Tamil Nadu

Demonetisation has impacted State tax revenue: Governor

Prime Minister Narendra Modi announced the decision to demonetise Rs. 500 and Rs. 1,000 notes on November 8, 2016.   | Photo Credit: V. Sreenivasa Murthy

: Tamil Nadu Governor Ch Vidyasagar Rao on Monday said demonetisation of ₹1,000 and ₹500 currency notes had negatively impacted the State’s revenue collections.

“The impact of demonetisation has been particularly severe on the resources of the States as tax revenue collections have slowed down in the last few months,” Mr. Rao said in his customary address to the Tamil Nadu Legislative Assembly on Monday. He acknowledged that its (demonetisation) short-term negative impact, particularly on the informal sector, farmers and small traders may last longer than expected.

To tide over this crisis, the State has requested the Union Government to increase its share in Centrally Sponsored Schemes from 60 per cent to 90 per cent for the next two years. He hoped that the State’s request would be considered positively.

On the issue of “unjust denial” of the due share of central tax to Tamil Nadu, Mr. Rao said the State suffered the highest loss in the country after the 14th Finance Commission reduced the earlier inter-se share of Tamil Nadu by 19.04 per cent. The State’s finances have been strained due to the increase in State’s share in centrally sponsored schemes. The Governor hoped that the Centre would consider Tamil Nadu’s request as a special case by providing an annual grant of ₹2,000 crore during the award period.

As for the GST, he requested the Centre to ensure that the present level of Central transfers after appropriate adjustment for normal growth is maintained even after the rollout.

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Printable version | Oct 25, 2021 12:32:20 PM | https://www.thehindu.com/news/national/tamil-nadu/Demonetisation-has-impacted-State-tax-revenue-Governor/article17084352.ece

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