Tamil Nadu Minister for Finance and Human Resources Management P. T. R. Palanivel Thiagarajan on Monday published the much-awaited White Paper on the state’s finances at the Secretariat in Chennai. The white paper highlighted the fiscal mismanagement during the past 10 years of AIADMK rule in Tamil Nadu.
The minister said the worsening deficit situation over the past 10 years has led the state to be over-reliant on debts. The average annual growth rate of GSDP in TN has reduced from 10.15 per cent in 2006-11 to 7.22 per cent in between 2016-20, the white paper stated.
Further, demonetization, hurried adaptation of GST and stagnation of economic activities due to Covid has further aggravated the growth issue. Poor growth rate and fiscal erosion of the state can be attributed to lack of fiscal discipline and management, the paper further stated.
Here are the major takeaways from the paper:
Revenue deficit of TN has been deteriorating for the last eight years. Such a long-term trend has affected the development investments.
Revenue deficit : 3.16 as percentage of GSDP for FY 2020-21.
Fiscal deficit of the state has been primarily increasing due to increase in govt borrowing.
Fiscal deficit is 4.43 as percentage of GSDP.
The public debt is Rs 2,63,976 per family in TN.
Public debt as percentage of GSDP is 26.69 per cent, which is above the allowed limit of 25 per cent. Outstanding debt of GoTN has been metioned as Rs 4,85,503 crores until now. However, if we consider "other means" of financing the fiscal deficit the real debt is Rs 5,24,574 crores.
Taxes
State's Own Tax Revenue registered a significant decline.
Commerical taxes, a main component of the State's Own Tax Revenue, was on a decreasing trend even before GST was introduced.
TN has a lower tax rates than many states leading to continued loss in Revenues. Eg: Motor vehicle tax rates have not been revised in the past 15 years.
Tamil Nadu has 6.124 per cent share of the population of the country but only 4.079 per cent share in the total tax revenue of the country, which is a proportion of 66.607 per cent. This is third lowest in the country.
Proportion of Cesses and Surcharges has gone up from 10.4 per cent in 2011-12 to 20.2 per cent in 2019-20. These Cesses and Surcharges are not shareable with the States.
Subsidies
Subsidies amounted 12.65 per cent (Rs 4841.80 crores) of revenue expenditure and 1.48 per cent of GSDP in 2006-07. This has increased to 27.06 per cent (Rs 62,338.84 crores) of Revenue Expenditure and 3.21 per cent of GSDP in 2020-21.
High increase in subsidy amounts calls for some urgent measures for improving and re-orientation of subsidies.
Power subsidy is the highest at 1.10 per cent of GSDP.
Food subsidy- 0.49 per cent of GSDP
Transport subsidy- 0.19 per cent of GSDP