Though the Tamil Nadu Budget 2021-22 has not spelt out any radical reform steps, the announcement of data-centric governance is an indication of the State government’s intent to take up transformative measures in the coming years, according to S Krishnan, Additional Chief Secretary- Finance, Government of Tamil Nadu.

Also, the proposed move to plug the revenue leakages is a major step announced by the State Finance Minister to boost revenues.

“ The proposal for launching smart metering and improving transparency through e-procurement are in the right direction,” said Krishnan.

Industry analysts have been advocating for the shift from traditional electricity meters to smart meters for the beleaguered power distribution companies like TANGEDCO to pare losses and improve efficiency.

With State’s Discom among the largest loss-making units, State Finance Minister Palanivel Thiaga Rajan had earlier said that without proper data, it would be impossible to reduce the losses.

Meanwhile, the MK Stalin-led new government will also focus on boosting State’s own revenues. Thiaga Rajan was of the view that lax tax administration in Tamil Nadu was also one the major causes for loss of revenue. The government will focus on plugging leakages through improved administration.

The white paper on State’s finances had pointed out that there had been a deterioration of the tax to GSDP ratio.

As a proportion of GSDP, SOTR (State's Own Tax Revenue) was at 8.48 per cent in 2006-07 and at 8.34 per cent in 2012-13. Subsequently, it saw decline every year and stood at 6.40 per cent in 2017-18, 5.82 per cent in 2019-20 and finally just 5.46 per cent in 2020-21. This is a source of grave concern. In current GSDP terms, this represents a loss of about ₹65,000 crore worth of revenue per year. The State government is of the view that there could be leakages in revenues and hence there will be more efforts to address these.

Thiga Rajan also stated that targeted actions would be taken against tax evasion based on advanced data analytics. An effective Samadhan Scheme will be launched to clear the pending dues of ₹28,000 crore under Tamil Nadu Value Added Tax and other legacy legislations.

Krishnan said the government is confident of meeting the target of SOTR of ₹1.26-lakh crore (revised from ₹1.35-lakh crore in the interim budget estimates FY22) this fiscal.

“As the second wave of Covid is more or less contained, economic activity should pick up. We should expect significant growth in the remaining part of this fiscal. Also, with the plugging of leakages and additional enforcement efforts on the commercial tax and registration tax areas, we should be able to reach the revised SOTR target, which is realistic,” said Krishnan.