Once again, Tamil Nadu faces a sharp increase in its revenue deficit. The interim budget for 2016-17 presented by Finance Minister O. Panneerselvam on Tuesday showed that the State’s revenue expenditure overshoots its receipts by a whopping Rs. 9,154.78 crore.
Mr. Panneerselvam said the total revenue receipts had been estimated at Rs. 1,52,004.23 crore, while the total revenue expenditure would Rs. 1,61,159.01 crore. The interim budget spelt out no new revenue proposals or policy measures, as the State is due to have Assembly elections before the end of May.
The implementation of a host of welfare schemes and a fall in the State’s tax revenue, especially because of reduced income from sales tax on petroleum products were the main reasons, explained Mr. Panneerselvam. As a result, the State will, for the third year in succession, be unable to meet its fiscal responsibility norm of zero revenue deficit.
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The Tamil Nadu Fiscal Responsibility and Budget Management Act, 2003, will be amended suitably to permit the revenue deficit, he said. The amendments would be taken up when the revised budget estimates for the current year are presented in the Assembly.
Mr. Panneerselvam, whose budget presentation was delayed by the protest of Opposition members, who subsequently staged a walkout, said the huge revenue deficit was unavoidable. The drastic fall in international crude oil prices in the last one-and-a-half years and reduction in tax realisation on petroleum products had reduced the state tax revenue by Rs. 4,000 crore per year.
“Further when the State is implementing many unique schemes such as green houses scheme, free mixer, fan, grinder and laptops scheme, special public distribution scheme, special security pension scheme, such a revenue deficit is unavoidable,” he said. Even though neighbouring States had raised sales tax on petrol and diesel to compensate the loss of revenue, Tamil Nadu had not resorted to such a move.
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Fiscal deficit has been projected at Rs. 36,740.11 crore. Its ratio to the Gross State Domestic Product (GSDP) had been contained at 2.92 per cent.
“This is well below the limit prescribed by the fourth Finance Commission. Even though the State is entitled for budgetary borrowing of Rs. 37,782 crore, it has been restricted to Rs. 35,129 crore in the interim budget estimates,” Mr. Paneerselvam said.
Tax revenue
Mr. Panneerselvam said the State’s own tax revenue in the coming fiscal would be Rs. 96,531.41. Commercial tax revenue is expected to grow at a rate of 11.69 per cent and reach Rs. 72,326.45 crore. The State excise duty is expected reach Rs. 7,101.81 and collection under stamp fees and registration is projected at Rs. 10,548.25 crore. Taxes on motor vehicles are expected to fetch Rs. 4,925.05 crore.
The Finance Minister said non-tax revenue was estimated at Rs. 9,288.63 crore and the share in central taxes was estimated at Rs 23,688.11 crore. “A growth rate of nine per cent is assumed for 2017-18 and 2018-19,” he said.
The grants-in-aid from the Centre has been projected at Rs. 22,496.08 crore, taking into account the revised sharing pattern for the centrally sponsored schemes from 2015-16.