Finance Minister statement excluding Puducherry in Finance panel disappointing, says former MP

Former Member of Parliament M. Ramadass has termed as “unfortunate and disheartening” the reply of the Union Finance Minister Nirmala Sitharaman on the floor of the Lok Sabha that the Centre had no intention of including Puducherry in the 15th Finance Commission.

In a statement, Mr. Ramadass said: “This stand of the Union Finance Ministry would undoubtedly worsen the already tottering fiscal system of Puducherry compelling it to mount its public borrowing, which has already reached unsustainable level. There is no substantive reason for rejecting the long pending demand of Puducherry to be part of Finance Panel recommendations except that it is a Union Territory.”

According to the former MP, though Puducherry is nominally a Union Territory, functionally it is a State as it has almost all features of a State like Goa. Puducherry is functioning with an elected Legislature since 1963 and performs almost all the functions delineated in the State and Concurrent Lists.

Besides, it has a three tier Panchayat system with 29 functions and a municipal structure with 18 duties governed by the 73rd and 74th Constitutional amendments. Like any other State, Puducherry is also contributing to the central pool of resources and faces the dilemma of elastic functions and inelastic revenue. Puducherry is crediting the Central Sales tax revenue collected to the Consolidated Fund of India, has opened a Public Account, is included in the National GST Council, participates in the Presidential election and its two Members work in the Parliament of India.

Even though some of the members of the XI Finance Commission (FC) pleaded for the inclusion of Puducherry in the FC recommendations, it fell on deaf ears. Adding insult to injury, the Home Ministry has not included Puducherry even under the ambit of the Finance Commission constituted for Union Territories without legislature, he said.

“Thus Puducherry is neither here nor there. The central assistance in lieu of FC transfer to the UT in the form of non-plan gap grant is niggardly, constant and sticky. It is discretionary in character and is not rule based like the FC transfer. Further, it does not increase annually commensurate with the increase in annual inflation and the dynamic people oriented activities. Over the years, this syndrome has pushed Puducherry into a debt trap,” the former MP said.

The solution, he said, was a Constitutional Amendment to Article, 280 (3) of the Indian Constitution by adding the words “and Union Territories with the Legislature” to this Article. He urged the two Members of Parliament of Puducherry to table a calling attention motion in the two Houses of Parliament to bring this Amendment in the monsoon session of the Parliament itself.

The Government of Puducherry should present a cogent and convincing case of Puducherry with a well-prepared document to the Prime Minister, Finance Minister, Home Minister and the Chairman of the Finance panel along with taking an all-party delegation to press the issue, he added.

Further, in the context of a proposed financial outlay of ₹9,050 crore for the Budget of 2021-2022 by the Chief Minister, there is an imperative need to urge upon the Central Government to increase the Central Assistance at least to the tune of ₹4,500 crore in view of the COVID-19 situation which has unprecedentedly reduced the internal resource mobilisation and escalated manifold the expenditure, Mr. Ramadass said.

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Printable version | Sep 26, 2021 7:12:35 AM | https://www.thehindu.com/news/cities/puducherry/finance-minister-statement-excluding-puducherry-in-finance-panel-disappointing-says-former-mp/article35465769.ece

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