Tamil Nadu Demands Revenue Protection in Upcoming GST Meeting

The Tamil Nadu government has urged the Union government to safeguard its revenue receipts during the upcoming GST Council meeting. Finance Minister Thangam Thennarasu emphasized the need for protection against potential revenue losses that could impact various state programs and projects. He stated that the demand is crucial to ensure that Tamil Nadu does not suffer financially as the GST rationalisation progresses.

On March 14, 2024, just a day before the GST Council convenes, Thennarasu reiterated the state’s position during a press conference at the Secretariat. He highlighted that the state’s ongoing infrastructure and social welfare initiatives could face significant setbacks if there is a major decrease in revenue. “Our key demand is that the Union government should protect our revenue receipts to the extent that there should be no revenue loss,” he said.

The Finance Minister acknowledged that the state does not oppose GST rationalisation, asserting that it should ultimately benefit consumers and end-users. He urged that financial safeguards must accompany any changes to the GST framework to ensure state finances remain intact.

In addition to discussing GST, Thennarasu addressed concerns about the impact of new tariffs imposed by the U.S. government on Indian imports. Sectors such as textiles, leather, and gems have been notably affected, particularly in regions like Tiruppur. He requested a special assistance package from the Union government, which would include measures like duty drawbacks and import duty exemptions.

The Minister pointed out the increasing financial burden on the Tamil Nadu government due to a declining share of funding from the Union government for Centrally sponsored schemes. He stated that the state has had to absorb more of the costs associated with programs like the Sarva Shiksha Abhiyan, where the Union-State allocation ratio was altered from 75:25 to 60:40 over time. He also mentioned other schemes, such as the Prime Minister Awas Yojana and the Indira Gandhi National Old Age Pension Scheme, where funding from the Union government has diminished.

Thennarasu noted that Tamil Nadu has repeatedly flagged these issues, asserting that the state has not received fair treatment from successive Finance Commissions regarding fund devolution. He characterized the funding system as punitive, with allocations being based solely on population metrics.

The Finance Minister took the opportunity to highlight the achievements of the ruling DMK government. He reported that the Gross State Domestic Product (GSDP) has increased to 11.19%, the highest growth rate in the past decade. Furthermore, the revenue deficit has decreased from 3.49% in 2020-21 to 1.17%, while the fiscal deficit has dropped from 4.9% to 3%.

Thennarasu emphasized that these accomplishments occurred despite challenges such as natural disasters and insufficient funds from the Union government. Under the leadership of Chief Minister M.K. Stalin, the Tamil Nadu government has made significant progress on its electoral promises. He noted that out of 505 electoral commitments, orders have been issued, work is ongoing, or projects have been completed for 364 of them. Additionally, 40 projects are currently under consideration by the government.

However, the Minister mentioned that there are still 37 projects pending with the Union government, and 64 projects have yet to be initiated. This highlights the ongoing challenges Tamil Nadu faces in securing necessary funding and support for its development initiatives.

As Tamil Nadu prepares for the GST Council meeting, the emphasis remains on ensuring that state revenue is protected to continue supporting vital programs and projects that contribute to the state’s growth and welfare.