High on debts,TN needs Tasmac to remain sober

High on debts,TN needs Tasmac to remain sober

Desperation Apparent In Urgency To Move SC Against Order Of Outlets’ Closure

D.Govardan@timesgroup.com

11.05.2020

Ameme — even if people of the state decide to stop drinking, it seems Tamil Nadu government will not let them to do so — widely circulated last week highlighted the desperation of the state to plug its financial loopholes.

The speed at which the government, despite condemnation from the opposition, moved the Supreme Court on Saturday to get reprieve from the Madras high court’s order on Friday to close state-owned Tasmac outlets, only highlighted that fact. And you don’t need a Rajinikanth to drive home the point.

Nevertheless, the actor and politician-in-waiting did make a point. “The state government should look at better ways to fill up its treasury,” tweeted Rajinikanth on Sunday morning, even while chiding the ruling AIADMK to “forget about returning to power” if it plans to reopen Tasmac outlets.

A couple of weeks ago, a senior official from the state finance department told TOI that salaries have to be paid, even while seeking to discount the notion that Tamil Nadu government is surviving on ‘liquor money’. “Consumption of alcohol appears to be high since everything goes through Tasmac, which controls both the wholesale procurement and retail sale. It also indicates the efficiency in collection of this revenue, a model that has been since replicated by the states of Kerala and Andhra Pradesh. But the revenue from liquor is just around 25% of the state’s total own revenue,” the official said, while adding that revenue through Tasmac is around ₹30,000 crore per annum, while state’s own revenue amounts to around ₹1.3 lakh crore.

Surprisingly, the trigger happy AIADMK camp, which hits back at anyone attacking the government, preferred a stoic silence through the day and let Rajinikanth go almost scot-free. Even officials are tight lipped about the precarious state of government finances. But the writing is on the wall and one gets to see the glimpses. First came the withholding of the dearness allowance and then the order to increase the retirement age of state government employees by one year.

That too may not suffice. There are unofficial talks about the state government having ordered a freeze in recruitment and discussing ways and means to implement a salary cut, which some say could be up to 30%, for different categories of government employees. “Salary cut was discussed and debated. It has been decided not to implement it,” said one official. “Paying salaries to government employees will not be a problem since it comes through ‘appropriation account’. Further, there is a 70% chance that this government will not opt for a salary cut of employees,” said another official.

A statement from the Tamil Nadu government on Saturday, announcing an expert committee to be headed by former RBI governor C Rangarajan, seems to highlight the precarious condition of the state’s finances to a certain extent. In reply to the general discussion on the budget on February 20, 2020 deputy chief minister (O Panneerselvam) had announced that an expert committee would be constituted to recommend measures to improve the tax-GSDP ratio of Tamil Nadu, it read.

In the present context where the Covid-19 pandemic has posed much more serious economic and fiscal challenges, the expert committee may be requested to examine the challenges of Tamil Nadu and the way forward to improve the fiscal position including the tax-GSDP ratio as part of the larger brief of suggesting policy measures to improve the economic situation, the statement said.

“What the chief secretary’s order doesn’t say, but was duly acknowledged by the deputy chief minister O Panneerselvam in the state assembly, is that the suggestion to the government to constitute such an expert committee came from me. I have been telling this to the state government since 2017,” said DMK MLA P T R Palanivel Thiagarajan, who worked as a financial consultant in the US before getting active in state politics a few years ago.

“The tax-GSDP ratio used to be around 10% between 2004 and 2014. Since then it has steadily declined to around 7% now. A onethird drop and it should have alarmed the government long ago. The state’s finances were in a precarious situation much before this crisis,” said Thiagarajan. The constitution of the expert committee too does not enthuse him. “The committee does not inspire confidence as it should. It does not have any world-class economists as the one constituted by the Rajasthan government. Also the three-month timeframe given to the committee is too long. By then, we will already be bankrupt or will be in a deep liquidity crunch,” says Thiagarajan.

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UNCONCERNED: People queuing up in front of Tasmac shops were uncontrollable on the first day outlets opened