Tamil Nadu chief minister J Jayalalithaa on Thursday demanded an increase in grant component under the Normal Central Assistance (NCA) to 50%, from 30% at present.
Under the NCA component of annual Plan outlay, states get 30% as grant, which they are not supposed to return, and 70% as loan.
She also sought hike in funds under the NCA to her state and called upon the Planning Commission to take up the matter with the union government.
"We request the Planning Commission to recommend increase of NCA levels to at least 20% of the annual Plan outlay, with a grant component of 50% by revision from the present level of 30%," Jayalalithaa said in a meeting with Planning Commission Deputy Chairman Montek Singh Ahluwalia here to finalise Tamil Nadu's Plan allocation for 2011-12.
She said the overall share of NCA has also been falling consistently.
"This grant portion was tentatively set at last year's level of Rs 547.52 crore... The share of NCA is, therefore, sharply down to 9.1% of last year's outlay and appears set to slide further," she said during her speech before the Plan panel.
The chief minister said that nearly all major sources of revenue, including most of the service taxes, are held by the central government.
"Therefore, to meet the pressures of local governance at the state level, borrowings become necessary and the fiscal strain compromises the ability of the state government to invest developmental needs," she said.
Jayalalithaa called upon the Plan panel to take up the matter with central government and said the NCA for this fiscal should be raised to Rs 4,600 crore.
The Planning Commission approved Tamil Nadu's annual Plan of Rs 23,535 crore for 2011-12, which is Rs 3,467 crore higher than last fiscal's outlay.
"The Planning Commission could urge the central government to alter the NCA and accordingly boost the state's resource position and capability to take up programmes that can yield dynamic growth," she said.
Tamil Nadu has last month sought a special assistance package of over Rs 2.5 lakh crore from the centre to tide over economic problems in the state.