CHENNAI: Highlighting the alleged mismanagement of funds during the previous AIADMK regime, Tamil Nadu Finance Minister Palanivel Thiaga Rajan on Monday promised that the deterioration of the state's finances during the past seven years would be set right in the next five years.
Charging that Rs 1 lakh crore has been lost due to mismanagement and inefficiency during the AIADMK regime, the minister said the revenue deficit stood at Rs 61,320 crore for 2020-21 (3.16% of GSDP). The revenue deficit has been increasing for eight years and Tamil Nadu has become a chronic revenue deficit state since 2013. As of now, the public debt in the state is Rs 2,63,976 per family.
Releasing a White Paper, the minister said there has been a steady deterioration in the state's finances post 2013-14 apparent from the trends in the revenue and fiscal deficits.
"Between 2006-13, in 5 out of 7 years, TN had a net revenue surplus. Since 2013, revenue deficit has become a recurring phenomenon," the White Paper highlighted.
The COVID-19 pandemic has caused a further substantial deterioration in 2020-21, it went on to observe, staing elsewhere that "as per the Interim Budget Estimate of 2021-22, the overall debt of the State will be ₹5,70,189 crore."
The minister clarified that the release of the White Paper does not indicate that the government would go back on its electoral promises. He also indicated that the reform measures to put the economy on the rails in Tamil Nadu would be revealed in the ensuing revised budget for the year 2021-22.
The White Paper contains the following details: Debt Status, Revenue Trends, Expenditure Trends, Status of the Public Sector Undertakings (PSUs), Current Overall Growth, Sectoral Growth, Per Capita GSDP Growth and actions needed to set right the present situation.
Addressing a press conference, the minister said, "After three months in office and after going through the documents, I am confident of setting right the present fiscal situation in Tamil Nadu. What we need is people's cooperation."
Rajan said 95% of guarantees of the Tamil Nadu government are on the account of power and transport sector borrowings. The total revenue receipts of Tamil Nadu declined to 8.7% of GSDP in 2020-21 from the peak 13.35% of GSDP in 2008-09.
Tamil Nadu's own tax revenue registered a significant fall and lax tax administration is a factor for the declining trend. Also, the state's growth rate was higher during 2006-11 (11.46%) which came down to 4.32% between 2016-11. In 2019-20, it was just 1.83%.
Commercial taxes were on a decreasing trend even before GST was introduced and the proportion of CT to GSDP declined ever further, the minister said, adding that Tamil Nadu has a lower tax rate than many states leading to continued loss in revenue. Also, the motor vehicle tax has not been revised for 15 years which resulted in loss of revenue.
Proportion of cesses and surcharges went up from 10.4% in 2011-12 to 20.2% in 2019-20. These cesses and surcharges are not shareable with the states. The accumulated loss of State Transport Corporations in 2020-21 is Rs 42,143.69 crore compared to Rs 879.69 crore in 2011-12.
The finance minister signed off by stating that extraordinary reforms will be needed to pull the state out of the financial mire it finds itself in, but he expressed confidence that he will succeed in that mission.
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"Tamil Nadu should become the model State in India which other States would seek to emulate. You must give us advice to make this happen. These dreams of mine cannot be realized through ordinary reforms. I am aware that only through a total and dramatic transformation will my dreams be realized. Let me assure you that the Government of Tamil Nadu is prepared to do whatever it takes," the minister noted.