The Hindu Business Line : TN: Deficit halved due to buoyant tax mop-up

AIDED by a buoyancy in tax revenues, Tamil Nadu's revenue deficit for 2004-05 has almost halved to Rs 1,687.39 crore for 2004-05 against the originally estimated Rs 3,336.43 crore. The increased collections have also resulted in the overall deficit coming down to Rs 124.98 crore against the estimated Rs 590.47 crore.

In the budget for 2005-06, presented to the Assembly today by the Finance Minister, Mr C. Ponnaiyan, the revenue deficit for the year has been estimated at Rs 1,404 crore and the overall deficit at Rs 260.41 crore.

"The cash management during the year was perfect and problems of unpaid bills for committed expenditure have been left behind in the distant past," said the Finance Minister. The revenue deficit had been brought down to 4.64 per cent of the total revenue receipts, showing that the State was well on the way to meet the targets fixed under the Fiscal Responsibility Act 2003.

Presenting a tax-free budget, the Finance Minister, in his nearly three-hour-long speech, outlined the State's financial turnaround and said in such a situation the emphasis for the coming year would be on infrastructure and social development while continuing with fiscal consolidation.

Total revenue receipts in the revised estimates were Rs 27,049.40 crore against budget estimates of Rs 24,792.30 crore. Revenue expenditure in the revised estimates was higher at Rs 28,736.79 crore against budget estimates of Rs 28,128.73 crore primarily because of increased expenditure on social schemes.

The Minister estimated the total revenue receipts during 2005-06 at Rs 30,251.53 crore against a revenue expenditure of Rs 31,655.53 crore, leaving a deficit of Rs 1,404 crore. The fiscal deficit for 2005-06 was estimated to be Rs 6,350.57 crore. The fiscal deficit, excluding prior period expenditure, in the budget estimates had been brought down to 2.86 per cent of the Gross State Domestic Product.

Thanks to fiscal discipline the targets in the medium term fiscal plan for 2004-05 have been met in full. The updated plan with the aim of bringing down revenue deficit and generating a surplus by 2008-09 aims to achieve growth and development while continuing with social commitment, he said.

Later, briefing reporters, the Principal Secretary - Finance, Mr N. Narayanan, said the major correction of revenue deficit was a signal of fiscal correction and consolidation. Higher revenues were possible because of increased collection from the State's own tax revenues (Sales Tax and Excise). Specifically, the growth in sales tax was significant.

With a plan outlay of Rs 9,100 crore for 2005-06 its priorities were on growth in primary sector, infrastructure establishment, social sectors and urban development.

The outlay for a comprehensive road development programme was Rs 1,050 crore with Rs 750 crore provided to cover State highways, major district roads, and other district roads. It has also provided Rs 550 crore for the World Bank assisted Tamil Nadu Road Sector Project being implemented at a total cost of Rs 2,160 crore to upgrade 742 km of roads and maintain 2,000 km of roads.

Mr Ponnaiyan announced a provision of Rs 7,528 crore for 2005-06 covering food security, primary health care, clothing, primary education, shelter and livelihood support and welfare.

The allocation to social sectors included Rs 1,000 crore towards food subsidy, and Rs 4,348 crore for school education, Rs 741.77 crore for higher education, Rs 1,652 crore for health and family welfare and Rs 558.18 crore for social welfare and nutritious meal programme.

During the current year the growth in primary sector is pegged at 16 per cent with food grains output set to exceed 90 lakh tonnes. The focus is on crop diversification, wasteland development, and efficient water use.

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