"It is a matter of regret to say. But the Centre is working with the intention of not allowing Tamil Nadu to survive," Jayalalithaa told the Assembly.
Her remarks come a day after she charged the Centre with inaction on a resolution by the Assembly seeking economic santions on Sri Lanka on the ethnic conflict involving the Tamils, alleging that it had emboldened Sri Lankan Defence Secretary Gotabaya Rajapakse to ridicule the resolution.
He had said that the resolution was passed for political advantage.
Responding to CPI (M) Floor Leader A Sounderrajan's plea for more funds for certain programmes, Jayalalithaa said the Centre had "snatched" from states most of the revenue-generating portfolios and retained them with itself and left Value Added Tax and Commercial Taxes for states to meet their revenue.
"State government's revenue is realised only from these. And we are managing all our expenses using these. We have the intention to do but financial deficit has tied us down," she said.
She assured that her government was committed in implementing welfare measures and said that all the "hurdles created by the Centre will be smashed."
"I would assure that we will fulfill our democratic duty in democratic ways," she said.
Earlier, she had slammed the Congress-led UPA when she said that the Centre had cut down state's quota of kerosene since June and recalled that she had taken this up with Prime Minister Manmohan Singh.