IPA Newspack
  • Home
  • now
  • politics
  • business
  • markets

IPA /

IPA Special

IPA Special

Tamil Nadu Budget Shows The Model To Shun Fiscal Profligacy

By K R Sudhaman

It really goes to the credit of Tamil Nadu Finance Minister Palanivel Thiaga Rajan in crafting this year’s state budget in a manner to reign in on fiscal deficit at difficult covid times without burdening the common man with more and new taxes. There is a lesson for other states on how to manage the state’s economy with fiscal prudence while at the same time increasing allocation to critical sectors like education and measures to step up investment  particularly MSMEs to kick-start the economy. It is a bold budget as well as for the first time in recent history, the budget has not offered any goodies to people.

Populism has become the order of the day among various political parties to protect their electoral constituency for short-term gains notwithstanding the long-term damage it does to the economy. One must not forget that the budget presented in third week of this month is the first budget after a famous five descended on the state to help the government manage its economy. Known as the Economic Advisory council, the body comprise former RBI governor, Raghuram Rajan, Nobel Laureate Esther Duflo, former Chief Economic Adviser Arvind Subramanian, development economist, Jean Drez and former Union Finance Secretary S Narayan. This is also the first full-fledged budget after DMK’s M K Stalin became Chief Minister of the state in 2021.

Certainly, the budget has the stamp of the council notwithstanding the fact that that the well-articulated finance minister himself is a MIT business school product, who too would have contributed greatly to the budget making. The significant aspect of this budget is that for the first time in seven years, the budget showed a dip in revenue deficit by more than Rs 7000 crore. The fiscal deficit has been contained at 3.8 per cent of GSDP from 4.8 per cent estimated earlier and well within 4.5 per cent recommended by the 15th finance commission.

The government proposed to bring down the revenue deficit further in 2022-23 without raising taxes but improving tax collections by plugging leakage. According to one estimate the state loses Rs 75,000 crore annually and even if it is able to plug one third of the leakage, the state would get additional revenue of about Rs 25,000 crore. The state has proposed to mop up revenue of Rs 2.31 lakh crore in 2022-23 as against 2.03 lakh crore in 2021-22, a growth of 13.5 per cent. The state economy is expected to achieve better growth in 2022-23 with Covid waning and increasing economic activity. It expects revenues from state levies excise, commercial taxes, motor vehicles tax, stamps and registration to increase by 17.2 per cent. All these are going to be achieved without raising any of the levies. The rest to come from state’s share from central pool of taxes and GST.

The budget has enough proposals to make the state a $ one trillion economy by 2030.  This is not a difficult ask for the state as this can be achieved with an annual rate of 14 per cent nominal GSDP.  Nominal GSDP is inflation plus real growth. The state has clocked 15.8 per cent nominal GSDP annually in pre-covid times and even during Covid, Tamil Nadu was the only state to achieve a positive GSDP growth. All other states and the centre clocked a negative growth. Tamil Nadu is expected to clock 14 per cent GSDP in 2021-22 is expected to grow at a slightly better rate in 2022-23.

Basically prudent fiscal management is the key as Rajan puts it and this has been done at a time when the state has to kick-start the economy. The lesson here for all the states is that even during difficult times, fiscal management is more important. Fiscal profligacy may be an easy way out to get out of difficult economic situation in the short-term, but it has long-term consequences that are dangerous and harmful to the economy. While ensuring prudent fiscal management, Tamil Nadu government has rebalanced priorities and focused on social infrastructure and development without compromising on welfare schemes. “This budget has been prepared with a vision keeping in mind not just the present but the future, including generations of Tamils yet unborn,” Rajan said implying this could be a model state budget for other state governments to follow.

