"IN PRE-BUDGET MEETING WITH UNION FINANCE MINISTER

TN FM Says Preconditions for Additional Borrowing Adversely Impact State Finances

Chennai: The Union government's preconditions for availing the additional borrowing limit of 1% (0.5% for capital expenditure and 0.5% for power sector reforms) of the GSDP adversely affected the state, Tamil Nadu finance minister PTR Palanivel Thiaga Rajan said at the pre-Budgeting that Union finance minister Nirmala Sitharaman held with finance ministers of states and Union Territories on Thursday.

""The imposition of such conditions adversely impacts the state finances and its patterns of expenditure,"" he said. ""As the states have incurred huge expenditure to fight the Co vid-19 pandemic with substantial reduction in revenues, I urge the government to permit borrowing of 5% of GSDP without any conditions for FY22-23.

The TN finance minister stressed on the immediate release of the pending GST compensation of 16,725 crore and also pointed out that 17,000 crore was yet to be released by the Centre for schemes shared between the Centre and the states. Tamil Nadu also demanded a revival package for MSMEs which have been 

SEEKING MSME RELIEF

Tamil Nadu also demanded a revival package for MSMES which have been severely affected by the pandemic

severely affected by the pandemic while also asking for a rollback of the 12% tax for the textile and apparel sector.

He said this revival package' for MSMEs should include concessional credit, loan moratorium and deferment of statutory dues. Thiaga Rajan said the full benefits of the series of stimulus measures already announced by the Centre had not reached the MSMEs that were in need. ""The Union Budget is an integral part of fiscal federalism and has assumed even greater significance at a time when the finances of all states are under severe stress due to the Covid-19 pandemic,"" he said.

He claimed that the increased levy of cesses and surcharges, which do not form part of the divisible pool of taxes, has adversely affected the transfer of resources to the states."

Media: Economic Times