ChennaiState government finance secretary S Krishnan said on Tuesday that the lending limits by the Tamil Nadu government were within the limits set by the Finance Commission.
Addressing the post-budget press conference, he also said that the share of taxes on Tamil Nadu’s petroleum products has fallen since the introduction of cess by the Center.
Amid criticism of the state’s total estimated debt at Rs 5.70 lakh crore, the government has expressed its intention to borrow Rs 84,686 crore, the official said, adding that it was within the limits of the 15th Finance Commission, unlike some states which raised more funds. is.
Krishnan said that the Center has allowed states to borrow up to 5 percent of their gross state domestic product (GSDP), whereas earlier the 3 percent limit was in the wake of the COVID-19 epidemic.
He said, “The increase in borrowing was done in the wake of the epidemic. However it has been revised to 4 per cent (of GSDP) for 2021-22”.
He said, “What does one have to see here – after borrowing, the economy of a state must continue to grow.” Only then will he be able to repay the loan, otherwise there will be a problem. ”
State Deputy Chief Minister O Panneerselvam, who presented the budget in the Legislative Assembly earlier in the day, said the government intends to borrow Rs 84,686.75 crore.
Outstanding debt as a percentage of GSDP is expected to be 27.44 percent in 2022–23 and 27.50 percent in 2023–24, which is within the criteria outlined by the 15th Finance Commission.
The Finance Secretary said that Tamil Nadu has lost its share of tax revenue after the Center changed its policy to collect cess instead of excise from fuel prices.
The state government has already requested the Center to merge the cess and surcharge with the basic rate of tax to ensure a legitimate share of revenue.
Krishnan said that the state government revised the value-added tax on fuel prices in May 2020 to benefit the people.
“In the same month of the same year, the Center made some policy changes under which excise duty was changed to cess. As per excise duty, the Center would have to share revenue with the states. But after creating it as cess , It is not required. To do so “, he said.
The move by the center in May 2020 further increased taxes collected on fuel, he said.
Krishnan said that during the period April-November 2020, revenue to the Center (from fuel) increased by 48 percent while the state recorded a decrease of 39 percent.
Panneerselvam said that the share of central taxes for Tamil Nadu in the Union Budget has been increased from Rs 32,849.34 crore to Rs 23,039.46 crore in the revised estimate for 2020-21.
“Because the decrease is due to the overall decline in central tax revenue due to COVID-19, the shrinking of the divisible pool of central taxes due to the increase in the share of cess and surcharge is also an important factor”, Panneerselvam said. .
He said, “I reiterate my call to the Government of India to merge the cess and surcharge with the basic rate of tax, so that the states receive a legitimate share of the revenue.”
Panneerselvam said that the 15th Finance Commission has reset the debt-GSDP norms assuming that increased borrowing would be needed in 2020-21 and 2021-22 to maintain spending levels.
He said that Tamil Nadu’s debt-GSDP ratio would be 24.98 percent as on March 31, 2021 and 26.69 percent of GSDP as on March 31, 2022, which is within the norms set by the Finance Commission.