The Hindu : National : Encroaching on the domain of States: Jayalalithaa

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Friday, Jul 09, 2004

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Encroaching on the domain of States: Jayalalithaa

By Our Special Correspondent

CHENNAI, JULY 8. The Tamil Nadu Chief Minister, Jayalalithaa, today accused the Union Finance Minister, P. Chidambaram, of "completely wrecking Centre-State fiscal relations" by announcing a separate Backward States Grant Commission. "This is totally unconstitutional. It undermines the basic fabric of Centre-State fiscal relations envisaged in the Constitution," she said in a statement.

In a strong critique of the budget, she said: "A new trend of encroaching on the domain of the States is clearly visible in this budget. While support in the forms of funds to the States is always welcome, the Central budget should desist from trying to take over directly the management of subjects which are clearly in the State list.

"A grand announcement of a scheme to repair, renovate and restore man-made water bodies in the country has been made. However, what has been announced is just a pilot project in five districts with an outlay of Rs. 100 crores drawing resources from other schemes. States like Tamil Nadu have already implemented Water Resources Consolidation Projects and are now ready to go forward with their next generation projects.

Why is the Union Finance Minister reinventing the wheel, centralising the whole effort into an unmanageable new Central scheme instead of empowering States.

"Water is a subject on the State List. The Government of Tamil Nadu has already initiated a proposal for establishing a 300 mld desalination plant at Chennai. The distribution of water is also with statutory boards and utilities managed by the State Government.

The Centre should release assistance proposed in the Union budget to the State Government and let it execute this project which is already preparation."

Staying on the theme of water, Ms. Jayalalithaa said that "an opportunity to make a start on the programme for Interlinking River Systems has been clearly missed. We could have welcomed the budget if the first allocation for this programme had been made in this budget."

On the introduction of Value Added Tax from April 1, 2005, the Chief Minister said the announcement raises a lot of doubts.

"The announcement made by the Union Finance Minister on compensation is not categorical. This is not at all satisfactory. We will have to reconsider our plans of going through with VAT if a proper assurance on compensation is not extended."

Objecting to the levy of tax on more services, she said her Government "has always opposed the Centre's proposal to take over the powers to tax Services in the Union list."

Ms. Jayalalithaa said it was "unworkable budget, full of tall revenue projects and promises with no concrete plans of action. Inheriting a resilient economy as admitted by the Economic Survey with good fundamentals, the Union Budget has really missed a tremendous opportunity to set out a vision of rapid economic growth with genuine benefits for the poor."

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