Tamil Nadu govt revises revenue, fiscal deficit estimations upwards
Fall in tax revenue, reduced share in central devolution reason for the increase in deficits, says Finance Minister
The Government of Tamil Nadu has revised the revenue deficit estimates upwards to Rs 15,854 crore for the year 2016-17 in its revised budget presented today, as against the revenue deficit of Rs 9,154.78 crore estimated in the interim budget presented in February, 2016. There are no new tax proposals in the revised budget.
The fiscal deficit is also expected to go up to Rs 40,533.84 crore during the fiscal year, as against the earlier projection of Rs 30,259.24 crore.
In the revised budget for 2016-17, presented by Finance Minister O Panneerselvam in the State Legislative Assembly today, the increase in revenue deficit is owing to the continuing global economic slowdown, which has slowed down the tax revenue growth.
The growth rate of state’s own tax revenue has also experienced a fall, particularly in commercial taxes because of the reduced sales tax realisation due to fall in tax revenue from petroleum products.
“The tax collections on petroleum products were stagnant in the last three years and have registered a negative growth during 2015-16,” said the Minister.
Considering this, the estimates of Commercial Taxes has been revised to Rs 67,629.45 crore in the revised budget estimate for the fiscal, as against the Rs 72,326.45 crore in the interim budget estimates presented on February, 2016. The excise duty collection for the fiscal year has been scaled down to Rs 6,636 crore on account of the closure of 500 TASMAC liqour shops as part of the government’s election promise.
The government will take up necessary amendments to Tamil Nadu Fiscal Responsibility Act, 2003, in view of the increased revenue deficit, he said.
The revised estimates of fiscal deficits is 2.96% of the Gross State Domestic Product (GSDP). This is expected to go up to 3.34% in 2017-18 and to come down to 2.96% in the fiscal year after that, says the budget.
The State has to go for additional resource mobilisation or resort to control in expenditure in order to limit fiscal deficit within 3% norm while managing additional expenditure commitments during 201-7-18, it added.
The net budgetary borrowings of the State is expected to be at Rs 40,529 crore for 2016-17, which is within the revised ceiling of net borrowing of Rs 41,085 crore fixed by the Government of India. The outstanding debt including provident fund for the State by March 31, 2017 would be Rs 2,52,431 crore, which will continue to be 18.43% of the GSDP, which is well under the limits.
The government said that the economic recovery is evident from the GSDP growth rates in real terms, from 4.85% in 2012-13 to 8.79% in 2015-16 as per constant prices of 2011-12.
Apart from the significant fall in the growth of the state’s own tax revenue, the reduced share in central devolution, delay in reimbursement of grants in aid from the Government of India along with the reduced central share in centrally sponsored schemes have caused further strain on the State’s finances, stated the minister.
The state’s share in Central Taxes devolution for the current fiscal year has been reduced to Rs 23,018.12 crore from the estimated Rs 23,688.11 crore in the interim budget. The grants in aid from the Government of India for the current fiscal year is Rs 24,741.15 crore.
However, the trends in expenditure are steady and the overall fiscal deficit, net borrowings and outstanding debt-GSDP ratio will be within the permissible limits except fiscal deficit during 2017-18, it said.
The revenue deficit during the fiscal year 2015-16 was Rs 9481.14 crore and the fiscal deficit was Rs 32,359.59 crore, which is 2.67% of the GSDP, according to the revised estimates for 2015-16.
In the revised budget for 2016-17, today, the government said that the capital expenditure estimates has also been revised to Rs 24,679.39 crore as against Rs 22,878.45 crore in the interim budget.
The GSDP growth rate in 2015-16 is estimated at 8.79% as against the Gross Domestic Product (GDP) growth rate of 7.57% at 2011-12 constant prices. With the State Plan expenditure target for 2016-17 set at Rs 60,610 crore, the GSDP growth rate is expected to go up further during 2016-17.
