POVERTY REDUCTION STRATEGY TN

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Table 3.3 shows the performance of own tax revenues in Tamil Nadu relative to GSDP in terms of major tax revenue sources. It also gives annual buoyancy and growth rates of major taxes. GSDP is taken as the 1999-00 base series. By far the sales taxes are the most important source of own tax revenue in Tamil Nadu, followed by state excise duties and stamp and registration duties. The slightly lower budgeted figure for own tax revenue relative to GSDP in 2009-10 reflects consensus of the revenue impact of introduction to VAT which the state has recently implemented. The introduction of state value added tax (VAT) has implied some changes in the tax-GSDP ratio. The current practices in implementation imply restrictions on the taxrates that a state may have. For the states in general, the tax rates of 4, and 12.5 have been prescribed by the Empowered Committee of Finance Ministers. An indicative list of goods to be placed in different categories has also been provided. Tamil Nadu has historically been a highly taxed state. The shift to VAT essentially means that its tax rates will be in line with other states although there is some flexibility in the selection of goods that are placed in the exempted and lower rate category. As a result in 2007-08, the growth rate of sales tax fell drastically. The sales tax buoyancy has recovered since than but is still below one. As discussed earlier, the share of services in GSDP will continue to increase. But states are not able to tax the services since it has been placed in the union list. The fastest growth sector in Tamil Nadu is the services sector, taxation of which is reserved for the central Government. Much will depend on how the proposed goods and services tax (GST) takes shape. In BE 2009-10, as shown in Table 3.3, growth rates have fallen for most of the taxes. Sales tax revenue has fallen showing the impact of introduction of VAT. Appendix Table 3.1 shows the sequence in which states have introduced VAT in the country. However, as petroleum prices have increased substantially in 2008-09, and since special rates apply for petroleum grant products, it is expected that tax revenue buoyancy will remain high even in the case of State VAT. d. Non-tax Revenue: Untapped Potential Revenue collection in Tamil Nadu relies primarily on the state’s own tax system (about 70 percent). Another 15 percent of revenue comes from shared central taxes devolved to Tamil Nadu. Only 7 percent of total revenue is from non-tax revenue. Tamil Nadu ranks low in non-tax revenue relative to 14 major Indian states. Part of the reason is that some user charges (such as bus fares) do not go directly to the state’s treasury but are 58
collected by state-owned enterprises. In non-tax revenue there is some potential for increases. e. Fiscal Transfers to Tamil Nadu Fiscal transfers to Tamil Nadu come from Finance Commission transfers, Plan grants, and grants under various centrally sponsored schemes. In the aggregate, the transfers fell from 4.2 percent in 1993-94 to the level of 2.8 percent in 1998-99. These remained around 3 percent until 2003-04 and have started rising since then to 4.8 percent in 2007- 08 and thereafter came down to 4.1 percent in BE of 2009-10. Table 3.4: Grants Recommended for Tamil Nadu by the Twelfth Finance Commission (Rs. crore) Details 2005-06 2006-07 2007-08 2008-09 2009-10 Total Roads and Bridges 0.0 303.6 303.6 303.6 303.6 1214.4 Buildings 0.0 60.6 60.6 60.6 60.6 242.6 Forests 6.0 6.0 6.0 6.0 6.0 30.0 Heritage Conservation 0.0 10.0 10.0 10.0 10.0 40.0 State Specific Needs 0.0 75.0 75.0 75.0 75.0 300.0 Local Bodies Rural 174.0 174.0 174.0 174.0 174.0 870.0 Local Bodies Urban 114.4 114.4 114.4 114.4 114.4 572.0 Calamity Relief 156.8 164.7 172.9 181.5 190.6 866.5 Total 451.2 908.3 916.5 925.2 934.2 4135.4 Source: Report of Twelfth Finance Commission, 2004. The Twelfth Finance Commission (TFC) has fixed Tamil Nadu’s share in the total divisible pool of central taxes at 5.305 percent as opposed to 5.385 percent recommended by the Eleventh Finance Commission. This marginal decrease was neutralized since states’ share in the centre’s divisible tax pool has been increased from 29.5 percent to 30.5 percent. Thus, the share of Tamil Nadu has remained unchanged at 1.6 percent of central taxes during 2005-06 to 2009-10. However, Tamil Nadu has not obtained any special grants for education and health. It is the higher overall taxbuoyancy of central taxes that has increased Tamil Nadu’s share of central taxes relative to its own GSDP. The TFC has also recommended (Table 3.4) for Tamil Nadu, Rs. 1214 crore in grants for maintenance of roads and bridges, Rs. 242 crore for maintenance of public buildings, Rs. 30 crore for forests, Rs. 40 crore for Heritage conservation, Rs. 250 crore for development of urban areas and Rs. 50 crore for sea erosion, Rs. 1442 crore for local bodies, and Rs. 867 crore for calamity relief, over 2005-06 to 2009-10. As a result, 59
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MONOGRAPH 6/2010 MDGs-BASED POVERTY
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MONOGRAPH 6/2010 March 2010 Price:
