also claw back the increased devolution recommended by the Finance Commission. This includes the decision to convert Rs 4 per litre out of the specific duty of petrol and diesel into road cess, and making it an exclusive revenue of the Union government.

The two per cent surcharge is not shareable with the states and the Budget had also de-linked some 12 schemes. In addition, the state’s share for 13 key programmes is going to be enhanced, which means the state government’s expenditure priorities would be determined by the Centre, he said.