News Tamil Nadu

ADMK Parrots DMK’s False Narrative About PM Modi

April 15, 2024
The Commune

The AIADMK appears to be echoing the stance of their rival opposition party DMK, mirroring the sentiments expressed by Udhayanidhi Stalin, the Minister for Youth Welfare & Sports Development and scion of the DMK. Recently, posts from the AIADMK’s IT wing on their official X account have put forth the same narrative stating “29 Paisa- Delhi ji” which was peddled by Udhayanidhi Stalin during his election campaign in Arcot on 27 March 2024.

During the Arcot rally, Prime Minister Narendra Modi was criticized, and the Union government was accused of neglecting Tamil Nadu. Udhayanidhi Stalin referred to the PM as ‘Mr29 paisa Modi‘, alleging that while the Union government collects ₹1 per individual as tax, it only allocates a mere 29 paise for each citizen’s welfare, thus disregarding the public’s needs.

Tamil Nadu BJP president K Annamalai strongly rebutted a narrative presented by DMK on 4 April 2024, asserting that the Union government led by the BJP has allocated the highest amount of funds to Tamil Nadu in the past decade. He urged Udhayanidhi to cease referring to Prime Minister Modi as ‘29 paise Modi’, warning that if such remarks persist, the BJP will retaliate by labeling him ‘Ganja Udhayanidhi‘ as the widespread availability of illicit substances like ganja in villages since the DMK assumed power.

This suggests a clandestine liaison between the DMK and its partner party AIADMK parroting the sentiments despite projecting themselves as fierce adversaries in public arenas yet maintaining a covert relationship.

What Is The Truth Behind The Allegation?

The Finance Commission of the country plays a crucial role in shaping the financial dynamics between the central government and the states. By delving into the intricate workings of financial institutions in India, it facilitates a comprehensive understanding of their operations.

Constitutional provisions regarding the imposition and collection of taxes are outlined in Articles 268 to 281 of the Indian Constitution. These provisions serve as a blueprint for the central government, offering directives on the equitable distribution of financial resources among the states. They establish a framework for harmonizing tax imposition and collection procedures between the central and state authorities, thereby fostering a coherent system of financial relations. The Fifteenth Finance Commission has formulated a tax transfer formula that considers various factors. These factors include population (15%), geographical area (15%), income disparity among states (45%), demographic transition (12.5%), preservation of forests and ecology (10%), and the effort made by states in tax collection (2.5%).

During the budget session of 2024, it was reported that Tamil Nadu’s portion of Central taxes for the fiscal year 2023-24, as per the updated Union Budget figures presented by Finance Minister Nirmala Sitharaman on 1st February 2024, would amount to ₹44,760.83 crore. This represents a 7.4% increase from the initial projection of ₹41,664.86 crore. Adjustments for previous years led to a revised estimate of ₹45,052.53 crore for Tamil Nadu’s Central tax share in 2023-24. For the interim budget of 2024-25, Tamil Nadu’s share is forecasted to be ₹49,754.95 crore, indicating an 11.2% rise from the revised figures of the preceding fiscal year. Despite a surge in tax collections, the DMK government claims it has been receiving a considerably lower share of devolution from the Centre.

The primary argument put forth by the DMK is that its allocation from the total divisible pool of Central taxes has declined significantly, from 5.305% during the 12th Finance Commission to 4.079% under the 15th Finance Commission. They highlight examples where states ruled by the BJP receive comparatively more significant returns. For instance, for every rupee contributed by Tamil Nadu to the Centre, it receives only 29 paise in return. In contrast, Uttar Pradesh receives ₹2.73, Bihar receives ₹7.06, Maharashtra receives ₹0.08, Karnataka receives ₹0.15, and Gujarat, ruled by the BJP for nearly two decades, receives ₹0.28 less than Tamil Nadu.

The Fifteenth Finance Commission determined the allocation of funds to states from the divisible pool of taxes based on three key factors: their individual needs (such as population, area, forest coverage, and ecological concerns), equity considerations (including differences in per capita income), and performance metrics (such as own tax revenue generation and reduction in fertility rates). These factors were weighted with 40% for needs, 45% for equity, and 15% for performance. As a result, Uttar Pradesh and Bihar received shares of 17.9% and 10% respectively, while Karnataka, Kerala, and Tamil Nadu received 3.65%, 1.93%, and 4.08% respectively. Notably, the inclusion of fertility rate in the formula by the Fifteenth Finance Commission aimed to incentivize states that had successfully lowered their fertility rates, though this aspect tended to benefit more developed states.

M Govinda Rao, a member of the Fourteenth Finance Commission, defended the formula, emphasizing that its aim was not merely to redistribute funds between states but to ensure that all states could provide comparable levels of services. The underlying principle was one of horizontal equity, recognizing that tax revenues collected in a state might not solely originate from that state. He acknowledged the significant rise in per capita income levels in Karnataka, Kerala, and Tamil Nadu, but cautioned against attributing this solely to the efforts of those states.

Similarly, the state isn’t solely reliant on the central government, thanks to the GST, which provides a more substantial foundation for state sustenance with a 50/50 revenue-sharing model. Therefore, the fiscal decentralization carried out by the central government doesn’t exclusively benefit the BJP-led states in the north. It aligns with the constitutional obligation to distribute funds equitably among states. Recently, the BJP administration has responded to the states’ demands by offering incentives to those that effectively reduced their fertility rates. This initiative was not undertaken by the Congress, an ally of the DMK, during their tenure in power.

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