Chief Minister J Jayalalithaa on Monday urged the 14th Finance Commission to take steps to ensure that the allocation of funds to State governments is done through it.
She asked the commission to limit the discretionary powers vested in the hands of the Union government, alleging that these powers were paving the way for discrimination.
Jayalalithaa’s appeal came as part of her speech during the two-day visit of the 14th Commission to Chennai.
She noted that 54 per cent of the resources that flow to State governments come through the commission, which is a constitutionally mandated body.
The rest, she said, flows through plan assistance and centrally sponsored schemes which, unlike the Finance Commission devolution, have no constitutional basis and are subject to several vagaries such as bias and favouritism.
She alleged that State governments faced stepmotherly treatment from the Centre, which she said treated State governments with condescension.
“… I sincerely believe that such discretionary transfers are not just a sub-optimal solution but deeply humiliating for the States. The elected State governments are not regarded as equal partners in the development process but as mere local supplicants,” Jayalalithaa told the commission.
The Chief Minister said that her government wanted all fund flow to be routed through the commission.
“The Fourteenth Finance Commission is at the cusp of history. It has the opportunity to re-order Centre-State financial relations in the country and make them reflect the contemporary reality of the political economy,” she said.
“I urge the commission that your approach should not be incremental and self-limiting. I request you to take a bold approach and affect the paradigm shift needed at this juncture,” the Chief Minister said.
Jayalalithaa pushed for a need-based allocation for State governments instead of allocation based on levels of development, as recommended by the expert committee chaired by RBI governor Raghuram Rajan.
She urged the Commission to reject the expert committee’s report, saying adopting such recommendations would amount to punishment for States that perform well on financial indicators.
“… The commission needs to make a complete break with the incremental approach of the past. It needs to match expenditure responsibilities and resource needs and thereafter work out what proportion of the resources needs to be allocated to the States as a whole and to each individual State. A predictable non-discretionary and non-discriminatory mechanism has to be put in place,” said Jayalalithaa.
Fourteenth Finance Commission and former RBI Governor Y V Reddy, Commission members Sushama Nath, Govinda Rao and Sudipto Mundle, Tamil Nadu Chief Secretary Sheela Balakrishnan, Jayalalithaa’s cabinet, Finance Commission Secretary AN Jha and other government officials were among those who took part in the meeting.