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TN urges Centre to permit states borrow as much as 5% of GDP in 2021-22

The transition again to fiscal targets ought to be a gradual glide path over two to a few years.

The Tamil Nadu authorities on Monday urged the Union finance minister Nirmala Sitharaman to permit all state governments to borrow as much as 5% of GDP in 2021-22 in addition to to allow states to maintain expenditure on capital works and on Covid-19 prevention measures.

In a pre-Union Budget assembly, Tamil Nadu deputy chief minister O Pannerselvam, who additionally holds the finance portfolio, identified that whereas the early indicators of financial revival are obvious, the funds of the state governments will take extra time to get better. Given the state of affairs, he requested the finance minister that no abrupt fiscal correction ought to be tried throughout 2021-22. The transition again to fiscal targets ought to be a gradual glide path over two to a few years.

Outlining points associated to GST, he stated the expectations of income development with the implementation of GST have been belied. The causes for this tepid income development should be analysed intimately. The state governments might want to have their revenues protected, notably in these troublesome occasions.

He stated alternate options, together with continuance of the compensation mechanism and devolving additional taxation powers on states, should be mentioned within the GST Council with a purpose to make sure that states will not be put to hardship in 2022-23. “I urge Union finance minister to address this very crucial issue with the urgency that it warrants and to ensure that the interests of the states are not affected,” Pannerselvam stated .

The levy of cesses and surcharges by the central authorities deprives the states of their authentic share of the Centre’s tax income. Collections by the use of cesses and surcharges have elevated considerably as a proportion of the gross tax income of the Centre lately. All such cesses and surcharges ought to be merged into the fundamental price of tax, in order that the states additionally obtain their due share from the extra income.

He urged the finance minister that no additional circumstances are imposed by the Centre for the discharge of grants beneficial by the Finance Commission. This would make sure that the states obtain their full share of the grants in a well timed trend. Tamil Nadu was but to obtain grants of `2,577.98 crore beneficial by the 14th Finance Commission for rural and concrete native our bodies within the state. In truth, efficiency grants beneficial by the 14th Finance Commission haven’t been launched within the final three years to any state to date, which is unfair. “I request the Government of India to release the arrears pertaining to the 14 th Finance Commission grants at the earliest,” he stated.

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