State Finance Minister seeks compensation for privatised land

Published Date: December 31, 2021


State finance minister seeks compensation for privatised land



State Finance Minister Palanivel Thiaga Rajan demanded adequate compensation for the parcels of land given away by the State government for starting Union government projects like public sector undertakings that had subsequently privatised.


In his address at the Union Pre-Budget meeting of State Finance Minister, presided over by Union Finance Minister Nirmala Seetharaman, he said: 'In the past, the Government of Tamil Nadu has given lands for free or at concessional rates for many Central Public Sector Undertakings and projects of the Union Government. During the privatisation of such organisations, the State Government should be justly compensated for the land either through payment of land cost at current market value or through an equivalent equity stake in the new entity'

To incentivise States to show more interest in projects of the Union Government, Thiaga Rajan requested that a policy be formulated in that regard and announced in the Union Budget.


The Minister raised the issue of substantial dues pending from the Union Government and said 'for schemes shared between Centre and States, approximately ₹17,000 crore of the Union Government's share remains to be released. Further, the Performance Grants from 2017-18 to 2019-20 to the tune of ₹2,029.22 crore and the basic grant of ₹548.76 crore for 2019-20 under the 14th Finance Commission are pending.


Demanding the release of the dues, which have a considerable impact on the fiscal calculations of the State that was already under severe stress due to the pandemic, he also sought appropriate allocation in the upcoming Budget 2022-23

. 'During the introduction of GST, the State agreed to forgo its fiscal autonomy with an assurance from the Union Government that our revenues will be protected. In the last five years, there has been a wide gap between the actual revenues realized and the protected revenues guaranteed', he said, urging the Union Government to release pending compensation of ₹16,725 crore and extend the period of compensation by at least two years beyond June 2022


Thiaga Rajan demanded that the States be allowed to borrow unconditionally, pointing out that the pre-conditions for availing additional borrowing limit of 1% (0.5% for capital expenditure and 0.5% for Power sector reforms) of the GSDP adversely affected the state finances and patterns of expenditure.


States should be allowed to borrow 5% of GSDP without any conditions for FY 2022-23 and the borrowing limits under the FRBM and related State Acts should be set dynamically- at 5% or higher levels during recessions, he said.


Thanking the Union Finance Minister for organizing the meeting to seek the suggestions of the States for the upcoming Union Budget, he said it was an integral part of fiscal federalism and had assumed greater significance at a time when the finances of all States were under severe stress due to the COVID 19 pandemic.


Pointing out that the share of revenue collected from Indirect taxes in the Gross Tax Revenue had increased sharply and surpassed the collections from Direct taxes, he said it was highly inequitable as indirect taxes were regressive and disproportionately affected the poor


The Union Government had not acted on the 2016 CAG Report recommending the devolving of an amount of ₹81,647.70 crore between 1996-97 and 2014-15 to the States and due to that approximately ₹4,500 crore was due to the state, he said.