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In last budget before elections, Tamil Nadu blames Centre for fall in revenue
Paneerselvam also stated that the share of central taxes for Tamil Nadu, has been reduced to ₹23,039.46 crore in the revised estimates of 2020-21.
Tamil Nadu’s deputy chief minister and state finance minister, O Panneerselvam, on Tuesday presented a revenue deficit interim budget that blamed the Central government for the fall in revenue and talked up the achievements of the government over the past five years.
This is the last budget of AIADMK led state government as the state heads for assembly polls in April- May. The party has partnered with the Bharatiya Janata Party, which leads the Union government to contest the election.
Tamil Nadu’s debt was ₹4.87 lakh crore as on March 31, 2020. Since the state was affected due to the Covid-19 pandemic, this is likely to go up to ₹5.7 lakh crore by the end of March 31. State finance secretary S Krishnan in a post-budget conference said that the debt is within permissible limits.
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Panneerselvam’s ruling AIADMK blamed the central government led by their ally the BJP for delaying payments to the state. The deputy CM also said that the share of central taxes for Tamil Nadu which was ₹32,849.34 crore in 2020-21’s budget has been reduced to ₹23,039.46 crore in the revised estimates 2020-21. To be sure, revenue suffered in the course of the current fiscal year on account of the Covid-19 pandemic.
Panneerselvam cited the 15th Finance Commission’s report which noted that there is an increasing trend of levying cesses and surcharges by the Central Government which grew from 10.4% in 2011-12 to 20.3% in the received estimates 2019-20. He said the cesses do not form part of the divisible pool of taxes.
The commission “has not made any categorical recommendation of merging cesses and surcharges in the basic rate of tax or of including them in the divisible pool as demanded by the many states including Tamil Nadu, which is very disappointing,” Panneerselvam said, reiterating his appeal.
The finance minister also specified that the Commission has recommended state-specific grants of ₹4,784 crore as performance-based incentives to Tamil Nadu for specific sectors including health, education, judiciary and statistics. Following Union Finance Minister Nirmala Sitharaman’s union budget presentation on the same, he urged the centre “not to utilise the 15th Finance Commission recommended grants to substitute their share of funding for Central Sector and Centrally Sponsored Schemes. This would be a major deviation from past practice.”
He said that he ‘personally urged’ Sitharaman in the pre-Budget meeting held on January 18 that all cesses and surcharges should be merged with the basic rate of tax “so that the states receive their due share as devolution from the central taxes.” Chief minister Edappadi Palaniswami also raised the issue with the centre. “Despite this...the agricultural infrastructure development cess has been levied by further reducing the basic excise duty on petrol and diesel.”
In a budget speech that ran for more than two hours, Panneerselvam reiterated his government’s achievements, proposals and projects and announced new ones. Computer science will be taught to students from class 6 to 10, he said. School education has been sanctioned ₹34,181 crore in 2021-22. ₹13,352 crore was spent to bring Covid-19 under control, the minister said. The state has allocated ₹19,420 crore for health. Tamil Nadu is expected to register a positive growth rate of 2.02% against India’s negative growth rate of 7.7% in 2020-21, Panneerselvam said.
Following the chief minister’s announcement in the assembly in February, farm loans worth ₹12,110 crore owed to co-operative banks by 16,43,347 farmers were waived. A provision of ₹5,000 crore was announced for the scheme. “It is ambiguous if they will clear all loans,” added Maalan Narayanan. “Though it was meant to be a vote on account, the budget has initiated new projects. This is improper; what if the government doesn’t return. What happens to these works?”
Panneerselvam expressed confidence in the house that the government will return. “Tamil Nadu’s people will trust only a government headed by Edappadi Palaniswami,” he said in his concluding remarks.
DMK and Congress MLAs walked out after the speaker did not allow them permission to raise issues at the start of the budget speech. Tamimun Ansari of Manithaneya Jananayaga Katchi (MJK) cycled his way to the budget session condemning the fuel price rise. “Before the election, knowing that work cannot be finished, they have floated tenders worth ₹40,000 crore and emptied state coffers,” the DMK’s Duraimurugan told reporters. The assembly will reconvene next on February 25 until February 27.
