CHENNAI: Making a plain-speak on the three structural problems in the financial sector the State has been facing since 2014, Finance Minister Palanivel Thiaga Rajan on Monday said, “We must correct them as soon as possible.”
Giving a detailed account of how the state has been moving on the right path towards achieving zero-revenue deficit due to various measures, the minister said, “We must find a way to raise revenues (as a percentage of GSDP) to eliminate the revenue deficit and create a surplus for more progressive schemes and investments.” In this connection, he said the State’s Own Revenues (SOR) are still at roughly 7% of the GSDP, far below the almost 10% level of 2006-07.
Secondly, the government must use data to ensure that its revenue spending is targeted and does not lead to inflation, which is a hidden tax on the common person. Thirdly, improving the ability for discretionary spending by reducing the proportion of non-discretionary spending which currently takes up almost 85% of the SOR. The consistent improvement of the fiscal situation over the last two years stands in stark contrast to the continuous decline experienced by our state since 2014.
The Minister also recalled that the stellar performance exhibited by the government in the last two years in ensuring fiscal consolidation and debt sustainability has now allowed TN the much-needed fiscal space to embark on a path of expansion, high growth, and development.