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Expectations were high as Tamil Nadu Finance Minister Palanivel Thiaga Rajan rose to present the Budget in the State Assembly on Friday. The White Paper presented on Monday had called for a ‘once in a generation reforms’ after painting a grim picture of the State’s finances. But far from any reforms or revenue-mobilisation measures, the government cut tax on petrol by ₹3 a litre, costing the exchequer ₹1,160 crore, and waived loans worth ₹2,756 crore to self-help groups from co-operative credit societies.
Watch | TN Budget 2021-2022: Four big takeaways
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Will the forthcoming Budget see higher taxes to boost revenues?The revenue deficit, consequently, will increase from ₹41,417.30 crore estimated in the interim Budget to ₹58,692.68 crore in the revised Budget estimates for 2021-22. The fiscal deficit, at ₹ 92,529 crore, will be 4.33 per cent of GSDP.
“Given that the economy is just recovering from the impact of successive waves of the Covid-19 pandemic, the time is not yet ripe for fiscal consolidation,” the Finance Minister said. Once the impact of the pandemic is overcome, deeper reforms will be undertaken to ensure that Tamil Nadu’s debt overhang is corrected without any delay. The most critical reform that needs to be undertaken is to increase the tax-GSDP ratio of Tamil Nadu, he added.
KR Shanmugam, Director and Professor, Madras School of Economics, said the Budget has followed what the previous government did. There was no announcement towards fiscal reform. “In fact, all of the parameters are worse than the previous Budget,” he added.
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Will the forthcoming Budget see higher taxes to boost revenues?Measures for industry
According to Vidya Mahambare, Professor of Economics, Great Lakes Institute of Management, the Budget has set an ambitious target of lowering the revenue deficit to ₹58,692 crore.
It is unclear for now, without knowing the details on the revenue side, how this would be achieved.
The Budget had some welcome measures on the industrialisation front such as widening the ambit of the Single Window Clearance, setting up industrial estates in backward areas, Tidel Parks outside Chennai, a ₹1,000 crore International Furniture Park at in Thoothukudi district and creating a land bank of 45,000 acres. Fillip is also being planned for attracting FinTech investments (a Fin Tech City will come up in Chennai) .
The array of measures announced will prove a milestone and is likely to boost the State economy, said Venu Srinivasan, Chairman, TVS Motor Company.
Srivats Ram, President, MCCI, said the Budget takes a holistic view of development.
The development of industrial parks in a number of districts takes the Chief Minister’s view of a broad-based development across the State.
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