Chennai

Include Union Territory in 15th Finance Commission: Ramadass

M. Ramadass.

M. Ramadass.   | Photo Credit: T. Singaravelou

‘Peg expenditure of Centre and U.T. on CSS at 90:10 instead of the current 60:40’

Former MP M. Ramadass has suggested a set of measures to the Centre to lift the Union Territory out of its financial distress, including, as a first step, its inclusion in the 15th Finance Commission.

In a statement, Mr. Ramadass called for waiver of the ₹2,177 crore loan as on the date of opening of public account and for the reimbursement of the government servants’ pension payment, as being done in the case of Delhi.

While calling for pegging the ratio of expenditure of the Centre and the Union Territory on centrally-sponsored schemes (CSS) at 90:10 instead of the present 60:40, Mr. Ramadass also wanted the annual increase in central assistance to be 18% to offset inflationary impact.

He said the Union Budget for 2020-21, with financial outlay of ₹30,42,230 crore, has disappointed the fund-crunched Puducherry, both in terms of paltry increase in the transfer of resources as well as absence of any new scheme of financial relief.

The central assistance to Puducherry, no doubt, is higher than that of last year (₹1,601 crore) by ₹102 crore, but it is meagre when viewed in the backdrop of serious problems faced by the UT, he said.

In real terms, the increase is just only 6.4% for Puducherry but for Delhi, the respective escalation is 37.4%, from ₹812 crore in 2019-20 to ₹1,116 crore in 2020-21.

“When a financially comfortable Delhi receives 37.4% increase, a mere 6.4% increase to a financially afflicted territory is highly iniquitous and unjustifiable,” he said.

‘Reduced real value’

Further, viewed in the context of 8% running inflation, 6.4% increase reduces the real value of this year’s outlay of ₹1,703 crore to ₹ 1,566.8 crore. This outlay may just be sufficient to repay the principal and interest commitment of the UT’s debt, which was ₹1,550 crore last year.

The government has found it difficult to present full-fledged budgets consecutively for eight years, pay salaries to its employees in various departments and public sector organisations for months on end, honour its pension commitment, pay its contractors and suppliers for the services rendered, provide grants in aid and purchase provisions for schools and health institutions.

The three key fiscal parameters — revenue deficit, fiscal deficit and primary deficit — of the government have grown beyond sustainable limits, leading to high ratio of fiscal deficit to State income and a high debt ratio.

“Puducherry is a highly in-debt Territory in the country. The financial crisis has added to the woes of already ailing economy here,” he said.

According to the former MP, the non-inclusion of Puducherry under 15th Finance Commission (FC) has precluded the possibility of obtaining greater finance from the Centre. The estimated share of Puducherry under the 15th FC would be around ₹3,518 crore, which is higher by ₹1,815 crore than the present allocation, he said.

He suggested that the Centre provide financial assistance of ₹3,500 crore including assistance for CSS as compared to ₹1,890 crore provided last year.

He urged the Puducherry government to submit a report to the Union Finance Minister highlighting the above issues.

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Printable version | Apr 5, 2020 7:31:39 PM | https://www.thehindu.com/news/cities/chennai/include-union-territory-in-15th-finance-commission-ramadass/article30846671.ece

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