State govt’s tax not behind fuel price hike: Finance Secy

The Secretary further stated: “As per the Finance Commission’s recommendation, the Centre should transfer 41 per cent of the tax revenue to States.

Published: 24th February 2021 05:34 AM  |   Last Updated: 24th February 2021 05:34 AM   |  A+A-

Deputy Chief Minister O Panneerselvam presents the Interim Budget in the Assembly on Tuesday | p jawahar

By Express News Service

CHENNAI: Finance Secretary S Krishnan on Tuesday clarified that the State government’s tax was not the reason for the hike in fuel prices since the government had restructured the tax in May 2019 to benefit the people.

“Previously, a flat rate was levied as tax. Under the revised tax of the TN government, when there is a fall in fuel prices, the revenue for the State will also be protected while the public continue to benefit,” Krishnan said.

The Secretary further stated: “As per the Finance Commission’s recommendation, the Centre should transfer 41 per cent of the tax revenue to States. But the Centre need not share the revenue from the cess and surcharge. The cess and surcharge, which stood at 10 per cent, has now become 20 per cent, which means the transfer of tax revenue to the States has gone down.

The Centre, in May 2019, increased the share of cess and surcharge substantially, and reduced the basic duty component in the levy of excise duties. Thus, the share of Union Excise Duty to States had come down,” Krishnan said. He further stated, “The State had revised VAT on petrol and diesel last year to benefit people. Previously, a flat rate was levied as tax. There is another advantage in the revised tax — when there is a fall in fuel prices, the revenue for the State will also be protected.”

Replying to questions on the increasing debt burden of the State, he said when the debt increases, the economy (State Gross Domestic Product) grows simultaneously. The 14th Finance Commission said that the States should contain the debt within 25 per cent. Now, the 15th Finance Commission has revised these norms and the State’s debt level is within the specified limits.

While the outstanding debt to GSDP is within 28.7 per cent in 2021-22, it is 29.3 per cent in 2022-23 and 29.1 per cent in 2023-24 as prescribed by the 15th Finance Commission. “TN has never breached the debt limits specified by the Finance Commission. There are a few States that breached these norms also. What we should notice is what kind of expenditure we have with the funds borrowed and whether it helped the State’s growth. If there is growth, the State can repay debt,” he pointed out.

Pallikaranai marshland to soon be restored

Deputy Chief Minister O Panneerselvam on Tuesday announced a project to restore Pallikaranai marshland and waterways at Rs 816.80 crore. “The government is fully committed to protect the marshland, which is one of the recognised wetlands in Tamil Nadu and plays a major role in absorbing floodwaters and recharging the groundwater,” he said. The project would be undertaken jointly by the Public Works Department, Chennai Corporation and Highways Department. Corporation officials said that the project would cover desalting waterways and constructing news ones. Stormwater drains along the radial road would be cleaned by the Highways while the civic body would build new cut-and-cover stormwater drains between the stretch. 

Rs 165.68 cr worth restoration activities being implemented at Pallikaranai marshland

$300 million aid from World bank for CCP programme

Soon, a water authority to co-ordinate water resource planning and improving water security will be established, Deputy Chief Minister O Panneerselvam announced in the Interim Budget on Tuesday. This is a part of Chennai City Partnership (CCP) that has been formulated as a unique model of development co-operation after discussions with the World Bank. The programme will be implemented with an outlay of Rs 3,140 crore, of which the World Bank funding assistance will be $300 million. The loan negotiations would begin shortly, said Panneerselvam.

sneak peek

  • Programme to be done in 3 phases over 7 years
  • In the first phase, focus is on strengthening governance, policies and institutions

other initiatives

  • Enhancing quality and access to primary health services in Greater Chennai Corporation (GCC)
  • Expansion and improvement of bus services by the Metropolitan Transport Corporation (MTC)
  • Expansion and improvement of water supply by Chennai Metropolitan Water Supply and Sewerage Board (CMWSSB)
  • Strengthening financial resource bases of GCC, MTC, CMWSSB
  • Strengthening solid waste management


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