Sunday, Dec 22, 2002
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By Our Special Correspondent
"There is no case for handholding laggard States any more," she told the
National Development Council meeting in Delhi, stoutly objecting to the slash in Central assistance for Tamil Nadu's Plan outlay because of its better development record.
Ms. Jayalalithaa insisted that the level of Central assistance to States, "which do well" should be stepped up. "All talk of good governance will have no meaning" if the principle of limiting the rewards to performing States was not upheld, she said in her speech, a copy of which was released to the media here.
Tamil Nadu, which received a "body blow" from the Eleventh Finance Commission, was hit again by the reduced Central aid. "This is clearly a case of pulling down a State, which does well." Faulting the "serious inconsistencies" in the Central financial support, she said inefficiency and neglect were being rewarded with higher assistance. Taking a dig at the Opposition parties for criticising the fiscal reforms programme, the Chief Minister called for a "minimum agenda" of reforms to be adopted by the Centre and all States. "We are faced with a babble of voices from the Opposition, questioning fiscal reforms, with the sole intention of getting us to flounder and run aground,".
For pursuing fiscal reforms, Ms. Jayalalithaa also sought a "substantial" increase in the incentive package provided by the Centre. "In the medium-term, the States can be supported with a structural adjustment facility, which can encompass more reforms over a longer period.''
The Chief Minister reiterated that the Prime Minister should take a "large-hearted and broad-minded view" of the extreme fiscal distress faced by the States, to extend them a "meaningful debt relief and debt swap package''. Interest rates on State Plan loans need to be cut by at least 4 per cent. With the States moving into the Value Added Tax regime by next April, the Chief Minister reiterated the Tamil Nadu demand for a "100 per cent" compensation for three years for a possible large revenue loss. Similarly, any phase-out of Central Sales Tax would have to be accompanied by a permanent, full compensation mechanism.
Interestingly, the Chief Minister had a strong word of advice for the Union Finance Minister and the Prime Minister on shoring up the "low level" of Central revenues.
This was a critical issue, which had to be addressed immediately increasing Central tax revenues from the low level of 8.6 per cent of the Gross Domestic Product to above 10 per cent next year.
Ms. Jayalalithaa asked the Centre not to implement the recommendations of the Task Force on Direct Taxes for doing away with all exemptions for small savings. "This (recommendation) will spell doom for the States."
Welcoming the Centre's move to set up a task force on linking of rivers by December, 2016, she said the first series of links between the Mahanadhi and the Cauvery should be included in the Tenth Five Year Plan strategy.
The linking of the west-flowing Pamba Achankoil to the Vaippar, providing a lifeline to an arid zone in Tamil Nadu, should also be completed in this Plan period.
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