TN presents tax-free interim budget

Overall deficit estimated at Rs 5.57 crore; State expects growth of over 8 per cent

Tamil Nadu Finance Minister, C Ponnaiyan on Friday, presented a tax-free interim budget for 2006-07 with an uncovered revenue deficit of Rs 202.27 crore and an overall deficit estimate of Rs 5.57 crore, at the end of the financial year.

This is the third successive tax free budget of the AIADMK government. The main budget will be presented after the elections, which are due to be held in the state by May.

On track to meet medium-term benchmarks
Tabling the interim budget in the state Assembly, Ponnaiyan said that the government had so far achieved all the targets set out in the medium term fiscal plans and was well on track to eliminate the revenue deficit and reduce the fiscal deficit to below 3 per cent of the GSDP by 2008-09.

The total revenue expenditure for 2006-07 was projected at Rs 34,253.56 crore as against the total revenue receipts of Rs 34,046.29 crore, leaving a small gap of Rs 207.27 crore as revenue deficit.

The fiscal deficit for the year was projected at Rs 5570.14 crore, which constituted 2.35 per cent of the Gross State Domestic Product (GSDP), he said. The overall deficit projected in the interim budget estimates would be handled through effective and prudent management of public finances, he added.

The revenue deficit for 2005-06 came down to Rs 360 crore in the revised estimates against the budget estimates of Rs 1401 crore. The overall deficit has also been reduced from Rs 260.41 crore in the 2005-06 budget estimates to Rs 10.18 crore in the revised estimates.

The total revenue receipts of the government has increased from Rs 30,251,53 crore in the 2005-06 budget estimates to Rs 32,904.14 crore in the revised estimate.

The total revenue expenditure has gone up to Rs 33,264.14 crore in the revised estimate against the projected Rs 31,655.53 crore, mainly on account of expenditure-related disaster relief work.

The minister said that the trend towards progressively reducing the revenue deficit over the years had been maintained despite an increase in revenue expenditure.

8 per cent growth expected
The state's economy is poised to register a growth of over 8 per cent during 2005-06, after achieving a growth rate of 8.73 per cent in 2004-05, notwithstanding the adverse impact of the recent floods in the state.

The Interim Budget has a provision of Rs 11,709 crore for ongoing plan schemes. This is a substantial increase of 28 per cent over the 2005-2006's plan outlay.

He said that the state would outperform Tenth plan outlay of Rs 40,000 crore by the close of the plan period. According to state finance secretary, K Gnanadesikan, the state had already crossed Rs 30,000 crore in 2005-06.

The interim budget has provided an allocation of Rs 861.23 crore for the agriculture sector and Rs 3529.90 crore for the development of roads and highways. The capital outlay of the Tamil Nadu Electricity Board will be stepped up to Rs 1,798 crore in 2006-07 from Rs 1,495 crore.

The minister said that going by preliminary estimates, manufacturing sector in the state will register a growth of over 9 per cent at constant prices in 2005-06, showing that the growth momentum in the secondary sector had been restored.

The IT exports from the state is expected to increase to over Rs 15,000 crore by the end of 2005-06 (The IT exports stood at Rs 10,703 crore during 2004-05). Over 70 IT parks with floor space exceeding 20 million sq ft are coming up in the private sector in and around Chennai.

Ponnnaiyan said that fiscal consolidation in Tamil Nadu had been concurrently accompanied by re-prioritisation of resource allocation towards growth and development-oriented sectors.

The Annual Plan outlays have increased by a record 75 per cent from Rs 5,200 crore in 2001-2002 to Rs 9,100 crore in 2005-2006. Tamil Nadu's externally-aided project portfolio has grown to become one of the largest in the country at Rs 8,550 crore ($ 1.90 billion).

Medium Term Fiscal Plan document said that the state was able to reduce the revenue deficit as a percentage of the total revenue receipts to 6.6 in 2003-2004, which was a major correction when compared to the level of 23.28 per cent in 2002-2003.

The fiscal consolidation was sustained in 2004-2005 without imposing any new taxes and further bringing down the revenue deficit as a percentage of the total revenue receipts to 2.47 per cent in 2004-2005, thus achieving the objective of bringing down the ratio to a level below 5 per cent well before the target year 2007-2008.