CHENNAI: Finance Secretary K Shanmugam on Tuesday attributed the huge estimated revenue deficit of Rs 9,154.78 crore to various reasons, including the economic downturn witnessed across the country, the lower tax on petroleum products to keep their retail rates less for the people and the increased share for the State government on the schemes implemented together by Centre and State governments.
“When there is a downtrend, economic deficit cannot be avoided. When there is normal economic trend, the growth rate would be between 15 to 20 per cent. If there was 15 to 20 per cent growth, Tamil Nadu would not have faced this revenue deficit. The real growth rate had come down to below 10 per cent,” Shanmugam said addressing a press conference after the presentation of the interim budget for 2016-17.
When pointed out that the State budget, which had revenue surplus a couple of years ago was now having a huge revenue deficit, he said during the first two years of this government - 2011-12 and 2012-13, economic growth was on an upswing. But later, there had been a global economic downturn and it affected almost all States.
The Finance Secretary said during the past five years, the projection for 2016-17 was the highest. “This is because of reduction in sales tax revenue from petroleum products. In other States, the VAT tax rate on petroleum products have been increased. In Andhra and Telengana, 34 per cent tax had been levied on petroleum products whereas TN was levying only 27 per cent. And for diesel, Tamil Nadu was levying 21.4 per cent while the same is above 30 per cent in other States. Since the retail rate of the petroleum products had come down in Tamil Nadu due to lesser tax structure, there was loss of tax revenue of around Rs 4,000 crore,” he said.