Notwithstanding the falling tax revenue and mounting expenditure due to higher subsidies, freebies and social welfare schemes, Tamil Nadu Finance Minister D Jayakumar on Thursday presented a tax-free budget with no new taxes and no increase in the existing tax rates. This was in contrast to the finances of the state whose fiscal deficit for 2016-17 stands at a whopping Rs 61,341 crore — 4.58 per cent of the Gross State Domestic Product (GSDP), higher than the permitted 3 per cent deficit under the Fiscal Responsibility and Budget Management (FRBM) Act.
In his speech, the Finance Minister said that uncertainty in domestic economy kept the tax revenue growth lower than the revised budget’s estimate for 2016-17. He said that there has been a significant drop in state’s tax revenue growth rate, especially in the receipts from stamp and registration charges and cited the Rs 14,000-crore debt takeover of Tangedco, a government-run power generation and distribution firm, as one reason for the critical financial status.
“The low economic growth, demonetisation and the ban on sale of property in unapproved layouts have dented the receipts from stamp duty and registration charges severely. Considering these factors, receipts from stamp duty and registration charges are expected to be Rs 8,220 crore during 2017-18, as against Rs 7,985 crore,” said Jayakumar.
He was, however, hopeful to bring down the fiscal deficit within 3 per cent in 2017-18. The budget gave impetus to school education with the sector receiving the maximum allocation of Rs 26,932 crore. Power sector was next with Rs 16,998 crore allocation, which includes Rs 8,538 crore subsidy to Tangedco for providing 100 units free power to domestic consumers and free power to farmers.
To prevent fragmentation of land holdings, the budget announced a new scheme — Farmer Producer Groups — to promote collective farming. The budget proposes to form and promote over 2,000 farmer producer groups, each with not less than 100 farmers, in 2017-18.