Chennai, Mar 14 (UNI) Tamil Nadu Finance Minister Thangam Thennarasu presented a tax free budget, while projecting the Revenue Deficit to reduce to Rs 41,635 crore by bringing it down to
1.17 per cent of the GSDP this year.
He said the Centre withholding funds under Samagra Shiksha, denial of funds under NDRF for Cyclone Fengal, have all caused a severe strain on the State Finances.
Presenting the budget in the State Assembly, he said the Revenue deficit in revised estimates is estimated to decrease to Rs.46,467 crore compared to Rs.49,279 crore in 2024-25, on account of prudent fiscal management.
This has been achieved despite the substantial reduction in grants-in-aid from the Union Government in the current year.
He said in this the Revenue Deficit is estimated to further reduce to Rs.41,635 crore.
The State finances have deteriorated continuously since the year 2015-16, when the Revenue Deficit breached the 1 per cent GSDP mark for the first time, and then worsened further to reach 3.28 per cent in 2020-21.
He said this Government has been working tirelessly to reverse this declining trend, amidst all obstacles, and in the ensuing year, it is expected to bring down the Revenue Deficit to 1.17 per cent of the GSDP, close to the ratio of 2015-16.
The Fiscal Deficit in Revised Estimates is estimated to decrease by Rs.6,992 crore to reach Rs.1,01,698 crore, as against Rs.1,08,690 crore in 2024-25.
The Fiscal Deficit as a percentage of GSDP is estimated to decrease to 3.26 per cent in the Revised Estimates 2024-25 as against 3.44 per cent estimated in the Budget Estimates, despite a downward revision in the GSDP.
This year, it is estimated to be Rs.1,06,963 crore, equal to 3 per cent of the GSDP, showcasing the Government’s commitment to the path of fiscal consolidation.
While there is a reduction in the net borrowings of the Government in absolute terms, the outstanding Debt to GSDP ratio in Revised Estimates 2024-25 is estimated to marginally increase to 26.43 per cent as compared to 26.41 per cent projected in Budget Estimates 2024-25, owing to the downward revision of GSDP as per the latest estimates.
In Budget Estimates 2025-26, this ratio is expected to decrease to 26.07 per cent of the GSDP, well within the target of 28.70 per cent prescribed under the 15th Finance Commission.
Mr Thennarasu said the State’s Own Tax Revenue is projected at Rs.2,20,895 crore, which includes an amount of Rs.1,63,930 crore for Commercial Taxes, Rs.26,109 crore for Stamps and Registration, Rs.13,441 crore for Motor vehicle Taxes and Rs.12,944 crore for State Excise.
Taking into account the growth in State’s economic activity, the revision of taxes and improvement in collection efficiency, the State’s Own Tax Revenue is estimated to grow at 14.60 per cent in 2025-26.
The State’s Own Non-Tax Revenue is estimated at Rs.28,819 crore. In sum, the State’s Own Revenues are estimated at Rs.2,49,713 crore, which constitutes 75.31 per cent of the Total Revenue Receipts in the Budget Estimates 2025-26.
While the State’s Own Revenues have been increasing due to the efforts of the Government, the central transfers from the Union Government in the form of Grants-in-aid and share in central taxes as a proportion of total revenue receipts have reduced significantly.
Withholding of funds under Samagra Shiksha, denial of funds under NDRF for Cyclone Fengal, a paltry release of Rs.276 crore for two massive disasters in the form of Cyclone Michaung and the unprecedented rainfall in southern districts, have all caused a severe strain on the State Finances,
Mr Thennarasu said.
Anticipating the release of the entire funds due to the State under Samagra Shiksha in the ensuing year, the Grants-in-aid receivable from the Union Government are estimated at Rs.23,834 crore.
The share in central taxes has been estimated at Rs.52,491 crore in the Revised Estimates, as compared to Rs.49,755 crore in the Budget Estimates 2024-25.
While there is an increase owing to the higher tax collections by the Union Government, it continues to be far lesser than what should accrue to the State but for the indiscriminate levy of cess and surcharges.
The Share in Central Taxes is estimated at Rs.58,022 crore in the Budget Estimates 2025-26 based on the Union Government’s budgetary allocation. When seen in comparison to our contribution of
9 per cent to the nation’s economy and 6 per cent of the Country’s population, the 4 per cent share
in central taxes is a gross injustice to the State.
In aggregate, the total amount of funds received from the Union Government as a percentage of the Gross State Domestic Product (GSDP) to the State has seen a constant and precipitous fall in the past few years, reducing from a high of 3.41 per cent of GSDP in 2016-17 to a meagre 1.96 per cent in the Revised Estimates 2024-25.
In current GSDP terms, the reduction of 1.45 per cent translates to a loss of Rs.45,182 crore to
the State, which is almost 44.43 per cent of our estimated Fiscal Deficit in Revised Estimates
2024-25.
In 2025-26, the Total Revenue Receipts are projected at Rs.3,31,569 crore, which is an increase of 12.81 per cent over the Revised Estimates.
On the expenditure front, the Total Revenue Expenditure has been estimated at Rs.3,73,204 crore, showcasing a growth of 9.65 per cent over Revised Estimates 2024-25.
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