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CONTENTS Acknowledgements Contents
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List of Tables Table 1.1 Millennium
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Table 5.10 Status of Urban Water Su
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Appendix 1.12 Maternal Mortality an
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MDGs-Based Poverty Reduction: Main
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. In terms of share of below povert
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of expenditure on public goods like
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households or individuals. For each
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Chapter 1 ISSUES AND INITIAL CONDIT
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The first three goals relate to era
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. Poverty in Tamil Nadu: Inter-stat
Page 29 and 30: and the urban poverty ratio was sli
Page 31 and 32: the total poor accounted for a prog
Page 33 and 34: physical development of people. Mor
Page 35 and 36: Table 1.11: Millennium Development
Page 37 and 38: indicates that Tamil Nadu will achi
Page 39 and 40: However, there is a scope for meeti
Page 41 and 42: status of malnutrition. The accepte
Page 43 and 44: The under-five mortality rate-U5MR
Page 45 and 46: (iv) HIV/AIDS, Malaria and Other Di
Page 47 and 48: 3. While Tami Nadu has done compara
Page 49 and 50: Chapter 2 REDUCING POVERTY: THE MAC
Page 51 and 52: est of the economy indicates the ex
Page 53 and 54: share of the tertiary sector in Tam
Page 55 and 56: Chart 2.1: Sectoral Growth in Tamil
Page 57 and 58: policies are in place to absorb lar
Page 59 and 60: In the context of interface between
Page 61 and 62: Table 2.7: Decomposition of the Hea
Page 63 and 64: Dutt are not so relevant for predic
Page 65 and 66: The SDE estimates vary across the s
Page 67 and 68: Chart 2.3 highlights that agricultu
Page 69 and 70: 2.6 Summary In summary the followin
Page 71 and 72: Chapter 3 FISCAL REFORMS FOR POVERT
Page 73 and 74: Bardhan (1996) emphasizes that ofte
Page 75 and 76: atio of government employees to pop
Page 77 and 78: Table 3.2: Tamil Nadu in Inter-stat
Page 79: Chart 3.4: Own Tax Revenues Relativ
Page 83 and 84: Chart 3.5: Capital Outlay as percen
Page 85 and 86: The Fiscal Policy Strategy Statemen
Page 87 and 88: f. Pension and Salary Expenditures
Page 89 and 90: 10 it is kept at 40 percent to acco
Page 91 and 92: Government of Tamil Nadu has to sub
Page 93 and 94: Chapter 4 COPING WITH SPATIAL IMBAL
Page 95 and 96: In order to focus on the deficient
Page 97 and 98: Chart 4.2 indicates the arrangement
Page 99 and 100: Chart 4.5: Human Development Index:
Page 101 and 102: Table 4.4: Index of Gender Deficien
Page 103 and 104: Districts Table 4.7: Health Facilit
Page 105 and 106: Regarding access costs in availing
Page 107 and 108: 4.6 Incidence of Poverty: District
Page 109 and 110: district followed by Villupuram and
Page 111 and 112: household willing to do public work
Page 113 and 114: Districts Table 4.13: Implementatio
Page 115 and 116: Table 4.14: Share of BPL Population
Page 117 and 118: Table 4.16: Block -wise Gross Acces
Page 119 and 120: Table 4.18: Block-wise IMR in Thiru
Page 121 and 122: 8. For provision of safe drinking w
Page 123 and 124: Chapter 5 WATER, LAND AND AGRICULTU
Page 125 and 126: 5.2 Water: Key Issues in Tamil Nadu
Page 127 and 128: Table 5.3: Sources of Water Supply
Page 129 and 130: funding under the Water Resources C
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In 2006-7, 65.83 percent of habitat
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the major cause for poor maintenanc
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about 30 litre per capita per day (
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2006-07). However, total area under
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nearly 3.5 times as high as the pri
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5.4 Agriculture: Key Issues Agricul
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Table 5.19: Productivity (Yield) of
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Only rice and sugarcane received ir
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iv. There are severe water quality
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Chapter 6 LAST MILE REACH STRATEGIE
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targeting as a device to improve ef
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eneficiaries and of delivering prog
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In the nighbourhood of the poverty
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inefficiencies. Some of the major c
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Tamil Nadu is close to achieving un
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programmes. It is the only Self Emp
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districts in Tamil Nadu. Namadhu Gr
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6.5 Reaching Households and Individ
