Stalin calls for raising States’ share in divisible pool to 50%

“Only if the share of States was increased to 50% could they implement development projects as per their requirements and function with financial autonomy,” Mr. Stalin said

Tamil Nadu Chief Minister M.K. Stalin on Monday (November 18, 2024) said the share of the States in the divisible pool should be increased to 50%, as multiple factors added to their financial burden. “We hope increasing it to 50% would be appropriate and acceptable to all,” he said in Chennai.

“Only if the share of States was increased to 50% could they implement development projects as per their requirements and function with financial autonomy,” Mr. Stalin said in his speech, in the presence of the chairperson and members of the XVI Finance Commission, who are on an official visit to Tamil Nadu.

Mr. Stalin further hoped that the XVI Finance Commission would ensure that the States get 50% from the divisible pool.

“We wholeheartedly commend the increase in the share of States in the divisible pool to 41%, as per the recommendation of the XV Finance Commission. However, contrary to this recommendation, only 33.16% has been shared with the States during the past four years. The Union government increasing the surcharges and cesses is the primary reason for this,” Mr. Stalin said.

Moreover, the share of the State governments in projects jointly implemented with the Union government was affecting the financial status of the States, especially Tamil Nadu, he pointed out.

The decrease in the devolution to the States and the increasing share of the States in projects jointly implemented with the Union government were the two major factors that were adding to the burden of the State governments, Mr. Stalin contended.

From the recommendation of the IX Finance Commission for 7.93% to that of the XV Finance Commission for 4.07%, the devolution share to Tamil Nadu has been consistently on the decline, Mr. Stalin pointed out. “I would like to point out that the present devolution norms proves a punishment to Tamil Nadu, which has been a pioneer in the country in planning and administering various welfare programmes.”

Though it was necessary to allocate funds for underdeveloped areas in the country, “only by allocating necessary funds to States that have been performing well on various fronts, could one ensure that they maintain their development and keep them on track. The Finance Commission should keep this in their consideration,” Mr. Stalin said.

The diversion of funds from well-performing States to underdeveloped areas “would not only affect the country’s overall development but would lead to underdeveloped States receiving less funds in the long run. We believe that funds generated with a short term in mind would not yield intended results in the future,” Mr. Stalin said.

A careful analysis of the recommendations of the previous Finance Commissions showed that even though more funds were devolved to underdeveloped States, “it was clear that it did not yield development and progress in many of the underdeveloped States,” he pointed out.

Contending that the 45 years of the devolution method adopted by the country has not yielded intended results, Mr. Stalin advocated that the Finance Commission should reconsider it and adopt a “new approach,” which would ensure that developed States were not affected while funds were being granted to underdeveloped States.

Published - November 18, 2024 12:17 pm IST