R. ARIVANANTHAM
CHENNAI, MAY 18
In an unusual outburst against the NDA government, Tamil Nadu Chief Minister Edappadi K Palaniswami on Monday said the conditions put forth by it for additional borrowing were onerous, unreasonable, lacked consensus and above all not in keeping with the spirit of co-operative federalism.
விவசாயிகளுக்கான இலவச மின்சார திட்டத்தை ரத்து செய்ய கூடாது என்றும் விவசாயிகளுக்கு மானியம் அளிக்கும் முடிவை தமிழ்நாடு அரசே மேற்கொள்ள விட வேண்டும் என்றும் மாண்புமிகு பாரதப் பிரதமர் @PMOIndia அவர்களுக்கு கோரிக்கை விடுத்து கடிதம் எழுதியுள்ளேன். pic.twitter.com/gMhweA2pbS
— CMOTamilNadu (@CMOTamilnadu) May 18, 2020
Amid accusations of opposition parties that the AIADMK government is a puppet in the hands of NDA government at the Centre, the Chief Minister has come out for the first time against the electricity reforms proposed by the central government.
In his two-page DO letter written to Prime Minister Narendra Modi, the Chief Minister flagged electricity distribution reform as ‘politically sensitive,’ and strongly opposing the proposal to withdraw free power supply to farmers and made it categorical that the mode of disbursement of subsidy should be left to the State governments and batted for “greater latitude” to states to implement reforms.
One of the conditions of the Centre to states to increase their borrowing limit was the discontinuation of free electricity to farmers. The Centre, as part of the conditions, has asked states to switch to Direct Benefit Transfer (DBT) instead.
Free power distribution to farmers is among the initiatives over which both the Dravidian majors – AIADMK and DMK – have vied with each other to take credit for helping the peasants for over four decades.
Drawing Prime Minister Narendra Modi’s attention to the “onerous conditions attached to the additional borrowing limits,” approved for States by the Finance Ministry, he said in the letter that States sought the additional borrowing limit, beyond 3 per cent of Gross Domestic Product (GSDP) mainly because of the significant shortfall in revenues due to the lockdown.
“There are also large additional expenditure commitments. These are borrowings by the state government, which have to be repaid from future tax revenues of the states. They are not grants from the Centre. To attach needlessly demanding conditionalities to the additional borrowing requirements appears to be unreasonable,” Palaniswami added.
Aggressively pushing a reform agenda on which “a consensus is yet to be developed, at a time when states have approached the Centre for additional borrowing out of sheer desperation, is not in keeping with the spirit of co-operative federalism,” he said.
Ideally, a consensus should have been evolved by the Centre following detailed deliberations with the States on proposed reforms, the Chief Minister said, adding reforms may have been linked to special Central COVID-1 grants, and not to additional borrowing by the State.
“Linking the Central government’s power under Article 293 (3) of the Constitution to permit additional borrowing by the States to conditionalities, is unprecedented,” he said.
As per the Constitutional provision, “a State may not without the consent of the Government of India raise any loan…”
In some of the four major areas of reform required by the Centre to avail additional borrowing, the state government has already undertaken reforms without expecting any financial assistance.
There are, however, some areas, like “power distribution reforms, which are politically sensitive. These issues have been repeatedly raised by me in communications to the Prime Minister as well. I have raised the issue in the context of the proposed changes in the Electricity Act. Our government is strongly opposed to the idea of removing the free power supply to farmers. It has been our stand that the mode of disbursement of subsidy should be left to the State governments themselves,” he said.
Since a consensus was yet to emerge on these issues, the Chief Minister requested the Prime Minister to instruct the Finance Ministry to remove the requirements to reform the power sector from the proposed conditionalities and also to “allow greater latitude to states in implementing a reform agenda.”
Also, Palaniswami said, “imposing needlessly onerous conditions on borrowings will constrain the state governments in finding funds to meet essential expenditure in the wake of a serious financial situation. I am confident you will appreciate and understand the difficulties that states face at this time and instruct that the necessary changes be made to the relevant guidelines,” the letter states.
