The State Budget, which did not have new tax proposals, anticipates a 15 per cent growth in revenues from commercial taxes and stamp duty. These had been hard hit in 2009-10 because of the slowdown, but the recovery is happening and this will partly bridge the deficit in the coming years. The annual Plan outlay for 2010-11 is Rs 20,000 crore against Rs 17,500 crore in 2009-10.

Presenting the Budget at the new Rs 500-crore partly completed Assembly building, the State Finance Minister, Mr K. Anbazhagan, reiterated the State Government's stand on autonomy by urging the Centre to refrain from enacting laws that take away the powers of the State Governments in subjects relating to the concurrent list. The Centre should drop the move to centralise powers relating to higher education through the establishment of the National Commission for Higher Education, he said.

The Union Government should formulate schemes after consulting State Governments and give them the flexibility to modify schemes to suit the State's needs.

While welcoming the hike in States' share of the Centre's net tax revenue to 32 per cent from the prevailing 30.5 per cent and the higher allocation in the form of grants-in-aid, he pointed out that the share of some of the better performing States, including Tamil Nadu has dropped. This affects the States that do better in welfare schemes and infrastructure projects.

Industries

The State Government's support to investors setting up manufacturing base in southern districts has helped attract new investments there, he said. Sundareshwar Alloys, a company based in Indonesia and Hong Kong will invest Rs 2,000 crore to manufacture tractors and steel alloys in Madurai and Sivaganga Districts. An industrial park will be set up by the State Industries Promotion Corporation of Tamil Nadu in Villupuram District.

The State continues to strengthen its automobile and components manufacturing base with new investments coming in.

Slashes VAT

The State Government plans to introduce a scheme for settlement of arrears under the Tamil Nadu General Sales Tax Act and Central Sales Tax Act during the current session. It slashed Value Added Tax to 4 per cent on a range of items that now attract 12.5 per cent. These include branded coffee powder (not instant coffee), branded sweets, savouries and ready mix food products, paint brushes, and knives, scissors and tailoring items.


The State Government is targeting a crop loan disbursement of over Rs 2,500 crore through cooperative banks for 2010-11 against Rs 2,013 crore disbursed in 2009-10. The number of farmers covered under the crop insurance scheme has increased substantially to about 7.8 lakh in the current year against about one lakh in 2005-08. The Minister attributed the growth to the 50 per cent subsidy on the insurance premium by the Government.

The Minister also announced Rs 100 hike in sugarcane support price for 2009-10. Farmers will get Rs 1,650 a tonne against Rs 1,550 announced earlier. For 2010-11 sugarcane farmers will be paid Rs 2,000 including the transport charge and recovery based incentive.

The State Government has anticipated a drop in food subsidy outgo to Rs 3,750 crore from Rs 4,000 crore in the current year due to the drop in prices of commodities such as pulses and sugar.

Mr Anbazhagan said that the total revenue receipts for 2010-11 is estimated at Rs 63,091.74 crore with the revenue expenditure at Rs 66,488.19 crore resulting in a revenue deficit of Rs 3,396.45 crore. The main reason for the deficit is the implementation of the recommendations of the Sixth Pay Commission.

The total capital expenditure including loans and advances is projected at 12,825.68 crore and the fiscal defict Rs 16,222.13 crore. Taking into account the net Public Account of Rs 6,013 crore the overall deficit is Rs 8 crore.

Commercial Tax revenue is estimated to grow 15 per cent over 2009-10 to Rs 26,851 crore, Stamp Duty to grow by about 20 per cent to Rs 4,096.18 crore and State Excise receipts to 7,508.18 crore, an increase of about 15 per cent.

Source : BusinessLine, India, dated 19/03/2010