A Study on Grants from the Centre to Tamil Nadu – A Post-Reform Approach
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This paper “A Study on Grants from the Centre to Tamil Nadu – A Post-Reform Approach,” examines the growth trend of
central grants received by the Government of Tamil Nadu during the post-reform period. It is a positive and time series study
and it is based on secondary data. The main objective of this study is to assess the pattern and growth trend of grants
transferred from the Central Government to the State Government of Tamil Nadu. This study is based on the hypotheses that
“Grants-in-aid received by Tamil Nadu have increased at a faster rate than its share of central taxes during the post – reform
period” and “Plan grants to Tamil Nadu have increased at a faster rate than non-plan grants during the post-reform period”.
This study concluded that the flow of central grants to Tamil Nadu has experienced fluctuations and an overall decline in
relative importance during the study period. This trend reflects changes in the structure of intergovernmental fiscal transfers
and the evolving framework of Centre–State financial relations. Also, this study has concluded that the reduced significance
of grants may have increased the State’s reliance on other sources of revenue to meet its developmental and administrative
expenditure requirements.
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References
1. Twelfth Finance Commission Report (2004), Chapter 10, "Grants-in-Aid to States," pp. 191–232.
2. Union Budget 2016–17, Budget Speech, para. 114, p. 39; Union Budget Expenditure Profile 2017–18, pp. 1–3; Fifteenth Finance Commission Study, Development Expenditure in the States Post Fourteenth Finance Commission Award, pp. 8–12.
3. Twelfth Finance Commission Report (2004), Chapter 10, "Grants-in-Aid to States," pp. 191–232.
4. NITI Aayog (2015), Report of the Sub-Group of Chief Ministers on Rationalisation of Centrally Sponsored Schemes, New Delhi. Chapter 1 (pp. 1–4) for the background and Chapter 4 (pp. 31–46) for the recommendations. The discussion on the reduction in CSS allocations in the 2015–16 Union Budget appears on p. 94
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