The Tamil Nadu government on Thursday presented a revenue deficit budget for the year 2017-18, but spared the common man from any new tax. In his maiden budget, Tamil Nadu Finance Minister D Jayakumar noted that the state economy was “slowly picking up” but the “continuing sluggishness” of global and domestic economies and demonetisation has affected it “significantly”.
While the Total Revenue Receipts (TRR) has been projected at Rs 1,59,363 crore, revenue expenditure was estimated at Rs 1,75,293 crore, “leaving the revenue deficit at Rs 15,930 crore,” he said.
However, the deficit will be contained despite “additional commitment” of payments under the Centre’s UDAY scheme and the state government giving free power of up to 100 units to domestic consumers, he said.
In 2016-17, the government had taken over state-run power utility TANGEDCO’s Rs 22,815 crore debt which has “increased the Fiscal Deficit beyond the Tamil Nadu Fiscal Responsibility Act Norm of three per cent of GSDP (Gross State Domestic Product),” Jayakumar said.
But the Centre has given ‘specific authorisation’ to exceed the limit to the extent of this debt takeover and allowed the state to borrow beyond the three per cent to absorb this burden, he said.
A bill to amend the Tamil Nadu Fiscal Responsibility Act, 2003 will be introduced in the ongoing session of the Assembly, Jayakumar said.
While dwelling on State’s Own Tax Revenue (SOTR), he said Tamil Nadu’s economy is ‘slowly picking up’, which is evident from improvement in GSDP rate, up from 4.85 per cent in 2012-13 to 8.79 per cent in 2015-16 at 2011-12 constant prices.
The state finance minister anticipated a faster growth rate on account of concerted efforts by the government.
“However, the continuing sluggishness of the global and domestic economies and demonetisation of specific bank notes have affected the state economy in a significant manner,” he said.
SOTR was estimated to be Rs 87,287 crore in Revised Estimates 2016-17 and was estimated to increase to Rs 99,590 crore in Budget Estimates 2017-18, Jayakumar said.
“The low economic growth, demonetisation and the ban on sale of property in unapproved layouts have dented receipts from Stamp Duty and Registration charges severely,” he said.
Considering these factors, receipts from Stamp Duty and Registration Charges were expected to be Rs 8,220 crore in 2017-18 against Rs 7,985 crore in the Revised Estimates 2016-17, he said.
On revenue deficit, Jayakumar said, “tax revenue growth has been lower than that estimated in the Revised Budget 2016-17 due to uncertainty in domestic economy” and there was “significant drop in” SOTR, especially in receipts from Stamps and Registration Charges.
Fiscal Deficit for 2016-17 was estimated to be Rs 61,341 crore in the revised estimates due to the government’s takeover of TANGEDCO’s debt and it is “temporary,” he said.
“The decrease in Central Taxes due to 14th Finance Commission’s recommendations and the increase in states’ share in Centrally Sponsored Schemes have also hampered the state’s finances,” Jayakumar said.
However, he assured that the government would take ‘concerted efforts’ for faster economic recovery.
The Finance Minister said Tamil Nadu’s net outstanding debt at the end of March 31, 2018 will be Rs 3,14,366 crore, including the debt taken over from TANGEDCO.
The Debt-GSDP ratio will be 20.90 per cent, “which is well below” the prescribed norm of 25 per cent, he said.
Further, the state was estimated to raise Rs 41,965 crore as net borrowings, as against the permissible limit of Rs 45,119 crore, he said.
The rollout of GST during 2017-18 was “expected to have an impact on the resources of the state,” he said.
“Though it is estimated that the GST regime will affect the resources of a manufacturing state like Tamil Nadu considerably, the Government of India has agreed to compensate the loss for a period of five years,” he said.