TN budget: focus on welfare, no new taxes

Despite a slowdown in tax revenues, the Tamil Nadu Government continues to focus on social sector spending and supporting primary sector while pushing for infrastructure development and investments in manufacturing, said Chief Minister O Panneerselvam in the Assembly today.

Presenting the budget for 2015-16, the Chief Minister, who also handles the Finance portfolio, said the government has not hiked any taxes or levied new taxes but would mobilise resources through better tax administration and “tightening the collection system” to meet revenue projections.

With nearly one-third of the budget dedicated to social sector and the continued thrust on subsidies, the government faces a huge commitment. The challenge is to facilitate economic growth while ensuring inclusive development, he said.

The State’s own tax revenues have been hit due to the overall economic slowdown.

The Revised Estimates are pegged at ₹85,772 crore in 2015-16 against projections of ₹101,557 crore.

The Budget Estimate of tax revenue in 2015-16 is a conservative ₹96,083 crore representing about 12 per growth, he said.

The overall gross transfer to States as a proportion of Centre’s gross revenue continues to stagnate at about 49 per cent.

The Central Government has converted taxes such as wealth tax into cesses and surcharges which are not shared with States. The central schemes implemented through state governments have also been drastically reduced representing a revenue impact of over ₹1,137 crore based on allocations of 2014-15.

The 14{+t}{+h} Finance Commission has suggested that state specific grants such as slum improvement, support for water bodies, coastal and heritage sites be discontinued.

They received over ₹4,669 crore under these schemes. The Commission has also cut the State’s share from the tax pool to 4 per cent from 4.9 per cent previously.

The share from the service tax pool has also dropped to 4 per cent from 5 per cent previously.

Despite the drop in revenue and tight financial conditions, the State Government has managed to control its fiscal deficit and debt within the norms, he said.

The projected Revenue Receipts are ₹1,42,681.33 crore against a Revenue Expenditure of ₹1,47,297.35 crore leaving a Revenue Deficit of ₹ 4,616.02 crore for 2015-16.

Capital Expenditure is pegged at ₹ 27,213.17 crore which will mean an estimated Fiscal Deficit of ₹ 31,829.19 crore.

The Government will raise net borrowings to ₹30,446.68 crore, within the permissible limit of ₹32,990 crore. Overall debt will grow to ₹2,11,483 crore in March 2016.

Allocation to agriculture is at an all time high of ₹6,613.68 crore which is over three times that in 2010-11 when it was ₹2,072.43 crore.

Crop loan disbursement through the cooperative sector will be ₹5,500 crore. The focus will be on technology inputs including micro irrigation for which ₹200 crore has been allocated and horticulture crops for which ₹111.97 crore has been allocated, he said.

Universal coverage will continue under the PDS with free rice provided to all family card holders. The government has allocated ₹5,300 crore for the PDS.

A total financial support of ₹13,586 crore is provided for the power sector in the budget estimate for 2015-16. The power subsidy is set at ₹7,136 crore.

Over the last four years the government has signed 33 agreements representing a total investment of ₹31,706 crore. Investment deals worth ₹17,134 crore will be signed soon.

COMMENT NOW