Thursday, September 29 2005 15:55 Hrs (IST) - World Time -

Chennai: Accusing the 12th Finance Commission of having 'betrayed' the state's interests by recommending lesser financial allocation, Finance Minister C Ponnaiyan said today (Sept 29, 2005) the Commission had reduced the state's share of divisible tax by the Center to 5.305 per cent from 5.385 per cent of the 11th Commission.

This has resulted in the reduction of the center's allocation by Rs 76 crore for the current fiscal, he told the Assembly, replying to the debate on the first supplementary estimates for the current fiscal.

Due to the recommendation of the 11th Finance Commission, which also reduced the state's share from 6.637 per cent of the 10th Finance Commission to 5.385 per cent, the state would incur an additional loss of Rs.1266 crore, he said.

The 12th Finance Commission also recommended that the Center's assistance to plan expenditure be kept at 30 per cent and for the rest the state had to resort to market borrowings, he said adding this was a deviation from the past practice, which allowed the Centre to sanction loans to the tune of 70 per cent for plan schemes.

The Center, on its part, had reduced quantum of loan to be raised by the state from Rs.9,704 crore to Rs. 8,290 crore, he said.

The 12th Finance Commission had recommended special assistance to Kerala, West Bengal, Punjab and to North Eastern states to the tune of Rs.56,856 crore for the five years starting from 2005 to meet the revenue deficit, but Tamil Nadu had been neglected, he said.

The Commission also ignored the state's claim for a special subsidy for education and health sector expenditure, while extending it to the tune of Rs.16,059 crore to other states, Ponnaiyan said.

Accusing the center of ignoring the state, he said the Center had selected 147 districts as most backward in for assistance, but only five districts had been included in the list.

The center had sanctioned only Rs.98 crore of the Rs.2756 crore for the Indira Awaz Yojna, he said.

Denying the opposition charge that the supplementary estimates had made only token provision for implementation of various announcements made by Chief Minister Jayalalithaa after the state budget, he said funds for most of the schemes had already been made in the state budget.

Most of the schemes were new and works on these could not be completed this year and hence it was decided to make token provision, he said.

Flaying DMK President M Karunanidhi for his remarks that the Chief Minister's announcements were only on paper as no funds had been allocated for them in the estimates, he said

it was surprising to note that a man, who had been the Chief Minister of the state, was not aware that there was a provision for a final supplementary to provide funds for the schemes.

"Probably because of his old age, he might have forgotten the procedures adopted by the government," he said.

The uncovered deficit would be managed through better tax collections and austerity measures. The deficit would not create inflationary tendencies, he asserted.