DMK govt presents first budget, AIADMK boycotts

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Chennai: Given the COVID-19 pandemic scenario, the time is not yet ripe for fiscal consolidation, the Tamil Nadu government said in its revised budget (2021-22) presented on Friday in the Assembly and targeted the previous AIADMK regime for “half baked” projects to provide economic stimulus and “lax” tax administration.

Finance Minister Palanivel Thiaga Rajan, presenting the Revised Budget Estimates (RBE), said the revenue deficit (2021-22) is expected to go up from the “unrealistic” Interim Budget Estimates (IBE) of Rs.41,417.30 crore to Rs.58,692.68 crore in the RBE.

A fiscal path is being laid to reduce the revenue deficit in a phased manner and thereby enhance the allocation for creation of productive assets.

The government plans to borrow a net amount of Rs.92,484.50 crore during 2021-22, he said. One of the key causes for the loss of revenue is the lax tax administration over the past decade, he said.

“We are confident that through improved administration and plugging of leakages, revenue collections can be substantially stepped up.” The previous AIADMK government, which was in power from May 2011 to April 2021 had presented the interim budget in February this year.

This is the first budget by the DMK government, also the first paperless budget in Tamil Nadu, following assumption of power in May after a 10-year stint in opposition. The main opposition party AIADMK staged a walkout and boycotted the proceedings.

Thiaga Rajan said though estimates pointed to a negative, national growth rate of 7.3 per cent, Tamil Nadu’s GSDP is poised for a positive growth at 2.02 per cent (2020-21) at constant prices and it showed the state economy’s resilience.

In the guise of boosting capital expenditure to provide economic stimulus during the pandemic, the previous government had sanctioned several “half baked and ill thought out projects in the last minute” in the highways and irrigation sectors and for urban local bodies, the Minister said in his maiden budget presentation. “We have made a careful analysis of such projects. Only genuinely beneficial projects justified on the basis of detailed cost benefit analysis will be implemented.” Accordingly, the overall capital outlay (RBE 2021-22) has been scaled down to Rs.42,180.97 crore from the Rs.43,170.61 crore provided in the IBE, which is a 2.29 per cent decline.

On this basis, the fiscal deficit (2021-22) is estimated to be at Rs.92,529.43 crore in the RBE and at 4.33 per cent of GSDP it would still be within the overall norms prescribed by the 15th Finance Commission.

The total revenue receipts of the state including Central transfers, are estimated to be Rs.2,02,495.89 crore in RBE as against the IBE of Rs.2,18,991.96 crore in 2021-22.

The State’s Own Tax Revenue (SOTR), estimated to be Rs.1,35,641.78 crore in the IBE is projected to decrease to Rs.1,26,644.15 crore in the RBE.

The State’s Own Non-Tax Revenue has been estimated at Rs.14,139.01 crore in the RBE, showing a decline of 9.65 per cent compared to IBE.

The revenue expenditure is estimated at Rs.2,61,188.57 crore in the RBE revealing a marginal increase of growth of 0.30 per cent over IBE.

The Minister said targeted actions would be taken against tax evasion based on advanced data analytics. The total number of roving squads will be increased to 100 and equipped with vehicles and RFID (Radio Frequency Identification) reading devices to prevent movement of vehicles without bills.

“Stringent action including criminal action will be taken against tax evaders.” An effective Samadhan Scheme would be launched to clear the pending dues of Rs.28,000 crore under Tamil Nadu Value Added Tax and other legacy legislations, he said.

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