In 2007-08, another Rs 4,224 crore will be spent by the state government on behalf of local bodies for running primary schools, primary health centres and providing water supply, thus making a total fund transfer of Rs 9,169 crore.
This is much more than in any other state, including Kerala and West Bengal, the chief minister claimed.
According to the recommendations of the Third Finance Commission to devolve 9% of state's tax revenue to local bodies, the Budget for 2007-08 has allocated Rs 2,734 crore for local bodies, he said. Together with the assigned funds and Plan support funds the total devolution in Tamil Nadu would be Rs 4,945 crore.
In Kerala, the total funds allocation according to the Third Finance Commission recommendation was only Rs 2,255 crore. The allocation was not as a percentage of the state's own tax revenue, Karunanidhi said.
In West Bengal, the allocation was just Rs 350 crore, Rs 278 for village panchayats, and Rs 78 for municipalities.
"Thus, the fund allocation for Tamil Nadu local bodies is in no way less than that in West Bengal or any other state," the chief minister said.
Karunanidhi said the interest on crop loan for farmers who have been repaying their existing loans regularly would be 5% instead of 7%. The government would bear this cost and subsidise the co-operative banks, he added.