Decision to bail out Tangedco the major factor
The State Government may not achieve revenue surplus projected for the current year, mainly due to its decision to bail out the Tamil Nadu Generation and Distribution Corporation (Tangedco) from its financial woes.
Against the projected revenue surplus of about Rs. 2,376 crore, the government may end up with a surplus of around Rs. 1,000 crore, says a policymaker.
An indication of the likelihood of a decline in revenue surplus was given in a statement of review of trends in receipts and expenditure of the government, was placed by Finance Minister O. Paneerselvam in the Assembly last week.
Apart from giving ways and means advance of Rs. 1,000 crore, the government provided another Rs. 2,000 crore to the Tangedco towards execution of the financial restructuring package for the power utility. Also, it has decided to absorb 30 per cent of the utility’s current year losses.
Besides, the implementation of other schemes is expected to cost the government Rs. 1,000 crore. In total, Rs. 4,000 crore more may have to be spent by the government in the form of revenue expenditure.
On the revenue front, the government expects to get higher receipts than the projected budget estimates in view of the increase in licence fee of the State Excise and revision in guideline value in Stamp Duty and Registration Fees. It also hopes to carry out avoidance of unnecessary expenditure.
As per the statement, the total revenue receipts of the government was Rs. 36,818 crore up to August — a growth rate of 22.89 per cent over the corresponding period last year. Of this amount, State’s Own Tax Revenue (SOTR) accounted for Rs. 28,082 crore and Non-Tax Revenue — Rs. 1,630 crore.
While share in Central taxes yielded Rs. 5,369 crore, the Union Government’s grants-in-aid was Rs. 1,737 crore.
The revenue expenditure was Rs. 36,862 crore, representing about 37.5 per cent of the total annual appropriation allocated for revenue expenditure. A revenue deficit of Rs. 44 crore had been recorded.
Also, what should be of concern to the government is that there is no buoyancy in the economy even amid signals that the growth rate of the SOTR in September and October was not as high as in the previous months.
The SOTR accounts for about 70 per cent of the State’s total revenue.
In spite of this scenario, the statement of the Finance Minister seems optimistic about the overall revenue surplus for the year being achieved as required by the Tamil Nadu Fiscal Responsibility Act, 2003.