Classified as a relatively-developed State because of its good performance in revenue generation

Even as the Tamil Nadu government is yet to get a favourable response from the Centre to many of its representations for enhanced allocation of funds, the Raghuram Rajan committee on devolution of funds to States seems to have dealt a blow to Tamil Nadu in terms of allocation of funds.

A cursory perusal of the report reveals that the State stands to lose 50 per cent of what it has been getting which, it feels, is much less than what it deserves.

Using the figures of releases of grants and shares in Central taxes/duties for 2011-2012, the report said that the share of Tamil Nadu in allocation was 5.01 per cent. The report recommended that this may be reduced to 2.51 per cent.

What this means in money terms will be that the State, which is expecting to receive about Rs. 26,160 crore during the current year, would be given around Rs. 13,080 crore if the recommendations were to be implemented immediately.

Given the ability of Tamil Nadu to generate higher revenue on its own, its reliance on the Centre for funds is less.

The present year’s projected Central transfer works out to be around 20 per cent of the State’s total revenue receipts.

Yet, the argument of policy-makers is that the State should not be punished because of high performance.

But, it is this factor that has made the committee classify Tamil Nadu as a relatively-developed State.

In fact, the State is placed below Goa and Kerala.

While Tamil Nadu’s score in terms of underdevelopment/need index is 0.341, those of Kerala and Goa are 0.095 and 0.045 respectively. In terms of physical size, Maharashtra is the only other big State that has been included in the category of “relatively developed” States.

The score assigned to this western State is 0.352.

As higher Central assistance is always welcome to the State, particularly in times of economic downturn, the policy-makers feel that any new norm, such as the one suggested in the committee, should be debated intensely and critically before the Centre contemplates taking any action.

Besides, there has to be wider consultation with all stakeholders.