The Tamil Nadu government on Friday requested the Centre to release the pending compensation of ₹11,185.82 crore due to the State as it was expecting a revenue shortfall.

It also requested the extension of the Goods and Services Tax compensation period by at least two more years.

In his speech at the pre-Union Budget meeting held in New Delhi, Finance Minister Palanivel Thiaga Rajan pointed to the “continuous neglect” of Tamil Nadu in railway projects and requested an adequate allocation in the upcoming Union Budget.

Vande Bharat trains connecting Chennai with Madurai and Coimbatore, a fourth rail line between Tambaram and Chengalpattu, a third and fourth rail line between Attipattu and Gummidipoondi, a new line from Tirupattur to Hosur through Krishnagiri, and the doubling of the Arakkonam-Kancheepuram-Chengalpattu line were among the projects for which he sought funding.

Cesses and surcharges

The practice of the Union government in continuously increasing the levy of cesses and surcharges was “antithetical” to the spirit of fiscal federalism, Mr. Thiaga Rajan contended.

The cesses and surcharges, which did not form part of the divisible pool of taxes, had adversely affected the transfer of resources to the States, he said.

The State’s fiscal autonomy had further been curtailed by the increasing ratio of grants-in-aid to share in the Central taxes, he pointed out, requesting the Union government to provide greater untied funding to the States rather than a one-size-fits-all homogenization through increasingly detailed Central schemes.

The Minister urged the Centre to ensure that State-specific grants were released in full without conditions.

As the unit cost and the Government of India’s share of it in many Centrally-sponsored schemes were not in consonance with the ground realities, he requested the Union government to enhance the unit cost to reflect present-day requirements and increase its proportion in them.

Pointing out that Tamil Nadu had set up the first international furniture park in the country, Mr. Thiaga Rajan requested the Union government to reduce the duties on imported wood to attract investments in this sector.

He also suggested the implementation of a Production Linked Incentive Scheme for the leather and non-leather footwear sector, and for green hydrogen and electrolyser manufacturers.

Garment sector crisis

Highlighting the garment sector, which he said was undergoing a severe crisis and witnessing a sharp decline in month-on-month growth, Mr. Thiaga Rajan said, “Lakhs of jobs, particularly for rural women who form a significant chunk of the workforce, are in danger.” The Minister requested the Union government for a special Emergency Credit Line Guarantee Scheme for the Micro, Small and Medium Enterprises in the garment sector with a 20% additional collateral-free credit.

AIIMS project

Mr. Thiaga Rajan also requested the Union government to expeditiously commence the establishment of the All India Institute of Medical Sciences (AIIMS) in Madurai as the project had made very little progress.

“The Government of India must form a dedicated team of officers with adequate financial and administrative powers to expedite the construction work for the establishment of a full-fledged AIIMS in Madurai. The State government will extend full cooperation for immediate commencement and early completion of the project,” he added.