Chennai, Jan 19 (KNN) The Tamil Nadu (TN) government has urged the Union Finance Minister Nirmala Sitharaman to allow all state governments to borrow up to 5 per cent of Gross Domestic Product (GDP) in 2021-22.

Reportedly, State’s Deputy Chief Minister O Panneerselvam, who also holds the finance portfolio, on Monday put forth a slew of demands before the Centre, while preparing the 2021-22 State Budget.

The other demands include no abrupt fiscal correction during 2021-22, discussions on continuance of the compensation mechanism and devolving further taxation powers on States, permission and fund allocation for water resource augmentation projects, early disbursal of pending dues to the State, etc.

Addressing the pre-budget meeting chaired by Union Finance Minister Nirmala Sitharaman on a virtual platform, the Deputy CM said, “Though the early signs of economic revival are apparent, the financial situation of State governments would take more time to recover. Given the situation, he requested the finance minister that no abrupt fiscal correction should be attempted during 2021-22. The transition back to fiscal targets should be a gradual glide path over two to three years.”

“The expectations of revenue growth with the implementation of GST have been belied. The reasons for this tepid revenue growth have to be analysed in detail,” he added.

He said alternatives, including continuance of the compensation mechanism and devolving further taxation powers on states, will have to be discussed in the GST Council in order to ensure that states are not put to hardship in 2022-23.

“I urge the Union finance minister to address this very crucial issue with the urgency that it warrants and to ensure that the interests of the states are not affected,” Pannerselvam said.

He further urged the Minister no further conditions should be imposed by the Centre for the release of grants recommended by the Finance Commission to ensure that the States receive their full share of the grants on time.

The Deputy CM also pointed out that Tamil Nadu was yet to receive grants of Rs 2,577.98 crore recommended by the 14th Finance Commission for rural and urban local bodies. In fact, performance grants recommended by the 14th Finance Commission have not been released in the last three years to any State.

“I request the Government of India to release the arrears pertaining to the 14th Finance Commission grants at the earliest,” he asserted.