Chennai, Feb 26 With the ruling DMK party trouncing the opposition in the local body polls, the Tamil Nadu government may get into a reform mode to beef up its revenues, prune down its expenses, debt, interest outgo and others.
As a matter of fact, State Finance Minister Palanivel Thiaga Rajan had earlier said the financial problems of the state can be corrected with "once in a generation" reforms and business as "usual approach" cannot continue.
"The upcoming Tamil Nadu budget can be reformatory in some aspects. They can roll back petrol price reduction citing the international hike in crude oil prices. The other welfare measures can be met comfortably as one time cash payments like the Covid-19 relief will not be there," Dr Gowri Ramachandran, an Economist told .
Last year, the government reduced the price of petrol by Rs 3/litre resulting in a revenue loss of Rs 1,160 crore per annum.
Incidentally, Rajan had ruled out any reduction in the tax rates on the petrol/diesel as it would reduce the state's revenue by about Rs 1,050 crore.
A major share of the state government's revenue goes towards salaries and pensions of its current and past employees respectively. The interest burden is also high, she pointed out.
As per the FY22 budget papers, the state's revenue receipts is estimated at Rs 2.02 lakh crore. The expenditure on account of Subsidies and Transfer for FY22 was estimated at Rs 1,14,632.71 crore.
Tamil Nadu is one of the debt laden states with its borrowing as on March 31, 2022, standing at Rs 5,77,987 crore.
The credit rating agency Care Ratings, in a recent report, said that Tamil Nadu has borrowed a sum of Rs 62,400 crore between April 8, 2021 and February 22, 2022.
In order to have a steady source of finance, the Tamil Nadu government wants the Goods and Services Tax
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