Finance Commission throws T.N. a ₹4,025-crore lifeline

Chief Minister Edappadi K. Palaniswami. File

Chief Minister Edappadi K. Palaniswami. File   | Photo Credit: E. Lakshmi Narayanan

Post-devolution revenue deficit grant part of panel’s recommendations

The State government’s sustained campaign for higher-than-normal allocation of funds from the Centre appears to have met with moderate success, as the 15th Finance Commission has recommended a post-devolution revenue deficit grant of ₹4,025 crore for Tamil Nadu.

This amount has been worked out by the panel for the the year 2020-21 after taking the Central devolution of funds into account.

Another positive feature of the Finance Commission’s recommendations is that the State’s inter-se share in the divisible pool of Central taxes has gone up from 4.023% (allotted by the 14th Finance Commission) to 4.189%. Tamil Nadu is the only southern State that has not suffered adversely in devolution. However, this figure is still less than what the State got from the 13th Finance Commission - 4.969%. Though the Centre has accepted the 15th Finance Commission’s recommendations “in substantial measure”, it is not clear whether all the States that have been recommended for the grant will receive their respective allotment during 2020-21, as the Budget Estimates of the Union government have provided only ₹30,000 crore against the required amount of ₹74,340 crore, as worked out by the Commission. This is why Deputy Chief Minister O. Panneerselvam, who is also Finance Minister, in a statement issued on Sunday, said the State might get ₹1,600 crore (initially).

At the same time, the State government is not oblivious to the weak spots that have been pointed out by the Finance Commission. For instance, in respect of the per capita average Gross State Domestic Product (GSDP), the State is ahead of Andhra Pradesh in ranking. The average figures have been calculated after considering the performance of States during 2015-16 to 2017-18. But, eventually, while arriving at inter-se shares of the States for the parameter of income distance, Tamil Nadu’s figure - 2.07% - is lower than that of the neighbouring State (3.203%). This only means that during the given years, Andhra Pradesh’s growth rate of GSDP was better than Tamil Nadu’s.

The findings of the Finance Commission may form part of the deliberations of the State Cabinet during the scheduled meeting at the Secretariat on Tuesday. The meeting is expected to provide its formal approval for the preparation of the State Budget, which may be presented in a month.

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The article was corrected for a factual error

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Printable version | Apr 2, 2020 9:13:59 PM |

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