Chief minister hits out at Centre

“The 14th Financial Commission recommendations have shattered all our hopes of getting more resources from the Centre.”

DMDK members sitting with placards outside the Assembly on Wednesday. Photos: V. Ganesan.

In strong remarks, Chief Minister O. Panneerselvam on Wednesday took on the Centre over the 14th Financial Commission recommendations, stating that it had “shattered all our hopes of getting more resources from the Central government.”

Tamil Nadu has been unfairly treated by the 14th Finance Commission with a drastic cut in the horizontal share from 4.969 per cent to 4.023 per cent of the general shareable tax pool and from 5.047 per cent to 4.104 per cent of the service tax pool, he said. 

The criteria adopted by the Commission are neither fair nor progressive as efficiency and fiscal discipline have been totally ignored to the detriment of well administered States such as Tamil Nadu which are known for their prudent fiscal management. Further, the increased weight accorded for area, per capita income distance and the inclusion of an irrelevant criterion such as forest area have all gone against the interests of Tamil Nadu. A State like Tamil Nadu, which had invested heavily with resources mobilised by taxing its people and also with huge borrowed funds to accelerate economic growth, has been badly let down by the Finance Commission, he added.

BJP upset

Those in the BJP view this as the strongest comment coming from the AIADMK in months. Mr. Panneerselvam choosing a big occasion - the Budget - to express his displeasure has also not missed the eye of BJP leaders.

In fact, the Congress was quick to react to the development, with TNCC president E.V.K.S. Elangovan wondering why after hailing the increase in tax devolution to States, the ruling party was now expressing concern about not getting enough from the Centre.

The BJP leaders disagreed with the Chief Minister.

“The Centre has been committed to increase autonomy of States. This has been expressly stated by the Prime Minister. In creating Niti Aayog, funding for even specific projects in the States has become possible,” State BJP vice-president Vanathi Srinivasan said.

While welcoming the increase in vertical tax devolutions to the States from 32 per cent to 42 per cent, the Chief Minister pointed out in the Budget there would nevertheless be no increase in overall gross transfers.

This would affect the State finances, he said.