The Hindu : Jayalalithaa seeks special financial package for T.N.

Online edition of India's National Newspaper
Friday, Mar 29, 2002

National

National

Jayalalithaa seeks special financial package for T.N.

By Our Special Correspondent

CHENNAI MARCH 28. The Tamil Nadu Chief Minister, Jayalalithaa, has urged the Prime Minister to convene a meeting of Chief Ministers to work out a common agenda for financial reforms and development.

In a letter to the Prime Minister, in which she had sought a Rs. 3,000 crore special financial assistance package to help Tamil Nadu tide over the present financial crisis, Ms. Jayalalithaa said other States too would require similar packages.

She has written to the Chief Ministers to take up the issue with the Union Government immediately, according to an official release.

The release issued tonight gave an extract of the letter in which Ms. Jayalalithaa had drawn the Prime Minister's attention ``to the declining fiscal health of many State governments,'' which could not only derail the economic and fiscal reforms pursued by the Union Government, but also prevent the States from being able to meet the people's basic needs.

The States, which paid their employees salaries equal to the Fifth Pay Commission packages, felt an ``unbearable strain'' on their finances. Also, the collection of Central taxes had declined sharply. The States' share of taxes correspondingly went down.

The Centre's decision to partially compensate the loss through an additional tranche of open market loans was too ``little, too late''. Hence, there was an urgent need to conjointly take stock of the situation before ``the financial problems spiral out of control'', the letter noted.

Rural unemployment in Tamil Nadu was one of the highest in the country. Despite the implementation of pioneering welfare schemes, the percentage of people below the poverty line was high. Concerted efforts were needed to create job opportunities in primary, secondary and tertiary sectors to prevent social discontent, it said.

Ms. Jayalalithaa said the Centre's economic and fiscal reforms programme required active participation by the States. ``We realise that there is some gain if the targets of the reform programme are achieved soon with minimal impact on the poor. But a lot will be lost, if the States fail to keep pace with the reform process.''

Though the Union Finance Minister, Yashwant Sinha, had announced reform-linked devolutions in the budget, she did know to what extent the cash-starved States could take advantage of the announcement, Ms. Jayalalithaa said.

The decision to devolve the entire small savings collections to States was welcome, but the gains would not be much because of the reductions in small savings interest rates, she said and wanted the Centre to evolve an ``untied grant package'' for States to tide over the present crisis.

Send this article to Friends by E-Mail

National