Approve and allocate funds for Chennai Metro Rail Phase 2 project: TN Finance Minister

Chennai, June 22 (IANS) Approval of the Union government for the second phase of the Metro rail project, allocation of more infrastructure projects and funds to the state, permission to borrow more, and release of funds towards disaster relief are what Tamil Nadu Finance Minister Thangam Thennarasu urged the Union Finance Minister Nirmala Sitharaman on Saturday.

Thennarasu speaking at the pre-budget meeting of the State Finance Ministers called by Sitharaman in Delhi said the Chennai Metro Rail Phase 2 was announced by the Union Finance Minister in her Budget speech of 2021-22 as a Central sector project for Rs 63,246 crore.

“While this project has been recommended by the Public Investment Board (PIB) on August 17, 2021, it is awaiting approval of the Cabinet Committee on Economic Affairs for the last three years. Pending this approval, the entire expenditure is being borne by the state from its funds. The delay in approval is making a severe impact on our state finances and has slowed the pace of implementation of this project, causing hardships to the people of Chennai,” the State Finance Minister said.

He urged the Union government to immediately give its sanction for the project as originally envisaged and provide adequate funds in the Union Budget 2024-25.

Referring to the two memoranda submitted to the Union government seeking Rs 37,906 crore as disaster relief, Thennarasu said the Union government has released a meagre Rs 276 crore.

He said the releases from the National Disaster Relief Fund are legitimate dues to the states and requested an allocation of Rs 3,000 crore in the upcoming budget to Tamil Nadu to undertake necessary restoration works.

Thennarasu also said the Union government’s various cesses and surcharges, as a percentage of gross tax revenue, have increased from 10.4 per cent in 2011-12 to 20.28 per cent in 2022-23.

He requested the Union government to merge them into the basic rates of taxation so that the states receive their legitimate share in devolution.

Thennarasu also urged the Union government to provide 50 per cent of the cost for centrally sponsored schemes as the unit cost has gone up and the state governments have to bear the remaining cost.

The Tamil Nadu Finance Minister also said the Union government should exclude the loans taken by state governments for taking over losses of state power distribution companies from the calculation of fiscal deficit and borrowing ceilings of the state, similar to the UDAY scheme of 2015.

According to him, the calculation of Gross State Domestic Product (GSDP) to fix the borrowing ceiling is repeatedly underestimated resulting in a loss of borrowing space of around Rs 8,500 crore in the last four years.

Amid a situation where the fiscal autonomy of states to raise resources through taxes is curtailed after GST and when the burden of expenditure is being shifted onto states, restrictive control over borrowing can have a debilitating impact on state finances, Thennarasu said.

According to him, the Union government should make suitable adjustments for any underestimation or overestimation in the calculation of GSDP in the subsequent year.

–IANS

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