TN govt bites the bullet: Petrol price reduced by Rs 3/litre, exchequer expected to lose Rs 1,160 crore a year
TN becomes the first State to slash tax on petrol and make it Rs 3 cheaper at a cost of Rs 1,160 crore; reveals Rs 1K aid meant for women of poor families
Published: 14th August 2021 05:00 AM
Express News Service
CHENNAI: When the DMK government fulfilled its promise of reducing the effective rate of tax on petrol by Rs 3 per litre, Tamil Nadu became the first State to do so in 2021. As the State exchequer faces a fall in revenues, the move will result in a loss of revenue of Rs 1,160 crore a year.
“The tax reduction is being done on the instruction of Chief Minister MK Stalin,” said Finance Minister Palanivel Thiaga Rajan on Friday while presenting the first Budget of a DMK government under Stalin.
Clearly, Thiaga Rajan has attempted a balancing act, amid the rising fiscal troubles on one side and DMK’s poll promises on the other. Despite the anticipation created by the White paper on the State’s finances, there were no tax or price hikes.
On the poll promise of Rs 1,000 financial honorarium for women of each household, it was revealed for the first time that the scheme is only for the poor, and hence a mechanism will be introduced to identify eligible ration card holders.
Rajan said the DMK government will again submit a Budget six months from now. He promised that the new Budget would deal with reform measures that will go a long way in stabilising the financial position of the State, adding that he was forced to stay away due to the pandemic. So, the March 2022 Budget might have more to look out for.
The finance minister delivered many messages. One of them is the nerve to stand for principles of federalism. Rarely do State finance ministers announce a council to frame a model to tell the Union government what federal fiscal model it should follow. Rajan did that, and citing a CAG report, openly accused the Union government of failing to spend the cess collected for the purpose it was meant for.
Tamil pride is another cornerstone of the Dravidian movement, and that too was not missed. There was a special attention given to archaeological excavations and other allocations towards Tamil language development.
An assuring undercurrent in the finance minister’s speech was the push towards greater transparency in governance. Many of the promises reflected the idea of using technology towards transparency and to quantify the results of governance. A dedicated e-portal for all procurements by the State government was one such.
Net public debt this year to finish at Rs 98,392 crore?
The revised Budget, with its higher estimated shortfall in revenue receipts, now expects the net public debt this year to end at Rs 98,392.4 crore. As mentioned already, this increase in debt is being driven primarily by the higher shortfall now estimated in revenue receipts — both in terms of tax and non-tax revenues and in the state’s share of the Central taxes.
While the new revenue estimate for FY22 (Rs 2.024 lakh crore) is higher than the revised estimates for FY21 (by around 12%), it is not as high as the 21% increase estimated in the interim Budget. In terms of total estimated expenditure, the interim and revised budgets do not differ by much. Revenue expenditure is now estimated at Rs 2.61 lakh crore against the interim budget’s Rs 2.60 lakh crore, and capital expenditure is expected to be lower, at Rs 42,181 crore against Rs 43,170 crore.
More interesting, however, are the changes made to individual heads vis-a-vis the interim Budget. For instance, on the revenue side, the decision to reduce petrol cess by Rs 3 per litre will result in a loss of revenue worth Rs 1,163 crore.
But, while politically significant, this is a small change in the larger scheme of things. State GST collections are budgeted to be lower than the interim Budget by Rs 3,095 crore; stamps and registration fee collections lower by Rs 1,626 crore; state excise lower by Rs 844 crore; sales tax by 3,272 crore; and interest payment receipts by Rs 1,009 crore.
What to expect
■ Land bank of 45,000 acres to be created in five years, with focus on industrially backward districts
■ Policy for ‘Life Sciences - Research and Development and Manufacturing’ to be released
■ Govt to appoint high-level committee of educationists & experts to formulate State Education Policy
■ 17,980 MW of power-generation capacity to be added through own generating stations in 10 years
■ Chennai City Partnership Programme to be launched with help from World Bank and Asian Infrastructure Investment Bank
■ TN Climate Change Mission to be launched with an outlay of Rs 500 crore
■ Smart metering for all public utilities. E-procurement to be adopted across all procuring entities
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