CHENNAI: Many parties have released their manifestos for the ensuing Lok Sabha elections, discussing many issues threadbare, but are unitedly mum on a key issue – reducing the debt burden of the State which is about to touch Rs 4 lakh crore.
The two Dravidian majors in Tamil Nadu, which have been alternately ruling the State for the past five decades, in their manifestos, explained how the State was affected by revenue loss due to certain steps of the Centre but did not outline their vision for reducing the debt burden.
This is perhaps because the debt burden has been going up during the regimes of these parties.
Though parties can argue that their present manifestos are only for the Lok Sabha elections, these parties, without fail, have dealt with the other issues of the State in detail but missed this key issue. The DMK has been vociferous in criticising the ruling AIADMK for the ever-increasing debt burden and the AIADMK too, when it was in the opposition camp, did not spare the DMK for the increase in the quantum of liabilities.
But the finance ministers of both regimes had a common reason for the ever-increasing debt burden.
They comfortably say the loans availed by the government had been spent on productive purposes and the debt level was also kept well within the norms prescribed in the Fiscal Responsibility and Budget Management Act. On the other hand, with every passing year, the debt level is going up.
The outstanding debt of the Tamil Nadu government at the end of March 2020, will be Rs 3,97,495.96 crore. The outstanding debt including liabilities which stood at Rs 57,457 crore in March 2006, crossed the mark of Rs 1 lakh crore in March 2011. It crossed Rs 2.5 lakh crore during 2014-15 and by March 2020, it is expected to touch Rs 4 lakh crore.
Apart from the huge chunk of revenue spent towards salaries of government employees and towards pension and retirement benefits, the payment of interest for the loans being availed is huge. The projection for the interest payment for 2019-20 is Rs 35,332.61 crore and it is expected to rise to Rs 43,941.76 crore.
It is obvious that the Centre has taken away key revenue sources, particularly the service tax. The State government has lost its hold over sales tax revenue due to GST and has been facing huge revenue loss and financial crunch points out the AIADMK manifesto.
In other words, the State government’s opportunities for increasing its revenue have come down. The VAT on petroleum products, TASMAC revenue, stamp duty, vehicle tax and a few other sources alone are revenue resources for the State government.
The DMK manifesto says, “Cess collected by the Union government for various purposes should duly be shared with the States for the respective purposes. Necessary amendments will be made to include all surcharges under the tax revenue meant for the devolution of funds to States.”
Though the manifesto says it would impress upon the Centre to contain the fiscal and revenue deficits within the stipulated limited FRBM Act, it did not say anything concrete on reducing the already burgeoning debt burden.
One of the major causes for the increasing debt burden of the State governments, particularly the Tamil Nadu government, is the freebies offered by the successive governments. But they christen them as welfare schemes meant for the poor and argue that such schemes cannot be avoided.
Asked about this ‘deafening silence’ of political parties on this key aspect of public administration, political analyst Tharasu Shyam told Express: “We have, many years ago, moved into credit economy. No government spends without availing loans and as such it would be difficult for the political parties to touch on this point. But the one thing which hard presses the government is the debt burden and the parties should have expressed their view and vision for reducing the liabilities. These parties did not even express the confidence of getting Central assistance to cope with this issue.”
Shyam also pointed out that the financial resources of the States had gone into the hands of the Centre and the States were able to levy tax on very minimum items. The States are depending on the Centre for funds.
AIADMK spokesperson Kovai Satyan is of the view that the issue of management of debt should be dealt with along with the annual financial statement of the State government.
Increasing the direct and indirect taxes is the way to increase the revenue and thereby, the debt burden could be reduced. So, this issue would be ideally dealt with in the budget, he said.