Stating that the budget has consciously eschewed a “big bang” approach, AIADMK general secretary Jayalalithaa has said it has fallen short of expectations as the hopes and expectations of Tamil Nadu have not been fully met.
In a statement, Ms. Jayalalithaa said the Finance Minister has claimed credit for a turnaround of the economy and restoration of macro-economic stability. “While there have been some policy actions, we are all aware that this process has been aided by favourable global factors especially the fall of petroleum prices.”
She said while there has been considerable talk of “co-operative federalism,” the actual measures taken in the budget have belied this rhetoric. While the 14 Finance Commission has increased the shareable element out of the divisible pool from 32 to 42 per cent, the Centre has found numerous ways to claw back the increased devolution, she charged.
The Central Assistance to State and Union Territories plan is reduced from Rs.3.38 lakh crores in 2014-15, to Rs.2.04 lakh crores for 2015-16, which is an unprecedented cut of 39.64 per cent. “This is a huge reduction compared to the previous two financial years,” she pointed out.
“Unfortunately, many taxation actions of the Centre have meant that the drop in petroleum prices has not been fully passed on to consumers,” she criticised. The conversion of Rs.4 per litre out of the specific duty on petrol and diesel into road cess implied that the State governments were being deprived of shareable revenue, she noted.
No incentives to encourage the States to join the GST regime, such as the promised CST compensation have been announced. “The lack of concrete measures for building confidence among the States to implement GST is disappointing,” she said.
In terms of taxation changes, she noted that indirect taxes have been raised, in particular Service Tax, while in Direct Taxes, significant benefits have been afforded to corporate entities. “This appears regressive,” she said.
On the proposed draft legislation for speedier clearances for businesses, she said the State governments, who are key stakeholders, should be consulted and there should be no abrogation of the powers of the States in this regard.
The proposed increase of Rs.100 to Rs.200 per tonne of coal towards Clean Energy Cess (CEC) for the Clean Energy Fund would adversely affect State power utilities and would inevitably lead to increase in the cost of power, she contended.
“While the Corporate Tax rate is proposed to be reduced over four years to 25 per cent, there is no indication of any increase in the threshold for personal income tax, which is disappointing,” Ms. Jayalalithaa said, speaking for the middle class.
She expressed disappointment that no site from Tamil Nadu has been selected for assistance under World Heritage Sites and lamented that only Gujarat and Maharashtra have been allocated substantial sums for industrial corridors.
