CHENNAI: Tamil Nadu Finance Minister Thangam Thennarasu on Monday accused the union government of stifling the State by imposing stringent conditions on the borrowing ceiling. He said this has restricted the ability of the State to raise resources to fund its development initiatives.
"The imposition of stringent conditions on the borrowing ceiling by the Union Government has unduly restricted the ability of the State to raise resources to fund its development initiatives," the Finance Minister said presenting the budget for 2024-25 in the State Assembly.
The Minister said the inordinate delay by the Union Government in approving the Chennai Metro Rail Project has forced the State to incur the entire project expenditure so far from its budgetary resources, resulting in an expenditure of Rs.9,000 crore in the current year.Further, the termination of GST compensation regime since June 30,2022 has caused a revenue shortfall of approximately Rs.20,000 crore per annum. Under these challenging circumstances, the Budget for the year2023-24 had been presented in March last year.
Thennarasu said during the current year, this situation has been aggravated by the onslaught of twin disasters, which have caused a severe strain on the state finances. While unanticipated expenditure to provide necessary cash relief assistance and to undertake temporary and permanent restoration works has been incurred, there has also been a significant dip in the revenue collections. Despite multiple requests, the Union Government has not provided any support to the State from National Disaster Response Fund.
The minister further explained that as a result of the condition put forth by the GOI, the Government of Tamil Nadu has been mandated to provide Rs.17,117 crore for loss funding to TANGEDCO in the current year, failing which an equivalent amount will be deducted from the borrowing ceiling fixed by the Union Government. Moreover, an amount of Rs.14,442 crore has to be provided for loss funding in the next year. While the Government is committed to undertake power sector reforms, this condition creates a huge financial burden on the State, constraining its ability to fund development initiatives. Therefore, on lines of the Ujwal Discom Assurance Yojana (UDAY) Scheme, this Government has addressed the Union Government to exclude this amount from the Fiscal Deficit and Borrowing Ceiling of the State.
"In these circumstances, the total revenue expenditure is estimated to be Rs.3,17,484 crore in the Revised Estimates 2023-24 as compared to Rs.3,08,056 crore in Budget Estimates. Despite the increase in revenue expenditure on account of loss funding to TANGEDCO to the tune of Rs.15,594 crore and disaster relief and restoration to the tune of Rs.2,041 crore, the increase has been contained to Rs.9,428 crore through prudent fiscal management," the Minister added.
On the receipts front, the collections from State‟s Own Tax Revenue are estimated at Rs.1,70,147 crore in the Revised Estimates 2023-24 as against Rs.1,81,182 crore in the Budget Estimates. This reflects a reduction from the anticipated growth levels of 20.61 per cent in Budget Estimates to 13.26 per cent in the Revised Estimates, owing to the severe impact caused by natural calamities.
The State‟s Non-Tax Revenue is estimated to be Rs.30,381 crore in the Revised Estimates 2023-24, which is a substantial increase over the Budget Estimates. This is a result of the revenue augmentation measures taken by this Government including rationalization of rates and improvement in collection efficiency.
The Transfers from the Union Government include Grants-in-aid and Share in Central taxes. The Grants-in-aid have been estimated at Rs.26,996 crore in Revised Estimates 2023-24, which is marginally lower than the Budget Estimates. The Share in Central Taxes has increased to Rs.45,053 crore in Revised Estimates 2023-24, as compared to Rs.41,665 crore in Budget Estimates. The increase in the Revised Estimates is due to an increase in tax collections estimated by the Union Government.
In aggregate, the Revenue Deficit in Revised Estimates 2023-24 is estimated to increase to Rs.44,907 crore compared to Rs.37,540 crore in Budget Estimates. Excluding loss funding to TANGEDCO, the revenue deficit is estimated to be Rs.27,790 crore in Revised Estimates 2023-24, as compared to Rs.36,017 crore in the Budget Estimates. This has been achieved through prudent fiscal management despite the adverse impact caused by the disasters on revenues and expenditure.
The Fiscal Deficit in Revised Estimates 2023-24 is estimated to marginally increase to Rs.94,060 crore as against Rs.92,075 crore in Budget Estimates. The Fiscal Deficit as a percentage of GSDP has increased from 3.25 per cent in Budget Estimates to 3.45 per cent in the Revised Estimates 2023-24, owing to a downward revision in the GSDP estimates.
Taking into account the State‟s economic growth, revision of taxes and improvement in collection efficiency, the State‟s Own Tax Revenue has been estimated at Rs.1,95,173 crore in the Budget Estimates 2024-25, which is a growth of 14.71 per cent over the Revised Estimates 2023-24. This includes an amount of Rs.1,43,381 crore from Commercial Taxes, Rs.23,370 crore from Stamps and Registration, Rs.12,247 crore from State Excise and Rs.11,560 crore from Motor Vehicle Taxes. In anticipation of sustained levels of collection from the State‟s Own Non-Tax Revenue, an amount of Rs.30,728 crore has been estimated in the Budget Estimates 2024-25.
As the GST compensation dues will completely end from the coming year, there is a reduction in Grants-in-Aid in the Budget Estimates 2024-25, as compared to the Revised Estimates 2023-24. The Grants-in-Aid are estimated to be Rs.23,354 crore. Based on the allocation made in the Union Budget 2024-25, the estimates fixed for Share in Central Taxes for the year 2024-25 are Rs.49,755 crore.
In total, the Fiscal Deficit is estimated at Rs.1,08,690 crore in the Budget Estimates 2024-25, which is 3.44 per cent of the GSDP. In line with the recommendations of the 15th Finance Commission, the Government is following the glide path of fiscal consolidation and has reduced it from 3.46 per cent in 2022-23 to 3.45 per cent in 2023-24 to 3.44 per cent in 2024-25. This has been achieved despite the impact of disasters and after an unprecedented allocation to TANGEDCO from within the budgetary resources. This Budget underscores the commitment of this Government to deliver on the promises made to the people, without wavering 95 from the path of prudent fiscal management, in spite of numerous challenges.
