Days after opposition parties, including the BJP, targeted the DMK government for the stagnation of rainwater in parts of Chennai, Tamil Nadu Finance Minister Palanivel Thiaga Rajan said that delays by the BJP-led government at the Centre in releasing funds were hampering flood mitigation work in the state capital.

Speaking at the pre-budget meeting chaired by Union Finance Minister Nirmala Sitharaman in New Delhi on Friday, Thiaga Rajan said the 15th Finance Commission had recommended ₹500 crore under the National Disaster Mitigation Fund for reducing the risk of urban flooding in Chennai for the period 2021-22 to 2025-26.

“Even after a lapse of two years, the National Disaster Management Authority has not yet released this earmarked allocation. Such delays in the release of funds hamper the state’s efforts in undertaking flood mitigation work,” he said, urging the Centre to release the funds. The minister also urged the Centre to sanction the Chennai Metro Rail Phase II project as a 50:50 equity share between the Centre and the state. Thiaga Rajan wanted the Centre to increase its share in centrally sponsored schemes like the Pradhan Mantri Awas Yojana, where the state government ends up spending more on the houses.

Thiaga Rajan also urged the Centre to release ₹11,185 crore in GST compensation dues for Tamil Nadu. After GST was introduced, there has been a wide gap between the revenue guaranteed and the actual revenues realized. Considering the expected revenue shortfall, the Union government should release the pending compensation dues of ₹11,185.82 crore at the earliest, he said.

Pointing out that there was ambiguity on whether ₹2,200 crore in state-specific grants recommended by the 15th Finance Commission would be released for Tamil Nadu, Thiaga Rajan demanded that the grants be released in full without imposing any conditions.

The minister, who urged the Centre to play a greater role in supporting the states to revive economic growth, listed a series of measures that the Centre needed to take up for the benefit of the states, starting with the reduction of the percentage of cesses and surcharges in total tax revenue. “Continuously increasing the levy of cesses and surcharges is antithetical to the spirit of fiscal federalism,” he said. Cesses and surcharges, as a percentage of gross tax revenue, have increased from 10.4% in 2011-12 to 26.7% in 2021-22. This has deprived the states of their legitimate share of revenue collected by the Centre, he said. He exhorted an increase in the percentage of the state’s share in central taxes instead of increasing grants-in-aid.