Tamil Nadu CM M K Stalin bats for 50% devolution of central taxes to states

Tamil Nadu Chief Minister M.K. Stalin urged the 16th Finance Commission to increase the state's share of central taxes to 50%, citing financial strain due to the current GST regime. He highlighted challenges such as a rapidly aging population, recent natural disasters, and the high costs of urbanization.

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CHENNAI: Tamil Nadu chief minister M K Stalin on Monday strongly advocated for an increase in the devolution of central taxes to states to 50%—a fair and equitable share, allowing states greater fiscal autonomy in funding and implementing locally relevant schemes. He expressed concerns over funding challenges faced by the state within the GST regime , pointing to the state's fast-aging population, recent natural disasters, and the difficulties faced as a highly urbanised state. Addressing a meeting with the 16th Finance Commission, the chief minister said the effective devolution in the first four years of the 15th Finance Commission award period amounted to only 33.

16% of the gross tax revenue. He stated that the financial strain on states like Tamil Nadu was severe due to the rising share of counterpart funding for centrally sponsored schemes. “We believe that the commission will prescribe an adequate ceiling on centrally sponsored schemes through a necessary constitutional amendment so as to protect the mandated divisible pool in an effective manner,” the CM said.



Stalin emphasised the commission should give equal weightage to balanced growth as well as good governance in inter-state devolution. He stated that the present model appears to “penalise” Tamil Nadu, a pioneer in implementing numerous welfare schemes and delivering good governance. Tamil Nadu’s share in devolution reduced from 7.

931% during the 9th Finance Commission to 4.079% in the 15th Finance Commission. An analysis of the awards of the previous commissions showed that despite repeated distributive efforts, the expected levels of development in many of our lesser-developed states were not achieved.

“The redistribution policy followed for the first four-and-a-half decades in our country yielded limited results in driving real growth,” Stalin said, urging the commission to revisit its approach and adopt a framework that supports the development of less advantaged states and provides the necessary resources to developed states, so they are not adversely affected. He hopes the 16th Finance Commission will provide a remedy to the historical injustice he believes was meted out to Tamil Nadu by successive commissions. Stalin highlighted three distinct challenges faced by the state in recent times that require the commission’s attention.

He cited the major devastation the state faced in recent years due to natural calamities, urging the commission to provide sufficient resources to bear the expenditure on mitigation, relief, and restoration. Stalin said there was a shift in the demographic profile of the state, with the median age of the state being 34.25 years, which is 9.

5 years older than Uttar Pradesh. He stated the median age would increase to 38.5 years by the end of the 16th Finance Commission award period, making Tamil Nadu the oldest state in the country.

“The state must urgently invest significantly in its economy in the coming 10 years to be able to cater to the needs of its growing elderly population. Without this, the state faces a present and imminent danger of becoming old before becoming rich,” Stalin said, urging adequate resources to fund investment needs. The chief minister urged the commission to recommend providing adequate funds to urban local bodies to improve the quality of infrastructure and service delivery in urban areas.

He stated that cities like Chennai, with high population pressure on limited land and water resources coupled with a locational disadvantage, face a huge burden of expenditure to provide quality basic amenities..