VIRUS vs VOWS: A BALANCED DMK BUDGET

However, the government deferred the implementation of the promised cooperative jewel and farm loan waiver, citing irregularities in the previous regime while presenting the DMK’s maiden budget.

Presenting the State’s first paperless (revised) e-budget in the Assembly, which scaled down the revenue receipt estimates for the current fiscal by over Rs 16,000 crore in comparison with the February 2021 interim budget, Finance Minister Palanivel Thiaga Rajan also pushed the reforms he had proposed in the White Paper to the back seat and said, “As soon as the impact of the pandemic is overcome, deeper reforms will be undertaken to ensure that the debt overhang is corrected without any delay.” Forecasting a Rs 9,000 crore shortfall in the State’s own tax revenue (SOTR), Thiaga Rajan said, “Given that the economy is still just recovering from the impact of COVID, the time is not yet ripe for fiscal consolidation. Hence, revenue deficit for 2021-22 is expected to go up from the unrealistic Interim Budget Estimates of Rs.41,417.30 crore to Rs 58,692.68 crore in the Revised Budget Estimates 2021-22.” Pointing out that the State has had to incur an additional total expenditure of Rs 17,618.80 crore on COVID relief, including livelihood cash support and additional food subsidy, the Minister said the most critical reform that they need to undertake is to increase the tax GSDP ratio. Citing the finding of the white paper that attributed the deterioration of the tax GSDP ratio by 3.02% from 8.48% in 2006-07 to just 5.46% in 2020-21, the Minister said the deterioration represents an annual revenue loss of about Rs 65,000 crore in the current terms. Citing lax tax administration in the last decade as one of the key causes for revenue loss, the Minister pegged TN’s fiscal deficit for 2021-22 at 4.33% of GSDP, which would still be within the overall norms prescribed by the 15th Finance Commission.

Proposing tax reforms in consultation with Commercial Taxes, Registration, Transport and Excise ministries, he said they were in the process of revamping tax administration in the Commercial Taxes, Registration, Motor Vehicle Tax and State Excise Departments and were confident that through various methods, revenue collections can be stepped up.