PUDUCHERRY: The Union Territory sought a special grant of Rs 2,614 crore from Centre and an enhancement of Normal Central Assistance (NCA) by 10% to finance the territorial budget for 2022-2023. The NCA shrunk from 35.3% in 2000-01 to 17% in 2022-23, said PWD Minister K Lakshminarayanan stressing the need for enhancement annually to discount inflation in the already cash-strapped UT.
The minister brought up this demand during a discussion, for the forthcoming Union budget, chaired by Union Finance Minister Nirmala Sitharaman in New Delhi on Friday. He said that the total revenue gap due to the cessation of GST compensation and the VAT rate reduction was estimated at Rs 1,710 crore for the nine months of this financial year. As the deficit cannot be bridged by the UT’s internal efforts, the gap will only widen every year unless the Centre is willing to extend Special Central Assistance (SCA), he added.
As the UT does not fall within the jurisdiction of the Central Finance Commission (CFC), there is an urgent need to enhance the NCA significantly and make it formula-based. Being a UT, Puducherry does not get financial devolution as part of CFC. In the case of Centrally Sponsored Schemes (CSS), Puducherry -- unlike other UTs that receive 100% Central share-- is treated on a par with states. This further worsens the UT's financial position, and prevents it from making full use of the CSS, said Lakshminarayanan.
In 2022-23, the Puducherry government plans to initiate a drive to fill up 2,748 Group A/ B/ C posts (out of 9,600 vacant posts) in various departments. However, the UT is in no position to meet the expenses and requires a minimum additional recurring Central assistance of Rs 254 crore. Besides, it also requires additional funds to the tune of Rs 1,86.5 crore towards the payment of arrears of allowances (HRA, TA and CEA) to the UT's employees.
Meanwhile, as the Central scheme of 'Financial Assistance for Capital Investment' is applicable only to States, the UT may be considered for the grant of SCA (infra) to the tune of Rs 2,147 crore. These funds will be allocated for infrastructure like airport expansion, construction of integrated assembly complex, upgradation of health infrastructure, and setting up of the Medical University and Law University.
Further, the minister urged the Ministry of Home Affairs to waive Puducherry's outstanding plan loans of Rs 104.24 crore and non-plan loans of Rs 210 crore. "This would provide succour to Puducherry by giving some relief on principal and interest repayments, and help create more space to push much-needed capital expenditure."
Anticipating the grant by the Ministry of Finance and Home Affairs, the government proposed to present the budget in March 2023.