National News

Nirmala Sitharaman Busts DMK’s Propaganda On Centre’s Devolution Of Funds To Tamil Nadu

February 12, 2024
The Commune

The Dravida Munnetra Kazhagam and other I.N.D.I. allies continue their trope about the disparity in tax sharing. The Karnataka Congress-led government is also indulging in this propaganda. They led a protest at Jantar Mantar a few days ago with their alliance partners to protest the disparity.

During the Parliament session, DMK MP Tiruchi Siva questioned the Union Finance Minister Nirmala Sitharaman on this once again. He said, “Tamil Nadu is the largest contributor of direct taxes to this country whereas for ₹1 we pay to the union government, Tamil Nadu government is getting 29 paise whereas UP if they pay ₹1, they get ₹2.73 (₹2 and 73paise). What is this disparity? Why this discrimination? You say the country is one, you say everything all are equal but why this sort of treatment? By way of this GST regime, the Tamil Nadu government has last estimated to be around ₹20,000 crores.”

Union Finance Minister Nirmala Sitharaman befittingly answered all the questions for yet another time. She said, “I just want to highlight just five points, I won’t go into details. The five points are sir, we give so much but we don’t get. Doesn’t add up. States receive 100% of the state GST collected in that state, nobody touches it. 

About GST Share

Approximately 50% of the IGST which is collected for the transaction between states is given approximately 50 goes to the states and 41% of the central government share of the GST – CGST is also devolved to the states based on the finance commission’s recommendations. So tax Devolution which is suggested by the finance commission tells very clearly that 100% of what you collect in GST is with you, 50% of the IGST goes to you, 41% of the central GST also goes to the states.”

Tax Paid By Industries

The second point she spoke of was, “Industrialized states like Tamil Nadu have very many companies which are registered there, but which have pan-India operations and they have concurrent tax payments. For example, Tamil Nadu is one of the leading automobile manufacturing states, we all know that. Manufacturers make profits because these automobiles are sold across India, so you pay the tax, you pay the tax, all of us pay the tax and similarly, plantations from Kerala make profits selling their products all over India. This explains why the location of direct tax collection may not be on the fair and equitable because the money comes from everywhere but the taxes paid in the state in which they are registered. So if automobile companies are registered in Sriperumbudur in Tamil Nadu and they pay their tax from there, it’s not just that Tamil Nadu tax money is in it, all our tax money is in it. So when we say each state as I’ve contributed this much what have you given back? I want to say the tax is from all Indians, sir. Your company is registered there and you pay your tax. So let us think about it.”

Contributions Of Centre vs State

Going on to the third point she was making, Nirmala Sitharaman said, “Third, sir. There’s a proverb in Tamil – Thadukku la paanja, paai la paaiven, (தடுக்குல பாஞ்சா பாயில பாய்வேன்) meaning, I raise an issue and if you address that, I’ll jump to the next. There’s no end. This is answered N number of times in this house but N number of times it’ll always be raised. Third is Sir, physical infrastructure such as roads, rails, ports, airports are built by the centre, and expenditure on internal and external security is completely the centre’s. So we have to make comparisons taking these points into consideration.

Finance Commission Recommendations

She added, “The last two points sir I’m just giving this as an example. Tax devolution made to Kerala and tax devolution made to Tamil Nadu during the 13th, 14th, and 15th Finance Commissions. Kerala, sir, when that is 32% Devolution 13th Finance Commission had ₹33,368 crores. When I say 13th Finance Commission, its period was 2010/11 to 14/15 in that duration. Then when the 14th Finance Commission submitted its report and recommendation was accepted just as soon as Prime Minister Modi took charge in 2014 and that 2014 report came into effect from 2015/16  to 2019/20.

By that time, because the recommendation of the 14th Finance Commission was, 42% will have to be devolved to the states, so the 32 became 42 in the tax devolution. 15th Finance Commission, it became 41 because of Jammu Kashmir becoming a Union territory. So 15th Finance Commission, it is 41%, and the 15th Finance Commission term which is running now, from 2021 to 25/26, so I’m reading the numbers for those three Finance Commission terms. ₹33,368 crore for the 5-year period, ₹80,188 crore for the 14th Finance Commission period, and ₹1.1 lakh crore during the 15th Finance Commission. Tamil Nadu sir during the same time ₹70,825 crores during the 13th Finance Commission’s time, ₹1.29 lakh crore during the 14th Finance Commission which ended in 2020, and during the 15th Finance Commission ₹2.36 lakhs lakh crores. Just see the amount and where are we being told your money is not getting devolved, you are getting the money.”

Modi Govt Empowering States Financially

In her final point, she said, “The credibility of this government sir is to financially empower the states can also be gauged from the fact that an issue which was pending from 1996-97 till 2014-15 happened, nobody touched it that was actually money belonging to the states. Nobody touched it it was lying as a pending amount, and tax dues amounting to ₹81,645 crores was lying there. It was Prime Minister Modi who in 2015, talked to the ministry to the officials, to me, all of us worked together with the states. There was some money that the states owed, some by the centre, this money was owed by the centre to the states – ₹81,645 crores was then released, and reconciled amounts adjusted. The net-net amount which went to the States was ₹43,168 crores after adjusting what they owe the centre.”

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