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TN Govt announces Rs 3 tax cut on petrol, waives Rs 2,756 crore SHG co-operative loan
Tamil Nadu government on Friday announced a three rupee tax cut on petrol at an annual revenue loss of Rs 1,160 crore to the state in its revised budget estimates for 2021-22 fiscal.
It has also announced a waiver of Rs 2,756 crore loan owed by Self Help Groups (SHGs) to cooperative credit societies. However, the government led Chief Minister M K Stalin has deferred the implementation of the promised cooperative jewel and farm loan waiver, citing irregularities in the previous regime.
Presenting in the State Assembly the state’s first paperless (revised) e-budget, which scaled down the revenue receipt estimates of the state for the current fiscal by over Rs 16,000 crore in comparison with the February 2021 interim budget, state finance minister Palanivel Thiyaga Rajan also pushed the reforms he had proposed in the White Paper to the back seat and said, “As soon as the impact of the Covid-19 pandemic is overcome, deeper reforms will be undertaken to ensure that Tamil Nadu’s debt overhang is corrected without any delay. This is a solemn assurance that I make through this House to the people of Tamil Nadu.”
Forecasting a Rs 9,000 crore shortfall in the state’s own tax revenue (SOTR), Thiyaga Rajan said, “Given that the economy is still just recovering from the impact of successive waves of the Covid-19 pandemic, the time is not yet ripe for fiscal consolidation. Hence, revenue deficit for the year 2021-22 is expected to go up from the unrealistic Interim Budget Estimates of Rs.41,417.30 crore to Rs.58,692.68 crore in the Revised Budget Estimates 2021-22.”
Attributing the increase in revenue deficit to exceptional times (Covid), the minister assured that the government does not detract in the least from its commitment to fiscal rectitude and consolidation in the coming years, emphatically indicated in the White Paper.
Pointing out that the Government has had to incur an additional total expenditure of Rs.17,618.80 crore on Covid related relief including the livelihood cash support and additional food subsidy, the minister said the most critical reform that they need to undertake is to increase the tax GSDP ratio of Tamil Nadu. Citing the finding of the white paper white attributed the deterioration of the tax GSDP ratio of Tamil Nadu by 3.02 per cent from 8.48 per cent in 2006-07 to just 5.46 per cent in 2020-21, the minister said the deterioration represents an annual revenue loss of about Rs.65,000 crore in the current terms. Citing lax tax administration in the last decade as one of the key causes for the revenue loss, the minister pegged the state’s fiscal deficit for 2021-22 at 4.33% of GSDP, which would still be within the overall norms prescribed by the 15th Finance Commission.
Proposing tax reforms in consultation with Commercial Taxes, Registration, Transport and Excise ministries, he said that they were in the process of revamping tax administration in the Commercial Taxes, Registration, Motor Vehicle Tax and State Excise Departments and they were confident that through improved administration and plugging of leakages, revenue collections can be substantially stepped up.
READ MORE: Tamil Nadu Budget 2021-22 Highlights
The Petrol price in the city stands Rs. 102.49/ litre while the diesel prices stand Rs.94.39/ litre.