Chief Minister M.K. Stalin called on Union Finance Minister Nirmala Sitharaman in New Delhi on Friday and requested her to release ₹20,860.40 crore due to Tamil Nadu so that the State could overcome the fiscal crisis.
In a memorandum, Mr. Stalin said the State was facing a “severe financial stress”, despite the easing of COVID-19, as the revenue was badly affected by the pandemic. The pandemic forced the State to incur an additional expenditure towards upgrading health infrastructure and medical equipment and purchase of drugs and to implement welfare schemes for the vulnerable sections, it said.
Mr. Stalin reiterated the State’s request for extending the GST compensation period by at least two more years beyond June. “In the last five years, there has been a wide gap between the actual revenues realized and the protected revenues guaranteed. This trend was visible even before the pandemic, and the gap has been increasingly wide ever since.”
The States’ revenue collection was yet to recover even after the pandemic eased. “At this juncture, the GST compensation period is coming to an end on 30.06.2022. Consequently, in the coming financial year, Tamil Nadu will face a revenue loss of approximately ₹20,000 crore.”
Though the 14th Finance Commission had recommended ₹7,899.69 crore as the basic grant for rural local bodies during 2015-2020, the Union government did not release the basic grant of ₹548.76 crore to Tamil Nadu because of the non-conduct of local bodies elections in 2,900 village panchayats.
The elections in these village panchayats were not conducted because of litigation, something that was beyond the control of the State government. Subsequently, the elections were held on October 6 and 9, 2021, and the elected members assumed their posts.
Though the 14th Finance Commission had also recommended ₹2,524.20 crore in performance grant to Tamil Nadu during the period from 2016-17 to 2019-20, the Union government released ₹494.99 crore for 2016-17. The certificates for utilisation of this sum were submitted with a request for releasing the grant for 2017-18.
“Despite compliance with the conditions and furnishing of utilisation certificates, the grant for 2017-18 has not been released. Subsequently, the grants for 2018-19 and 2019-20 have also not been released,” it said.
The Union government released the performance grant to most of the States for 2017-18. “Hence, we urge that the balance basic grant of ₹548.76 crore and performance grant of ₹2,029.22 crore be released to Tamil Nadu early,” it added.
State Finance Minister Palanivel Thiaga Rajan, DMK floor leader in the Lok Sabha T.R. Baalu, Chief Secretary V. Irai Anbu and Union Finance Secretary T.V. Somanathan were present at the meeting.
