 "TN presents tax-free, revenue surplus Budget")
“This Budget is yet another firm stride in our march towards growth and prosperity,” said Finance Minister O Panneerselvam in his Budget speech at the state Assembly.
The state administration had been striving hard to ensure equitable growth. However, failure of the Centre to stimulate growth and improve the failing macro-economic environment continued to adversely impact the investments and economic growth consecutively for the second year, he added.
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“Adherence to the Tamil Nadu Fiscal Responsibility (TNFR) Act target without impinging on the state’s ability to invest in critical sectors has, thus, become a daunting task,” he said, adding though there were signs of revival, with the state's economic growth expected to exceed five per cent in 2013-14, massive efforts were needed to put the economy back on the path of accelerated growth.
As a positive sign, the power situation had improved significantly in the state and industrial growth was showing recovery, he said.
With the proposed investment of Rs 42,185 crore under Plan schemes in 2014-15, the Plan expenditure will cross Rs 107,000 crore as against the overall 12th Plan target of Rs 211,000 crore.
The estimated revenue surplus in 2014-15 would be around Rs 289.36 crore and guided the state would continue to maintain a surplus in 2015-16 and 2016-17. Total revenue receipts are estimated at Rs 1,27,389.83 crore in 2014-15.
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Fiscal deficit for 2014-15 is estimated at Rs 25,714.31 crore (2.73 per cent of the GSDP). However, the fiscal deficit -gross state domestic product ratio -- would be 2.70 per cent in 2015-16 and 2.67 per cent in 2016-17.
“The continued economic stagnation has also caused a substantial shortfall in the state’s projected tax revenues,” he said.
The state’s own tax revenue was pegged at Rs 83,363.21 crore as per the revised estimates of 2013-14. It is estimated to increase to Rs 91,835.35 crore in the Budget Estimates for 2014-15.
“This would mean a growth of 10.16 per cent. The state’s own tax revenue - GSDP ratio for 2014-2015 will be 9.75 per cent as per BE 2014-15. A growth rate of 13.13 per cent is assumed for 2015-16,” he said.
The non-tax revenue was estimated at Rs 8,083.98 crore in the BE 2014-15. Since there was very limited mining potential in the state and most of the government services are delivered free of cost or only at nominal rate, non-tax revenue is estimated only marginally higher than the Revised Estimates 2013-14. A growth rate of 2.26 per cent is assumed for 2015-16 and 10.40 per cent for 2016-17.
“The state had recovered in the last two years from the revenue deficit of 2010-11. With prudent fiscal management, the state would achieve all the targets set by the 13th Finance Commission during 2014-15 and would also be able to maintain the same success in the future,” said Panneerselvam.
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Food subsidy
The state government has increased food subsidy to Rs 5,300 crore. Besides, it has decided to launch low cost pharmacy chains.
Panneerselvam said this year food subsidy had been increased to Rs 5,300 crore from Rs 4900 crore in 2013-14, which was later revised to Rs 5,000 crore.
Besides, it had been supplying essential products like rice, dal, pal oil and others through its public distribution scheme (PDS) and had also opened low-cost canteens, low-cost food and vegetable shops.
He said, already 210 medical chains were being operated by state co-operatives and another 100 would be opened. Besides it was decided to launch ‘Amma Pharmacy’. “These medical shops run to ensure the sale of medicines at reasonable prices to the public. A sum of Rs 20 crore will be used from the Price Stabilisation Fund,” he said.
The state government currently operates 297 Amma canteens, where idly is served for Re 1 and a variety rice for Rs 5 across the state.
Rs 200 crore for monorail
The government has allocated Rs 200 crore for the proposed monorail project in the state. The bid process was in progress, the minister said.
The estimated length of the project is 20.68 km and the estimated cost is $522 million (around Rs 3,235 crore). The project will be taken up through public, private partnership (PPP), on design, build, finance operate and transfer (DBFOT) basis.
Realty slowdown hits revenues
Slowdown in the real estate sector has impacted revenue from registration and stamp duty, said Panneerselvam. However, tax income from the sale of alcohol gave a helping hand.
“To assess the slowdown in the real estate sector, we have only the tool of stamp duty and registration and it has seen a fall of 10 per cent,” said K Shanmugam, principal secretary, Department of Finance.
The minister, in his speech, said, “In accordance with this low growth, the estimates have been reduced by Rs 652.24 crore in the Revised Estimates 2013-14. In the Budget Estimates 2014-15, the revenue from registration and stamp duty is estimated to be Rs 10,470.18 crore, assuming a growth of 13.54 per cent.”
In a press conference later, he added, “the general sentiments is that the sector would pick up now. The supply side is doing well, but the demand has to pick up.”
The modified target for commercial taxes for 2013-14 was Rs 64,626.46 crore, which has now been downsized to Rs 61,891.74 crore in the Revised Estimates of 2013-14. Similarly, the target for excise revenue was modified after the streamlining of excise duty. Thus, the original estimate of Rs.14,469.87 crore has been revised to Rs 5,868.65 crore in the Revised Estimates 2013-2014.
Assuming a 10.47 per cent growth, the estimated excise revenue in 2014-2015 will be Rs 6,483.04 crore, the minister said.
Rs 50 crore Cotton Cultivation Mission
The state announced its plans to launch Cotton Cultivation Mission to increase the cultivation of cotton to 600,000 acres in the next five years. The Southern India Mills’ Association (SIMA) welcomed this stating this would go a long way in reaching self-sufficiency in cotton production.
“As the production of cotton within the state was inadequate, an ambitious Tamil Nadu Cotton Cultivation Mission will be launched in the state with an initial outlay of Rs 50 crore.”
Cotton is at present cultivated in the state in 334,000 acres, with a production of 400,000 bales. There are 1,948 spinning mills functioning in the state with an annual requirement of 11 million bales.
T Rajkumar, chairman, Sima, said it was timely as the textile mills in the state were spending huge amount towards transportation of cotton from upcountry states and selling the cotton yarn in the same markets.
The industry also expressed happiness in wind power evacuation, as the sector suffered considerably during the current wind season due to partial non-evacuation of wind power.
Inclusive and growth-oriented: SICCI
The Southern India Chamber of Commerce & Industry (SICCI) welcomed the decision to increase crop loans to Rs 5,000 crore and provision of Rs 200 crore as interest subvention.
Other proposals like green energy corridor for evacuation of wind power, pharmacies that sell medicines at reasonable prices and Chennai City Transportation System to link all modes of transport were timely, said Jawahar Vadivelu, president of SICCI.
Besides, creation of a special purpose vehicle to implement the Madurai-Thoothukudi Industrial Corridor was a step in right direction, he said.