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Tamil Nadu government today presented a tax-free Budget for 2019-20, shorn of any significant populism. It projects a sharp reduction in revenue deficit and a fiscal deficit well within the threshold of 3 per cent of GSDP.
The revenue deficit will decline to ₹14,315 crore in 2019-20 from ₹19,319 crore in the revised budget estimate (BE) for 2018-19.
Pressure on finances
With higher State’s Own Tax Revenue growth, coupled with the phasing out of the impact of UDAY and pay revision, the State expects to bring down the revenue deficit in future, said Finance Minister O Paneerselvam presenting the Budget for 2019-20 in the State Assembly.
The takeover of the Tangedco’s debt of ₹22,815 crore by the government under the UDAY scheme and the implementation of 7th Pay Commission widened the revenue deficit in recent years.
However, the State expects to be on a high-growth path.
The shock of pay revision is getting phased out and steps are being taken for fiscal consolidation. The good growth prospects in the coming years will help Tamil Nadu maintain the status of a fiscally disciplined State, he said.
Deficit estimates
The fiscal deficit is estimated to be ₹44,176 crore in the BE 2019-2020. The fiscal deficit to GSDP ratio is estimated at 2.56 per cent as per the BE 2019-2020. It will be 2.39 per cent in 2020-2021 and 2.25 per cent in 2021-2022, he said.
Tamil Nadu is a better performing State in implementing Goods and Services Tax (GST). However, it is yet to receive its due share of IGST of ₹5,454 crore and the assured GST compensation of ₹455 crore for 2017-2018. This is impinging on the State finances, he said. Tangedco will establish floating solar power projects in Theni, Salem and Erode districts with a capacity of 250 MW at an estimated cost of ₹1,125 crore and the Kadaladi Ultra Mega Solar Photovoltaic Park Power Project with a capacity of 500 MW at a cost of ₹2,350 crore.
IMFL shops
The number of retail IMFL shops run by TASMAC has dropped from 7,896 to 5,198. Based on the present trend in State excise duty collection, a sum of ₹6,724 crore has been included in RE 2018-2019 and ₹7,262 crore is being included in BE 2019-2020.
Collections from stamp duty and registration fees have been buoyant in 2018-2019 and a sum of ₹11,512 crore has been fixed in RE 2018-2019, he said.
The State government plans to establish hi-end skill building centres to impart higher level of technical skills to unemployed engineering graduates under the PPP mode in five districts to annually benefit 10,000 unemployed engineering graduates, he said.
Stamp duty
The stamp duty on property transfer in respect of amalgamation or reconstruction of companies will be fixed at 2 per cent of the market value of the immovable property or 0.6 per cent of the aggregate of the market value of the shares, whichever is higher. Similarly, the registration fee payable on such transactions will be fixed at a maximum of ₹30,000, he said.
The fiscal indicators of fiscal deficit, net borrowings and outstanding debt-GSDP ratio will be within the permissible limits, despite the various financial stresses, says the State’s Medium Term Fiscal Plan.
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