Tamil Nadu expects equal funding as against contribution to GDP, says Arvind Panagariya
Panagariya was replying to queries on the requests made by the Tamil Nadu government, including the enhancement of devolution of a divisible pool of taxes to 50 per cent from the existing 41 per cent.
Finance panel head Arvind Panagariya addressing media
CHENNAI: The Centre's vertical devolution to States including Tamil Nadu was improved by the 14th Finance Commission to 40 per cent and the Government of Tamil Nadu expects the Centre to provide 8 per cent of the total funding as it contributes 8 per cent to the total GDP of the country, said Arvind Panagariya, Chairman of 16th (XVI) Finance Commission.
Talking to reporters after meeting the Chief Minister MK Stalin and other stakeholders here, the noted economist Panagariya pointed out the various recommendations made by the Chief Minister during the meeting and said the Commission is impressed by the presentation made by the Tamil Nadu government on the State of its finances and its development plans going forward.
"As per the 2011 census, the Tamil Nadu government did not accept the 15th Finance Commission's recommendations regarding vertical devolution. At present, the Centre's tax distribution to the states is 41 per cent. The CM of TN has insisted that this should be increased by 50 per cent. Other states including Telangana are also demanding to increase this rate, " Arvind said while interacting with reporters.
Panagariya was replying to queries on the requests made by the Tamil Nadu government, including the enhancement of devolution of a divisible pool of taxes to 50 per cent from the existing 41 per cent.
"Out of the 10 states that have been consulted so far, Tamil Nadu is the only one that has asked for recommendations specifying per capita annual income and purchasing power of an individual. It remains to be seen whether other states will make similar demands," he said, adding that the Commission can take a decision only after consulting the opinions of other 18 states.
Referring to the issues raised by the State, he informed that the Centre will decide on increasing the role of the Centre in implementing the schemes of the Union government with the financial contribution of the Centre-State governments.
"The disparity in financial distribution between developing and developed states is widening. The gap (3:1) has now increased to 6:1. Per capita annual income should not be understood only nominally. The price of a potato in Bihar is not the same as in Tamil Nadu or Karnataka. GoTN has requested us to understand the difference in purchasing power, " the Chairman said.
Referring to the disaster relief fund allocation request raised by the Chief Minister, Panagariya said alternative ways of funding for development would be explored for states that allocate more funds to disaster relief.
