Chennai: Hitting back at Prime Minister Narendra Modi’s targeting of opposition parties on the issue of freebies in the past few months, Tamil Nadu finance minister Palanivel Thiaga Rajan said Saturday that no state in India had yet caused the exchequer to break.
Questioning on what basis the union government was telling states how to spend money as long as the borrowings (by states) were within the limit, Rajan also claimed that people elect governments on the basis of how it spends money.
“I am yet to see a state where provision of freebies broke the exchequer or balance (the state’s financial balance)… don’t think there is any state that violated the borrowing limit and gone broke,” said Rajan.
The Tamil Nadu finance minister was speaking at a memorial lecture of renowned literature enthusiast, chartered accountant and co-founder of the Manthan public forum, late Ajay Gandhi, in Hyderabad.
This is not the first time that Rajan has hit out at the union government and Prime Minister Narendra Modi, over the latter’s slamming of the “revadi” culture.
In July, Modi, while inaugurating the Bundelkhand Expressway in Uttar Pradesh, had warned people against the “revadi culture” of offering freebies for votes, and also said that the practice was “very dangerous” for the country.
The following month, Rajan lashed out against the comments and questioned on what Constitutional basis or special expertise was the Centre advising the states on the same, and why should the states change their policy.
On Saturday, the Tamil Nadu finance minister said borrowings by states are often assessed under the Fiscal Responsibility and Budget Management (FRBM) Act of 2003, which sets limits to debt and fiscal deficit under certain conditions.
‘Tamil Nadu huge contributor to exchequer’
“Why should the Union government or anyone else be telling us how we should be spending our money as long as borrowings are under limits?” asked Rajan, adding on what basis should states listen to the union government without a proven track record of the Centre’s debt management efficiency.
At a meeting in April, top civil servants had warned the PM of the drain on resources caused by the freebies culture, citing the possibility of a Sri Lanka-like crisis emerging in some of these states.
Rajan questioned whether the Centre had performed better than any states in handling debts, adding that every year states get two letters from the union government cautioning about the borrowings.
He also pointed out how Tamil Nadu was a huge net contributor to the union exchequer.
Terming the GST (Goods and Services Tax) model complex, with rate structures and multiple exemptions, Rajan said GST Council meetings have never had any conversations based on data submitted by states.
Rajan also stressed on the importance of decentralisation of power and local governance in the country, adding that execution ability takes a hit if the governance is done sitting at once place.
(Edited by Poulomi Banerjee)