The implementation of electoral promises of All India Anna Dravida Munnetra Kazhagam (AIADMK) such as waiver of agricultural loans of small and marginal farmers owed to co-operative institutions and free power to domestic consumers up to 100 units, along with other welfare schemes of food and power subsidy has resulted in increase in allocation for subsidies and grant. The subsidies and transfers would see a jump to Rs 68,211.05 crore as per the revised budget for the fiscal, as compared to Rs 59,741.47 crore in the revised estimates for the previous fiscal year.
The agricultural loan to be waived off, including the principle and interest outstanding, is tentatively assessed as Rs 5,780.92 crore, in five years, to benefit 8,35,360 small farmers and 8,58,785 marginal farmers. The government has allocated Rs 1,680.73 crore in the revised budget estimate for the current fiscal for the loan waiver scheme. During the year, the co-operatives will extend fresh crop loans to an extent of Rs 6,000 crore.
Free 100 units of power to 191 lakh domestic consumers will cause an additional commitment of Rs 1,607 crore every year to the State government. It has allocated Rs 2000 crore to the State power utility TANGEDCO for repayment of debt under the financial restructuring plan. The free laptop scheme for students, which was implemented during the previous regime of the government, will continue to provide laptops to 5.35 lakh students this year with an allocation of Rs 890 crore.
The projection of salaries is expected to go up from Rs 1,67,493.27 crore in the revised budget estimates for 2016-17 to Rs 1,95,021.34 crore during 2017-18 based on the assumption of implementation of Seventh Pay Commission recommendations. The pensions and retirement benefits is expected to grow to Rs 59,204.83 crore during 2017-18 owing to this, compared to the estimates of Rs 45,542.18 crore under the revised budget for 2016-17.
The government has allocated Rs 150 crore to train two lakh youth for skill development under the Tamil Nadu Skill Development Mission.
In the revised budget, an amount of Rs 2,000 crore has been allocated for Tamil Nadu Infrastructure Development Fund and Rs 100 crore for the project preparation fund. The Tamil Nadu Infrastructure Fund, which is an alternative investment fund category – one, is mobilising the first financial close of Rs 3,000 crore, which will be used to fund new infrastructure projects in the State during 2016-17.
The software exports from the State, which has over 50 multi national companies having their facilities in its region, is steadily growing at 10-12% per annum and are expected to have touched Rs 95,000 crore in 2015-16.
The Japan International Co-operation Agency (JICA) has agreed to fund the second phase of the Tamil Nadu Investment Promotion Programme with an outlay of Rs 1,560 crore to improve the investment environment. Of the Rs 2.42 lakh crore potential investments committed during the Global Investors Meet in September 2015, Rs 23,258 crore worth of investment has been materialised so far. Out of 10,073 MoUs signed with MSMEs during the meet, 3,029 cases worth Rs 2,599.93 crore has been materialised so far.
State Industries Promotion Corporation of Tamil Nadu (SIPCOT) has set up a Special Purpose Vehicle Madurai-Thoothukudi Industrial Corridor Development Corporation Ltd and expedited land acquisition process for the industrial corridor project to attract Rs 25,000 crore investment, said the Finance Minister.
The government is in the process of developing Ponneri Industrial Node as a National Investment and Manufacturing Zone under the Chennai-Bengaluru Industrial Corridor Project and Tamil Nadu Industrial Development Corporation (TIDCO) is establishing a Polymer Industries Park in about 306 acres of land in Ponneri, Tiruvallur district to house 84 medium and small scale plastic component manufacturing units with a cost of Rs 294 crore. Approval for development of 250 acres in Vallam Vadagal, Sriperumbudur as an aerospace park has also been provided. The revised budget has allocated Rs 2,104.49 crore to the Industries department.
Another Rs 100 crore has been allocated to the New Entrepreneurship-cum-Enterprise Development Scheme (NEEDS) and the initiative has been extended to major educational institutions for executing Start-up Action Plan.
The extension of Chennai Metro Rail Project at an estimated Rs 3,770 crore, for which the Government of India has issued its approval, has been included in the rolling plan JICA assistance and the government will expedite the proposal for Phase -II of the project covering two more corridors for a stretch of 104.50 kilometres.
Source : Business-Standard