Chennai, Mar 21: Severe drought, crop failure and a general economic slowdown not withstanding, the Jayalalithaa Government in Tamil Nadu today presented a tax-free budget, apparently with an eye on next year's Lok Sabha elections.
During 2013-14, the projected revenue surplus would be Rs 664.06 crore while fiscal deficit would be Rs 22,938.57 crore, Finance Minister O Panneerselvam said in his budget proposals presented in the Assembly.
“The fiscal deficit will be 2.84 per cent of Gross State Domestic Product (GSDP), which is well within the stipulated norm of three per cent,” he added.
The budget was prepared in the backdrop of “gloomy national economic scenario” and “waning investor confidence,” he said, adding the recent Union budget “reveals absolutely no commitment on the part of the Union Government towards achieving the twin objectives of reversing the economic downtrend and controlling inflation.”
The state government was already “feeling the pinch” of slowdown as seen in lower growth of GSDP which according to Advanced Estimates was 4.61 per cent at constant prices.
“The severe drought and crop failure has hit us badly in the primary sector, which has ultimately affected service sector growth as well. The general economic slowdown in the national economy and shortage of power has hampered growth in the manufacturing sector,” the Minister said in his Budget speech.
However, this would not mean the state would levy new taxes, he added.
“Inspite of pressures for vital expenditure and serious resource constraints, the Chief Minister has decided that, against the backdrop of slow growth of the Indian economy in general and its possible repercussions on state's economy in particular, no new tax will be imposed, nor will any existing tax rate be hiked in this budget,” he said.
For the year, the government had pegged the state's own tax target at Rs 86,065.40 crore with the bulk of it expected from commercial taxes, Excise Duty and Motor Vehicles tax at over Rs 56,000 crore.
Slowdown in the economy had affected tax growth in the state where investement sentiments,especially in manufacturing sector, “has taken a beating,” Panneerselvam said.
However, the state government was making all efforts to revive economy through “sagacious policies,” and that the Tax-GDP ratio was still “one of the best in the country,” at 10.3 as per revised estimated for 2012-13.
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