Chennai: Balancing reforms and social justice, Tamil Nadu Finance Minister PTR Palanivel Thiagarajan on Monday released a White Paper on the abysmal financial situation of the state, a legacy of the AIADMK, which was in power since 2011. The exercise, coming days ahead of the state budget, has put the AIADMK in the dock. Financial mismanagement and profligacy with the absence of accountability, has landed the state in a severe debt burden, he said and gave broader hits at reviving the financial health through rationalising taxes and subsidies.
With the AIADMK-led opposition cornering the government on the DMK's silence over implementing the populist poll promises like Rs 1,000 a month for housewives, reduction of fuel and LPG prices among others, the finance minister is apparently buying time till the fiscal condition improves. “All the promises will be implemented. The Chief Minister and our party had made those promises to the people, which brought us to power. The white paper is not an excuse,” he clarified.
This is the second time a finance minister is presenting a white paper on state finances. Earlier, in 2001, C Ponnaiyan, who held the finance portfolio in the AIADMK government of Jayalalithaa, had presented one. Comparing the state’s performance with similar industrial states like Maharashtra, Gujarat and Karnataka, he said that Tamil Nadu’s revenue deficit had gone up every year from 2013-14, others have reported revenue surplus till 2018-19.
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He reasoned that the fiscal deficit was mainly due to high revenue deficit, forcing the state to borrow more and more to meet payment of salaries and debt servicing on previous loans rather than on capital expenditure. The current levels of fiscal deficit are unsustainable, he said and underlined the need for revenue generation.
While the state-owned TASMAC, having monopoly over liquor sale, is earning profit, many others, especially TANGEDCO and the Transport Corporations are reeling under debt, the white paper revealed. The rising fiscal deficits, he alleged, amounts to Rs.70,000 on every citizen of the state.
According to him, the State’s Own Tax Revenue has continuously declined due to inept administration and the AIADMK’s government’s inability to arrest large leakages. “The AIADMK regime was neither efficient in administration nor politically self-assured. Most of the present problems are due to the unscrupulous manner of running the government in the last seven years,” he charged.
Taking a swipe at the Union Government, the former Investment banker said, the cess levied on petrol is not divisible with the states but goes only to the Centre's coffers. Cesses and Surcharges of the Union government has gone up from 10.4% in 2011-12 to 20.2% in 2019-20. And the Union’s tax revenues from sale of Petrol and Diesel has shot up to 63% between 2019-20 and 2020-21, while the share for Tamil Nadu from the sale of fuels during the same period has dipped to 28%.
Further, he pointed out that the divisible pool of Union taxes has declined in successive Finance Commissions, from 6.637 in 10th Financial Commission to 4.023 in 14th.For now, Thiagarajan had put both the Union Government and the AIADMK on the backfoot.
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