TN for hike in central funds for Plan spending

The Tamil Nadu government has asked the Planning Commission to recommend an increase in the Normal Central Assistance (NCA) level to at least 20 per cent of the Annual Plan outlay, with a grant component of 50 per cent by revision from the present level of 30 per cent. The grant portion was tentatively set at last year's level of Rs 547.52 crore, pending these discussions.

During a meeting with the Planning Commission deputy chairman Montek Singh Ahluwalia in New Delhi on Wednesday, for finalisation of Annual Plan for Tamil Nadu for 2011-12, chief minister J Jayalalithaa, said that an important segment of the resources for the plan is the NCA to be finalised today and of which, 30 per cent is grant component.

“The share of NCA is sharply down to 9.1 per cent of last year's outlay and appears set to slide further,” she said. NCA has remained static and has declined recently. Nearly all major sources of revenue including most service taxes are now held by the Central government, making borrowing necessary to meet the needs of local governance at the state-level.

This fiscal strain compromises the ability of the state governments to invest in developmental needs. “We request the Planning Commission to recommend the increase of the NCA levels to at least 20 per cent of the Annual Plan outlay, with a grant component of 50 per cent by revision from the present level of 30 per cent,” Jayalalithaa said.

At the present Annual Plan outlay of Rs 23,000 crore, the increased NCA would be Rs 4,600 crore.

“The projects proposed by the state government will require substantial resource assistance from the Central government. This is in addition to our need of Rs 1 lakh crore as special assistance for debt relief,” the chief minister said.

She noted that the state has accessed external funding for 16 projects and this year, it was proposed an outlay of Rs 1,933.39 crore. The projects taken up are largely for infrastructure.

“The state’s own internal resources have been stretched to the utmost and we have been hard pressed to identify resources of Rs 23,000 crore for this Annual Plan,” she said.

On the basis of trend estimates of growth achieved over the last four years, the state is expected to clock an overall GSDP growth of 8 to 8.5 per cent over the Eleventh Plan period as against the target of 9 per cent.

The state’s outstanding debt has climbed to Rs 1,01,541 crore in addition to that of the Tamil Nadu Generation and Distribution Company at Rs 40,000 crores. The state would not be in a position to achieve the stipulations of zero revenue deficit and fiscal deficit below 3 per cent, she said.