News

7th Pay Commission recommendations may cost TN govt ₹14,719 cr more a year

Our Bureau Chennai | Updated on March 15, 2018 Published on March 15, 2018

Tamil Nadu Finance Secretary K Shanmugam   -  THE HINDU

The 7th Pay Commission has caused stress on Tamil Nadu’s finances, which led to higher-than-projected revenue deficit in 2017-18, according to the Finance Secretary K Shanmugam.

Last year’s Budget had projected a revenue deficit of ₹15,930 crore, but the revised estimate pegs the amount at ₹18,370 crore.

Salary expenditure

“It was off the mark specifically due to the implementation of the 7th Pay Commission, which led to a spike in the revenue deficit. However, it is getting stabilised from the current year and is expected to go down in the future, given the fact that the revenues are expected to grow at 14 per cent while the normal growth of salary expenditure is expected at 8-9 per cent,” he said at the post-Budget press conference.

The additional burden on account of the implementation of the new pay hikes is estimated at ₹14,719 crore a year.

Despite the burden on the State’s finances, the Budget has projected the fiscal deficit to GDP ratio at 2.79 per cent for 2018-19, which will be below three per cent fiscal norm. This is after projecting a revenue deficit of ₹17,491 crore and fiscal deficit of ₹44,481 crore for 2018-2019.

GST impact

Discussing the GST impact, Shanmugam admitted that there was an increase in revenue growth after GST implementation.

In pre-GST period (VAT) — during March-June 2017, the growth rate was 7.04 per cent as against 6.96 per cent in the same period previous year.

“In the post-GST regime (July 2017 to February 2018), the growth rate was 15.45 per cent when compared with 10.72 per cent in the same period previous year. So, it is 4.4 per cent higher after GST implementation and we feel at least 3-4 per cent increase is due to GST,” he added.

The State had projected SOTR (State’s own tax revenue) of ₹99,590 crore for 2017-18 in last year’s Budget. But, in the revised estimate, it is pegged at ₹98,693 crore. This is mainly due to drop in excise duty collection to the tune of about ₹500 crore.

For the current year, the Budget has projected a SOTR of ₹112,616.41 crore for 2018-19. “We are making a conservative estimate on this. We are actually projecting 14 per cent increase on SOTR,” he said.

The GSDP in 2017-18 is estimated 8.03 per cent at constant prices and for 2018-19 economic growth is pegged at nine per cent.

Published on March 15, 2018

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.