Upcoming Budget may feature ‘populist scheme’

The AIADMK government’s last full-fledged Budget before the 2021 Assembly election, to be presented by Deputy Chief Minister O. Panneerselvam on Friday, is expected to feature a ‘populist scheme’.

The expectation is based on the ground that the State government is to receive a revenue deficit grant of ₹4,025 crore and net an additional non-tax revenue of ₹2,600 crore during 2020-21.

Though these sources of income will not make the State revenue-surplus, they provide some room for the government to launch an “attractive scheme” in the coming year.

Besides, Chief Minister Edappadi K. Palaniswami, given his penchant for springing a surprise and the prevailing political fortunes of the ruling party, may be inclined to walk the extra mile.

Without ruling out the possibility, those involved in the preparation of the Budget say, however, that the government’s resources are “already stretched”. There are commitments towards the Tamil Nadu Generation and Distribution Corporation and State Transport Corporations that remain to be fulfilled.

The fact that the government’s calculations of revenue, worked out at the beginning of the current year, have gone wrong has been a matter of concern. A case in point is the growth rate in revenue through commercial taxes, which has been extremely modest. In the first half of 2019-20, the growth rate was 3.15% against the original estimate of around 11%

Resource mobilisation

Considering this and other factors, the Deputy Chief Minister, in his statement of mid-year review, which was presented to the Assembly last month, categorically said that the original estimated revenue deficit of ₹14,315 crore will be exceeded. He also dropped enough hints that the government might take up “additional resource mobilisation” to make up for the revenue shortfall, even as it continues various welfare and development schemes. Other than the recent hike in liquor prices, the government hasn’t announced any other increases.

It is against this backdrop that the 15th Finance Commission’s recommendation of providing a revenue deficit grant to the State has given relief to the government.

If the Centre releases the arrears of ₹4,073 crore in the Integrated Goods and Services Tax and around ₹3,370 crore in performance and basic grants for local bodies, the government’s financial health will see a substantial improvement.


Leave a Reply

Your email address will not be published. Required fields are marked *