The Tamil Nadu government has objected to the 13th Finance Commission’s prescribed criteria for fixing the open market borrowing limit for state governments.
In his address at the pre-Budget meeting speech at New Delhi, state finance minister O Panneerselvam said “once the ceiling is fixed as per the criteria of the Finance Commission, the state Government should be free to time its open market borrowings as per its requirements and market conditions. However, presently, the state government has to wait for approval of the central government for all open market borrowings.
“This is an unfair condition imposed on the states in addition to the already stringent criteria of Finance Commission and limits of FRBM Act. When the central government can approach the market at will, there is no reason why states should be forced to avail of loans at the most unfavourable times when interest rates are surging high. By doing so, in effect the central government is shifting the additional cost of borrowing onto the States,” he said.
He also asked the centre to allow the state to dovetail the funding of Rashtriya Swasthya Bima Yojana (RSBY), which gives health insurance to low income workers, with the state public health insurance programme, provided the state scheme’s coverage is better than the RSBY.
Panneerselvam said running two different schemes by the state and centre for the same purpose does not augur well, as it will only duplicate the efforts and drain the resources. “This will help us in pooling the resources to fulfil the objectives behind RSBY. Similarly, the central government is also implementing Aam Admi Beema Yojana for the rural landless households. Our state government is also implementing a programme for giving such coverage with a better benefit under Farmer’s Social Security Scheme”.
The minister said there were several such cases where convergence was the need of the hour and if the Government of India confined itself only to setting the overall goals, providing a broad framework for such schemes and making sectoral allocations, this will provide the states with the flexibility to design schemes by dovetailing their own resources.