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:: Press Releases ::
Tuesday, December 17, 2013

1. Dr. Y.V. Reddy, Chairman, Ms. Sushama Nath, Dr. M. Govinda Rao and Dr. Sudipto Mundle, Members of the Fourteenth Finance Commission and Sh. A.N. Jha, Secretary visited the State of Tamil Nadu from December 16-17, 2013 to hold consultations with the State Government and key stake holders.

2. The Commission met with the Hon’ble Chief Minister, her Cabinet Colleagues and senior officers of the State Government, for discussions.

3. The Chief Minister welcomed the Chairman and Members to Tamil Nadu and highlighted that the role of the State Governments, as provider of public services, has grown over the time while the role of the Union Government has become more of a facilitator. The resource need of the states has increased significantly, which should be reflected by the rebalancing of Centre-State Fiscal Relations. Tamil Nadu made a strong case that a higher proportion of fund flow from the centre to states should be on the basis of the recommendations of the constitutionally mandated Finance Commission rather than through other mechanisms. The Finance Commission needs to make a complete break with the incremental and self-limiting approach of the past and work towards predictable, non-discretionary and non-discriminatory resource transfers.

4. The State Government submitted its Memorandum and made a detailed presentation on the finances of the State Government, its projection for the award period and gave its views on the Terms of Reference of the Commission. The State suggested that vertical devolution should be 50% of the divisible pool of the central taxes and the overall transfers should be substantially increased by bringing all Cesses & Surcharges into the shareable pool. It was also suggested that the increase should be given through statutory grants rather than ad-hoc and discretionary grants. For horizontal distribution amongst States, it was suggested that 1971 population may be assigned a weight of 33.3%, fiscal capacity distance 33.3% and fiscal discipline 33.3%. The state stressed that the Calamity Relief Fund should be fully funded by Union and if not, at least to the extent of 90% with an annual increment of 10%. Besides this, the State also recommended allocation of requested to allocate 5% of the divisible pool for local bodies with greater weightage for urban local bodies proportional to the degree of urbanization in each state. Proposals relating to Upgradation Grants and State Specific Grants were also placed before the Commission.

5. The Commission also interacted with representatives of political parties, Panchayati Raj Institutions, Urban local bodies and Trade and Industry Associations. The Commission, during the visit, inspected a sea erosion site, slum rehabilitation, ancient temple restoration and rural development works.

6. The Commission places on record its appreciation to the Chief Minister and State Government for the cooperation and support extended to the Commission and assures that the issues raised have been taken on board and will receive due attention in the deliberations of the Commission. The Commission also looks forward to continuing interaction with the State Government.

7. The Commission will finalize its recommendations by October 2014 after completing its discussions with all the State Governments, the Government of India and relevant stake holders.

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