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The Dravida Munnetra Kazhagam (DMK) has reiterated its criticism of the Union government’s tax devolution policy, accusing the Centre of favouring Bharatiya Janata Party (BJP)-ruled States at the cost of Tamil Nadu. Party spokesperson T.K.S. Elangovan, addressing the media on Monday, said that the state receives only 27 paise for every rupee it contributes as tax to the Union government, while states like Uttar Pradesh receive Rs 2 for every rupee collected from them.
Elangovan demanded parity and transparency in the tax devolution system and questioned the logic behind the current formula used by the Centre. “When we pay Re 1 as tax, we get only 27 paise in return. When Uttar Pradesh pays Re 1, they get Rs 2 back. Why should Tamil Nadu, which contributes significantly to the Union’s revenue, receive so little in return? Either the share should be increased, or there must be uniformity across all states,” he said.
He further alleged that the disparity stems from a political motive. “The Union government is favouring BJP-ruled states. This bias has become more visible after the implementation of the Goods and Services Tax (GST),” Elangovan stated.
GST Implementation and Revenue Sharing Concerns
Elangovan pointed out that prior to the GST regime, the states collected and retained commercial taxes. However, under the current GST structure, the Centre collects the tax and redistributes a portion to the states based on a formula determined by the Finance Commission. According to Elangovan, this formula disproportionately disadvantages Tamil Nadu.
“In Prime Minister Narendra Modi’s speech in Rameswaram on Sunday, he claimed that the Centre has provided more funds to Tamil Nadu than what was given during the UPA government’s time. But this is misleading. During the Congress-led UPA rule, the state collected its own commercial tax. Now, the Union collects everything and gives us only a fraction,” he added.
PM Modi’s Visit to Rameswaram and Project Announcements
The DMK’s statement came a day after Prime Minister Modi visited Rameswaram, Tamil Nadu, to inaugurate and lay the foundation stone for multiple infrastructure projects valued at over Rs 8,300 crore. The visit was part of a larger outreach effort ahead of the upcoming general elections.
During his address, Modi inaugurated India’s first vertical lift sea bridge — the new Pamban Rail Bridge. He also flagged off a train and a ship from the adjacent road bridge and witnessed the operation of the vertical lift mechanism.
Modi emphasised the Centre’s commitment to infrastructure development in Tamil Nadu, stating that the state’s railway budget has increased more than sevenfold over the past decade. “Before 2014, Tamil Nadu received only Rs 900 crore annually for railway projects. This year, the allocation has exceeded Rs 6,000 crore,” he said.
The Prime Minister added that the Centre is currently modernising 77 railway stations across the state, including the Rameswaram station.
Road Development and Metro Expansion
In addition to railway upgrades, Modi highlighted the construction of 4,000 kilometres of roads in Tamil Nadu since 2014, supported by the Union government. He said that road projects worth Rs 8,000 crore are either underway or recently launched. These include the elevated corridor connecting Chennai Port and enhanced road connectivity with Andhra Pradesh.
“Road infrastructure is a backbone for development. The projects we are launching will not only ease transport but also generate employment across sectors,” Modi stated.
He also spoke about the Chennai Metro and its role in improving public transport, saying that such systems are vital for urban mobility and economic growth.
Investments in Social Infrastructure
Modi mentioned the Centre’s focus on social infrastructure over the past ten years, claiming that crores of families across India have benefited from central schemes. The government has constructed more than 12 lakh pucca houses in Tamil Nadu under the Pradhan Mantri Awas Yojana (PMAY), as part of a nationwide effort to provide over 4 crore homes to economically weaker sections.
He also underlined the government’s commitment to creating sustainable jobs through investment in housing, roadworks, and public utilities.
Political Backdrop and Ongoing Tensions
The DMK’s renewed criticism against tax devolution is set against the backdrop of an ongoing political tussle between the state government and the Centre over financial autonomy and fiscal fairness. Tamil Nadu has consistently ranked among the top contributors to the Union’s tax revenue. However, successive governments in the state have alleged that it receives a disproportionately low share in return, particularly under the Fifteenth Finance Commission’s allocation formula.
In the past, Tamil Nadu’s Finance Ministers have voiced similar concerns in official meetings, questioning why states with higher per capita income and robust revenue systems are penalised under a formula that gives more weightage to population figures.
While the Centre argues that the current system aims to ensure equitable development by supporting less-developed states, Tamil Nadu’s leaders see it as a disincentive for states that have performed well fiscally and economically.
Way Forward
The DMK plans to continue pressing for reforms in the Finance Commission’s fund allocation and the sharing of GST revenue.
Elangovan reiterated that the party is not against contributing to national development but wants fairness. “We are not asking for special treatment. We are asking for justice and uniformity in treatment. A state that contributes significantly should not be short-changed,” he said.
Experts urge a re-evaluation of the tax devolution formula to address concerns raised by high-performing states, especially in the post-GST era that has reduced fiscal autonomy. The coming months may see heightened discussions around Centre-State relations and the financial rights of states under the Constitution.
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