CHENNAI: Chief Minister MK Stalin, during his meeting with 16th Finance Commission chairman Arvind Panagariya and members of the panel in Chennai on Monday, expressed concern over the decrease in devolution of central funds to the state and increasing financial burden due to additional expenses incurred for projects jointly implemented by the state and the centre. Stalin urged the commission to address the disparities in sharing of revenue among states and increase the share of central taxes to states to 50%.
Though the 15th Finance Commission recommended for providing 41% tax revenue share, in the last four years, contrary to the recommendation, the union government’s total tax devolution was just 33.16%, the CM said.
Additional funds should be allocated to performing states like Tamil Nadu, considering the overall development of the country. “A new approach should be adopted so that developing states like Tamil Nadu are not affected by the decrease in central allocation,” he said.
Speaking about the difficulties in implementing schemes, he said that states are largely responsible for implementing key projects in sectors like healthcare, education, social welfare, and agriculture. Despite this, the power to generate funds for such projects by the states are limited, he said.
Stalin said, therefore, it is only fair and appropriate to raise the share of revenue allocated to states to 50%. “Only if the share is increased to 50%, states like Tamil Nadu will be able to implement development projects that meet their specific needs while also ensuring fiscal autonomy in managing their own finances.”
Stalin also expressed concern over Tamil Nadu’s diminishing share of tax revenue, which fell from 7.831% under the 9th Finance Commission to 4.079% under the 15th Commission.
TN asks 50% more disaster relief fund
Urging to revamp the current tax devolution mechanism, Stalin said that while it is necessary to allocate additional resources to underdeveloped regions, it is also important to recognise and support well-performing states with their deserved share of financial resources. “This approach will not only sustain their growth but also foster the overall development of the nation,” he said.
Drawing attention of the commission over the state’s ageing population, he said that currently, the average age of the population in Tamil Nadu is 36.4 years, which is 9.5 years higher than that of Uttar Pradesh. Hence, the need for social security, healthcare and other services has increased, he said. The CM also elaborated on the natural disaster faced by the state, the rapid urbanisation and the need for centre’s support to carry out relief and rescue work.
Besides, the state, in its memorandum to the 16th Finance Commission, has urged that the devolution of funds to the states must be based on the population data of the 1971 Census. The state has also called for increased weightage to be given to demographic performance, economic contribution to the national GDP, and urbanisation in determining resource allocation.
Addressing the state’s vulnerability to frequent natural disasters, TN requested a 50% increase in the State Disaster Risk Management Fund (SDRMF) corpus for 2026-27, with a 90:10 funding ratio between the centre and the states.
Highlighting the growing demands of local bodies, the government called for raising local body grants to at least 5% of the divisible pool, with an equitable 50:50 allocation between rural and urban areas.
The memorandum also outlined a financial requirement of Rs 6,84,500 crore to support Tamil Nadu’s economic and developmental goals. Major requests include Rs 43,600 crore for industrialisation, Rs 5,32,000 crore for urban infrastructure, Rs 62,000 crore for the power sector, Rs 7,000 crore for public transport modernisation, and Rs 25,000 crore for water management initiatives.
Further, recognised political parties of TN, including the DMK, AIADMK, Congress, CPM, CPI, AAP and others, have also presented their representations to the commission.
Arvind: TN REPORT well-researched
The 16th Finance Commission chairperson Arvind Panagariya on Monday said TN has presented a well-researched analytical report and has explained its demands and grievances in a well-balanced and convincing manner