Plugging leakage of revenue is critical for all state governments but the question is whether the state governments have the necessary political and administrative will. This will also help in checking corruption. Many taxes go uncollected because of mal practices, bribery and political interference. Digitisation is one major step in this direction, more importantly the political class will have to keep the interest of the state and nation ahead of personal and vested interests. This will take time and Tamil Nadu has at least made a beginning and hopefully this is sustained in subsequent budgets and more states emulate this approach. (IPA Service)

Politics

Regional parties report Rs 250cr electoral bond donations

May 28, 2022
Happening Now

Pak PM says fuel price hike averted bankruptcy

May 28, 2022
Business

No wheat-like export restriction for rice immediately

May 28, 2022
IPA Special

Places Of Religious Worship (Special Provisions) Act Is Still Legally Binding

May 27, 2022
IPA Special

Remembering Jawaharlal Nehru On His 58th Death Anniversary

May 27, 2022
IPA Special

Labour Market Recovery Is Again Under Threat

May 27, 2022
IPA Special

Is Arunachal And Ladakh The Dog’s Life For IAS & IPS?

May 27, 2022
IPA Special

Geetanjali Shree’s ‘Tomb Of Sand’ Wins International Booker Prize

May 27, 2022
IPA Special

Chief Minister Nitish Kumar Calls All-Party Meeting On Caste Census

May 27, 2022
IPA Special

Wage Earners And Bottom 20 Per Cent Are The Hardest Hit By High Inflation

May 27, 2022
IPA Special

Centre’s Sudden Wheat Export Ban Has Hit The Income Of Common Farmers

May 27, 2022
IPA Special

Ray Liotta Of Goodfellas Fame Was An Actor Of Great Talent

May 27, 2022
Politics

BJP wants AAP stopped from becoming main opposition party

May 27, 2022
Happening Now

Imran praises India for fuel price cut, slams Pakistan

May 27, 2022
Happening Now

Putin offers to help solve food crisis if sanctions lifted

May 27, 2022
Politics

Mann govt trains guns on ‘corrupt’ ex-ministers

May 27, 2022
Politics

Expelled Mayawati favourite lands up in Cong

May 27, 2022
Politics

Telangana CM holds talks with Deve Gowda in Bengaluru

May 26, 2022
IPA Special

Indian Membership Of Quad Is Against Both Political And Economic Interests

May 26, 2022
IPA Special

Despite Loss Of Jobs And High Price Rise, Narendra Modi Is Comfortable

May 26, 2022

An appeal

The legacy of IPA, founded by Nikhil Chakravartty, the doyen of journalism in India, to keep the flag of independent media flying high, is facing the threat of extinction due to the effect of the Covid pandemic. Only an emergency funding can avert such an eventuality. We appeal to all those who believe in the freedom of expression to contribute to this noble cause.
Click here to learn more

Share

Reply

  • 0
More on IPA

Places Of Religious Worship (Special Provisions) Act Is Still Legally Binding

May 27, 2022 5:28 pm | IPA Staff

By Prakash Karat During the Ramjanmabhoomi agitation, the Vishwa Hindu Parishad and other Hindutva outfits had raised the slogan “Ayodhya sirf ek jhanki hai, Mathura...

IPA Special

Remembering Jawaharlal Nehru On His 58th Death Anniversary

May 27, 2022 5:26 pm | IPA Staff

By Nitya Chakraborty On May 27, 1964 at 1.44 PM, India’s first Prime Minister and one of the best chroniclers of this great nation’s history...

IPA Special

Labour Market Recovery Is Again Under Threat

May 27, 2022 5:23 pm | IPA Staff

By Dr. Gyan Pathak After significant gains during the last quarter of 2021, the number of hours worked globally dropped in the first quarter of...

IPA Special

Is Arunachal And Ladakh The Dog’s Life For IAS & IPS?

May 27, 2022 5:21 pm | IPA Staff

By Sushil Kutty After the newspaper report with the picture showing the IAS couple watching the dog take a walk in the stadium, the Ministry...

IPA Special

Places Of Religious Worship (Special Provisions) Act Is Still Legally Binding

in IPA Special
May 27, 2022   ·  

Remembering Jawaharlal Nehru On His 58th Death Anniversary

in IPA Special
May 27, 2022   ·  

Labour Market Recovery Is Again Under Threat

in IPA Special
May 27, 2022   ·  

Leave a Reply Cancel reply

You must be logged in to post a comment.

Follow us on
Up Next: Kerala Opposition Intensifies Stir Against SilverLine
©2020 -2021 India Press Agency, All Rights Reserved
Newspack by India Press Agency
Posting....
logo
  • Home
  • now
  • politics
  • business
  • markets