The Hindu : Get us better deal, Ponnaiyan tells DMK

Online edition of India's National Newspaper
Tuesday, Apr 09, 2002

Southern States

Southern States - Tamil Nadu

Get us better deal, Ponnaiyan tells DMK

By Our Special Correspondent

CHENNAI April 8. The Tamil Nadu Finance Minister, C. Ponnaiyan, today accused the Centre of discriminating against the State in allocation of funds and urged the DMK, which was part of the National Democratic Alliance Government, to get it a better deal.

Replying to the budget debate in the Assembly, he wanted to know whether the DMK was prepared to follow the example of the Andhra Pradesh Chief Minister, N. Chandrababu Naidu, who was able to bring pressure on the Centre even while his Telugu Desam stayed out of the NDA Government.

Claiming that Tamil Nadu was in a debt-trap, Mr. Ponnaiyan said Rs.390 crores a month or Rs. 11 crores per day went towards interest payment on loans totalling Rs. 36,000 crores. As Tamil Nadu was already heavily taxed, there was no scope for raising further revenues and the crisis would become graver next year.

Mr. Ponnaiyan said the West Bengal Finance Minister, Ashim Dasgupta, agreeing with Tamil Nadu's case for a one-time Central assistance for all States to tide over their financial crisis, suggested that a collective representation be made. Unlike Uttar Pradesh, which had an unemployment percentage of only 4.27, it was 12.05 in Tamil Nadu. The State thus deserved a higher allocation of Central funds, and the DMK members, ``rising above parochial politics'', should raise this issue with the Centre, he said.

Although Tamil Nadu's own tax revenue was Rs. 12,566 crores, it got Central funds of only Rs. 2,901 crores. In contrast, Andhra Pradesh obtained Rs. 4,017 crores though its revenue from the State's own taxes was much less.

Similarly, while Tamil Nadu got Central grants of Rs. 1,497 crores, Andhra Pradesh secured Rs. 2,547 crores.

The crisis worsened with the Centre imposing restrictions on institutional and open market borrowings. The Reserve Bank was now asked to make an appraisal of Tamil Nadu's finances before allowing the Government to guarantee borrowings by State government undertakings. The State was thus unable to raise money from either financial institutions or through bonds and debentures. Only projects such as roads, which allowed for toll collection, could be taken up under the BOT (build, operate, transfer) system.

Denying that the pre-budget hike in tariffs had bolstered the State's finances, Mr. Ponnaiyan said initially the increase was expected to bring in Rs. 1,500 crores for the power sector, Rs. 1,030 crores for the transport sector, Rs. 600 crores from cut in food subsidy and Rs. 668 crores from withdrawal of perks and concessions to government employees. Subsequently, however, the power tariff was revised to grant a relief of Rs. 225 crores, bus fares were rolled back to the tune of Rs. 330 crores and the cut in food subsidy was put on hold.

After some concessions were restored to the employees, the Government could raise only Rs. 2,525 crores.

Much of this revenue went directly to the Electricity Board and the State Transport Corporations, which had been suffering losses over the years.

Responding to the Minister's taunts, the DMK deputy leader, Durai Murugan, asked why the Government had not approached the DMK Ministers in the Union Cabinet.

Mr. Ponnaiyan said he had already apprised the Union Ministers, Yashwant Sinha and M. Venkaiah Naidu, of the issue.

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