Chennai, Feb 7: Tamil Nadu Chief Minister M K Stalin has pledged his support to his Kerala counterpart, Pinarayi Vijayan, in the fight to preserve fiscal federalism. Stalin expressed solidarity with Vijayan’s efforts to challenge what he described as arbitrary and discriminatory control by the central government over states’ deficit financing.In a show of unity, Stalin commended Vijayan for bringing the pressing issue of the central government’s interference in state finances to the attention of the Supreme Court. He reiterated Tamil Nadu’s commitment to upholding federal principles and vowed to cooperate with Kerala in addressing this challenge.
Stalin highlighted the constitutional provision that grants state legislatures exclusive authority over public debt for financing state expenditures. He criticized the central government for misusing its powers under Article 293 of the Constitution to restrict states’ borrowing capacity, thereby undermining fiscal autonomy.
The Tamil Nadu Chief Minister pointed out the detrimental impact of the central government’s policies on his state’s finances. He revealed that Tamil Nadu had faced a loss of Rs 6,000 crore in borrowing space during the 2023-24 fiscal year due to arbitrary limits imposed by the Union government. Despite Tamil Nadu consistently achieving around 15% nominal growth in recent years, the borrowing ceiling was arbitrarily capped at 8%, severely constraining the state’s fiscal flexibility.
Stalin also raised concerns about the financial burden imposed on Tamil Nadu by the central government’s guidelines for additional borrowing for power sector reforms. He highlighted that the mandatory requirement to fund gross losses of State DISCOMs had forced Tamil Nadu to allocate a substantial amount of Rs 17,111 crore to TANGEDCO in the current fiscal year, further limiting the state’s fiscal maneuverability.