TN Budget: Four factors that led to higher revenue deficit

Tamil Nadu Finance Secretary K Shanmugam said there were four factors that caused higher revenue deficit.

The primary reason is the significant fall in the growth of the state’s own tax revenues, especially due to the fall in stamps and registration collections that reported a decline in 2016-17.

Delay in funds release Second, increase in states’ share in centrally sponsored schemes has also hampered the finances. “There has been delay in release of funds by the Centre even after spending the money on those schemes. Dues from the Centre are to the tune of ₹5,000-6,000 crore. Had they released the funds on time, revenue deficit could have been reduced,” he said.

Third, decrease in share of central taxes due to 14th Finance Commission’s recommendations. From 2015-16, the State has lost to the tune of ₹5,000 crore on account of this.

Schemes for the poor Finally, Tamil Nadu continues to implement several welfare schemes, which other States don’t. Shanmugam said the State was spending on schemes such as special PDS at subsidised rates (about ₹2,500 crore year), health insurance, maternity and marriage assistance programmes.

“These schemes entail an outlay of ₹6,000-7,000 crore a year. This is an additional expenditure, but these are vital schemes for protection of the poor. Despite deficit in revenues, these schemes are implemented in Tamil Nadu,” he explained.

Tax revenues He said there was some spurt in commercial taxes and motor vehicle taxes and the two segments are expected to register double-digit growth in collections in 2017-18.

“Commercial tax collections are expected to grow by 16 per cent, while motor vehicle tax revenue is expected to increase by 14 per cent in 2017-18. These are our conservative estimates,” he added.

He admitted that avenues for improving the revenues were limited for the State, but it was still looking for opportunities to increase revenues.

“State was doing its best to keep fiscal deficit, net borrowings and outstanding debt-GSDP ratio within the permissible limits, while implementing welfare schemes,” he added.