CHENNAI: Attributing the rising fiscal deficit of the state to the reduction of revenue due to the economic slowdown and decrease of state’s share of funds from the central pool, Finance Minister D. Jayakumar on Friday said the fiscal deficit would come down since there are indications of favourable conditions for economic development. Replying to the discussion on the budget for the year 2017-18, Jayakumar justified the increase in state’s debts saying that economic experts feel that debts could be obtained for developing infrastructure as it would be led to economic growth and improvement of human resource index. Besides, the amount of debts is 20.59 of the state’s GDP and it is well within the prescribed limit of 25 per cent, he said.
He also defended the increase in VAT on petroleum products and said the state government could modify the commercial taxes on petroleum products and liquor alone to increase its revenue. The price of crude oil is coming down in the international market from 2015 leading to loss of revenue for the state government. All the other states had increased the tax on petroleum products and Tamil Nadu too was forced to hike the tax to prevent the continuous fall in loss of revenue, he said. Even after the decrease, the prices of petrol and diesel are the lowest in Tamil Nadu compared to other South Indian states, Jayakumar said.
The centre had the powers to collect all the major taxes like income tax, corporation tax, besides excise duty, custom duty and service taxes. The major source of revenue for the state government is from commercial taxes, stamp paper charges, vehicle tax and state excise, he pointed out. Denying that the rise in stamp paper charges led to decrease in collection of taxes from the source, he said the economic slowdown is the major reason for the reduction of collection in stamp paper charges. The collection from stamp papers had come down in Maharastra, Kerala, Andhra Pradesh and Karnataka too, he said.
A committee had been formed to study the decrease of income from stamp duty and decisions would be taken by the government based on the recommendations of the committee. The state government gets 70 per cent of its revenue from commercial taxes and 18 per cent of the commercial taxes revenue is obtained from taxes on petroleum products. Still Tamil Nadu is spending Rs 2,500 crore for subsidies in PDS scheme, Rs 780 cr to give priceless laptops, Rs 1,001 cr for maternity schemes, Rs 723 cr for marriage scheme and Rs 1,347 cr on Chief Minister’s insurance scheme and Rs 420 cr on green houses scheme. The state is spending about Rs 6,000 cr on such welfare schemes, he said. Spending on such schemes had led to improvement of human resources development in the state, he added.
Besides, the state government had waived crop loans worth Rs. 1830 cr and additional grant of Rs. 4,563 cr had been given to TANGEDCO, resulting in fiscal deficit of Rs 15,459 cr. Jayakumar said favourable changes are perceived in economic situation and the economic growth would improve in the coming years and steps would be taken to contain the fiscal deficit within Rs 15,930 cr in the next year also. The revenue is expected to increase in the coming years and it would lead to reduction in fiscal deficit, he hoped.