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proposition more insurable, a group
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line to post-office saving banks or
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each the urban poor who live in slu
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Eleventh Plan (2007) observes: “O
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i. provide financial assistance for
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unemployed or underemployed poor by
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Services Prepare detailed water sup
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Chapter 7 SUMMARY AND FORMULATION O
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positive and relatively high. The b
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3. In terms of composition of BPL p
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holdings are smaller than 4 hectare
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There are considerable inter-distri
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Table 7.1: Adjustment during 2007-0
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R i =(I a +I max -I i )/(I a +I max
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line to post-office saving banks or
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d. Targeting As far as rural areas
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7.6 Urban Poverty Reduction Strateg
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Fund, GoTN has created Tamil Nadu I
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Some initiative by Government of Ta
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• Addressing urban poverty allevi
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land. There is need to develop a sc
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REFERENCES Agarwal, S.P. (2005),
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Deaton, Angus and Alessandro Tarozz
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Himmelfarb, G. (1984), The Idea of
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Report of the Working Group on Urba
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APPENDIX TABLES Appendix Table 1.1:
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Appendix Table 1.1 (contd.): Millen
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Appendix Table 1.2 (a): Poverty Lin
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Appendix Table 1.3: Poverty Gap Est
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Appendix Table 1.5: Head Count Rati
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Appendix Table 1.6 (contd.): Progre
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Appendix Table 1.8: Women’s Malnu
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Appendix Table 1.10: Child Mortalit
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Appendix Table 1.11 (contd.): State
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Appendix Table1.12 (contd.): Matern
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Appendix Table 2.3: Decomposition o
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and Publicity Relief from Natural C
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Appendix Table 4.3: Demography Rela
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Appendix Table 4.5: Health Faciliti
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Sl. No Appendix Table 4.7: Efficien
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Appendix Table 4.9: Employment unde
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Appendix Table 5.1: Major and Mediu
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Appendix Table 7.1: Indices for Dis
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ANNEXURES 231
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Monotonicity Sensitivity Axiom Mono
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component of the poverty line is th
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Fuchs (1969), while advocating the
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H = m/n (2) The head count ratio ig
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Annexure 1.3 UNIFORM RECALL PERIOD
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‣ Periyar became Erode; ‣ Tirun
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Women Receiving 3 Or More ANC Visit
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In Sivagangai, as per 2001 census,
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Table 4.3: Block wise Gender Wise G
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Block Table 4.6: Trained Teachers a
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Annexure 5.1 ENVIRONMENTAL CONSEQUE
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Annexure 6.1 NOTES ON SELECTED CENT
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10. Kasturba Gandhi Balika Vidyalay
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MSE Working Papers Recent Issues *
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POVERTY REDUCTION STRATEGY TN

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