State’s U-turn on central schemes

Central government schemes such as the UDAY (Ujwal Discom Assurance Yojana), NFSA (National Food Security Act) and GST (Goods and Services Tax), which were opposed by Jayalalithaa, have been accepted or will soon be accepted by a cash strapped state government, according to top government officials.  

“Of the three, NFSA was accepted when the central government jacked up the price of rice it provided for Tamil Nadu’s universal Public Distribution System (PDS), from Rs 8.30 per kilo to Rs 22.54, forcing the state government to spend an additional Rs 2,000 crore,” a senior official said. Following this, the state’s annual food subsidy will now increase from Rs 7, 300 crore to Rs 7, 900 crore. 

The government’s PDS has a total network of more than 4 lakh Fair Price Shops (FPS), —TN accounts for 34, 774 FPS - which distribute essential commodities worth Rs.15, 000 crore to more than 16 crore families. It is the largest distribution network in the world. The state’s PDS ensures a total of 20 kilo rice per family, which would continue under the revamped scheme. The central scheme provides 4 kilos per adult and 2 kilos per child, but Tamil Nadu is committed to 5 kilos per person. Also, the state ensures minimum entitlement of 12 kilos a month for one beneficiary, while under NFSA it is only 5 kilos. It is 25 kilos for a five member family in TN. 

“Though Jayalalithaa refused to join NFSA, Chief Minister O Pannerselvam  had no alternative as he lacked his predecessor’s clout to take on the central government. While this would streamline PDS distribution, it is to be seen whether joining NFSA will prove beneficial to the state in the long run” officials added. It is the same case with UDAY, which Tamil Nadu is expected to join in a month, though Jayalalithaa felt the scheme favoured private players and banks. A TANGEDCO official said, “Tamil Nadu will opt for UDAY within a month as the central power ministry is now providing clarifications sought by the state government.” 

As Chief Minister, Jayalalithaa had sought 5 modifications to UDAY, including relaxing the Fiscal Responsibility and Budget Management (FRBM) target norms for the 15-year bond period, provision of 25 per cent central government grant in financial restructuring plans (FRP), clearance to float 15-year bonds with a five-year moratorium and provision of 50 per cent cash-loss financing by commercial banks for the next five years.  

The scheme also envisaged hiking power tariff every three months which was considered anti-people. Officials have now clarified that the central government has accepted most of Jayalalithaa’s demands, including not hiking power tariff every quarter. In the absence of financial aid from the central government, the state managed to reduce losses from Rs 12, 700 crore in 2014-15 to Rs 8, 500 crore now.

“Efforts are underway to reduce this to 15 per cent by 2018-19 which could be achieved if the present actions continue. But we need money from either the state or the central government to survive. As we are a service organisation and not commercial, we cannot hike rates as and when necessary” top officials conceded. 

It is the same with the GST. Though the scheme was cleared by parliament and ratified by 50 states, Tamil Nadu still demurred, as it felt the move would also lead to losing tax revenue. A top official said, “Tax on a car purchased accrues to the state, but under the new Bill, this would go to the location where the vehicle is based. The Centre said states could now opt for service tax which was earlier in the centre’s domain as this would even- out taxes for states. But there are no figures for such changed taxes.” Senior commercial tax officers said it was doubtful if the scheme will become operational on April 1 and most probably implementation could be pushed to July. But Tamil Nadu getting on to the bandwagon is a foregone conclusion, officials aver. 

The Rs 1,800 crore Chennai Port – Maduravoyal elevated expressway which was sanctioned in 2007, had its foundation laid two years later and terminated in November 2016 due to local protests and non-clearance by the state government. NHAI (National Highways Authority of India), which undertook the project terminated it citing TN government’s lack of interest which resulted in NHAI’s inability to respond to the contractor, who wanted to finish it without cost escalation. 

But four days after Jayalalithaa’s death Chief Minister O Panneerselvam revived the project on December 9, when NHAI received orders to restart the project by altering the blueprint through reduction of pillars in the Cooum and to change the route near the War Memorial as otherwise many buildings may have had to demolished.