Borrowings by TN govt within limits says Finance Secy

Chennai, Feb 23 (PTI) Borrowings by Tamil Nadu government
were well within limits prescribed by the Finance Commission,
state Finance Secretary S Krishnan said on Tuesday.
Addressing the post-budget press conference, he also said
Tamil Nadu's share of taxes on petroleum products has fallen
since the introduction of cess by the Centre.
Amid Opposition criticism of the state's overall
estimated debt of Rs 5.70 lakh crore with the government
intending to borrow Rs 84,686 crore, the official said it was
within the 15th Finance Commission limits unlike some states
which have raised more funds 'breaching' the ceiling.
Krishnan said the Centre has allowed states to borrow upto
5 per cent of their gross state domestic product (GSDP) as
against the earlier 3 per cent limit in view of the COVID-19
"The increase in the borrowings was in the wake of
pandemic. However for 2021-22 it has been revised to 4 per
cent (of GSDP)", he said.
"What one has to see here is -- after the borrowings, the
economy of a State should continue to grow..only then it will
be able to pay back the loans otherwise there will be
problem," he said.
State Deputy Chief Minister O Panneerselvam, who presented
the budget in the assembly earlier in the day, said the
government intended to borrow Rs 84,686.75 crore.
The outstanding debt as a percentage of GSDP is expected
to be 27.44 per cent in 2022-23 and 27.50 per cent in 2023-24
well within the norms outlined by the 15th Finance Commission,
he added.
The Finance Secretary said Tamil Nadu has lost its share
of tax revenues after the Centre changed its policy to collect
cess instead of excise duty from fuel prices.
The state government has already made a request to the
Centre to merge the cess and surcharge with the basic rate of
tax so that its legitimate share of revenue was ensured.
Krishnan said the state government modified the Value
Added Tax on fuel prices with an eye to benefit the people in
May 2020.
"In the same month that year, the Centre made some policy
changes under which excise duty was changed to cess. As per
excise duty, the Centre has to share the revenues with the
States. But after making it as cess, it does not require to do
so", he said.
The move by the Centre in May 2020 further increased the
taxes collected on fuel 'substantially', he said.
Krishnan said between April-November 2020 period the
revenue to the Centre (from fuel) grew by 48 per cent whereas
the state recorded 39 per cent less.
Panneerselvam said the share of Central taxes for Tamil
Nadu indicated in the Union Budget at Rs 32,849.34 crore in
the budget estimates for 2020-21 has been reduced to Rs
23,039.46 crore in the revised estimates.
"While the reduction is attributable to the overall fall
in central tax revenue due to the COVID-19, the shrinking of
the divisible pool of central taxes due to the increase in
share of cesses and surcharge is also a significant factor",
Panneerselvam said.
"I reiterate my call to the Government of India to merge
cesses and surcharges with the basic rate of tax so that the
states receive their legitimate share of the revenue", he
Panneerselvam said the 15th Finance Commission has reset
the debt-GSDP norms recognising that increased borrowings will
be required in 2020-21 and 2021-22 to sustain the levels of
The debt-GSDP ratio of Tamil Nadu as on March 31, 2021
will be 24.98 per cent and as on March 31, 2022 will be 26.69
per cent of GSDP, well within the norms prescribed by the
finance commission, he said. PTI VIJ

(This story has not been edited by THE WEEK and is auto-generated from PTI)