The interim budget for 2011-2012, presented by Finance Minister K. Anbazhagan in the Assembly on Saturday, had no announcements regarding new schemes but showed a revenue surplus of about Rs. 439 crore.
In view of the forthcoming Assembly election, tax exemptions and imposition of any new tax had not been considered. “The revenue deficit will be completely wiped out in 2011-2012 in conformity with the norms fixed by Union Finance Commission,” he said, adding that the year 2010-2011 would have a revenue deficit of Rs. 3,129 crore.
Due to the adverse impact of the global economic slowdown on the Indian economy since 2007-2008, the tax revenue of the State declined and the revenue surplus came down from Rs. 4,545 crore in 2007-2008 to Rs.1,452 crore in 2008-2009. In the wake of the implementation of recommendations of the Sixth Pay Commission, the State had to face a revenue deficit in 2009-2010. The fiscal targets fixed for 2010-2011 under Fiscal Responsibility Act, 2003 had been relaxed by the Union Finance Commission as many State governments were facing severe financial problems due to the implementation of new pay scales against the declining trends in tax revenue, he said.
Explaining the reasons for the projection of revenue surplus for 2011-2012, Principal Secretary (Finance) K. Shanmugam later told reporters that unlike this year, there would be less pressure next year on the State's finances as only the third and final instalment of the payment of arrears of pay and pension had to be made.
Though the government announced the hike in pay and pension in 2009-2010 and decided to make the payment of arrears in three annual instalments, most of the payment of first instalment took place only in 2010-2011.
This was apart from the second instalment due this year. Some of the major schemes such as distribution of colour television sets free of cost and waiver of agricultural loans were also coming to an end. The downward revision of revenue expenditure coupled with better prospects of higher revenue growth was the basis for the projection of revenue surplus.
Asked how the State's Own Tax Revenue (SOTR)'s revised estimates were higher than the budget estimates, he pointed to the frequent hike in the prices of petroleum products, stabilisation of the regime of the State-level value added tax (VAT) and better economic recovery. As per the revised estimates, the SOTR for 2010-2011 would be Rs. 49,125 crore. As on December 31, 2010, the collections were Rs. 33,558 crore and they included Rs. 21,008 crore from commercial taxes; Rs. 6,086 crore from State Excise; Rs. 3,246 crore from stamps and registration and Rs. 1,949 crore from taxes on vehicles.
To a question on revenue through sale of liquor, he said there were two components – State Excise and Sales Tax on Indian Made Foreign Spirits (IMFS). As per the revised estimates, Rs. 7,929 crore would be netted through the Excise and Rs. 6,223 crore through the Sales Tax.
The State government's outstanding debt, which was Rs. 57,457 crore as on March 31, 2006, was expected to be Rs. 1,01,541 crore as on March 31, 2011. Still, the debt-Gross State Domestic Product (GSDP) ratio (19.58 per cent) of the State government in 2010-2011 would be less than what it was five years ago (22.29 per cent). As per the Central norms, the ratio could be up to 25 per cent, Mr Shanmugam said, adding that the ratio was 40 to 45 per cent in other States.
