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POVERTY REDUCTION STRATEGY TN

government buildings,

government buildings, the capital cost increases to Rs. 230 crore. The additional recurring cost that would be incurred in these facilities is about Rs. 20 crore each year. b. Reforming Subsidies and Transfers The desirability of subsidies arises primarily because of the associated positive externalities in the public provision of the concerned goods and services. Two important cases are health and education. Equity requires that the benefits of the subsidies should accrue primarily to the relatively deprived sections of the society, which in some contexts are the low income groups, and women or female children. The case becomes stronger when concerns about low incomes and gender are present simultaneously. In Tamil Nadu, direct subsidies were the third fastest growing revenue expenditure, next to pension and interest expenditure. The largest subsidy went to food (of which the rice subsidy accounts for 90 percent) distributed through the public distribution system, PDS. c. Reforming Public Sector Units State Level Public Enterprises continue to require financial support. State transport units, with about 120,000 employees have large accumulated losses. There are 18 cooperative spinning mills and 16 cooperative sugar mills, employing 20,000 people, which account for major financial losses incurred by the cooperative sector. There are also nine public Statutory Boards formed under independent legislative Acts, spanning from electricity to maritime transport to pollution control. The TNEB, accounting for 80 percent of employment of the nine Statutory Boards, has not been restructured yet. d. Gender Focus through Budgets Like the central government, in the Tamil Nadu state budget special statements indicating the extent of gender-oriented expenditure should be undertaken. e. Strengthening Local Governance Decentralization is generally considered efficiency augmenting. The provision of local public goods (LPGs) is best handled in a decentralised way. The efficiency advantages of decentralisation of LPGs are varied and quite significant. The first advantage of decentralisation is the possibility of having regional specific demands in the mix and level of local public goods, which can greatly enhance social welfare. Research has indicated that preference revelation problems encountered in public finance are greatly diminished as the size and heterogeneity of the population decreases. With decentralisation, competition, proximity, and transparency provide a strong motivation for local governments to be more responsive to the desires of the public. 64

f. Pension and Salary Expenditures Among important initiatives, Government of Tamil Nadu has already carried out pension reform to reduce current and contingent pension liabilities. A defined contribution system for employees hired after April 1, 2003, has been introduced and the qualifying tenure of service required to receive full pensions has been increased by three years. Further, the basis for calculating eligible pensions was changed to the last 10 months average pay rather than the last drawn pay. Tamil Nadu has the highest number of civil servants per hundred people of any major Indian state after Punjab: 2.13 compared with 1.4 for the country as a whole. Tamil Nadu had about 7 lakh government employees according to data given in Twelfth Finance Commission Report which is almost as many employees as in Uttar Pradesh, which has a much larger population. There will be a significant fiscal impact of implementation of the Sixth Pay Commission recommendations. g. Augmenting Capital Expenditures State government has a critical role to play in developing physical infrastructure in sectors like roads, power and irrigation. It is investment in these sectors that will strengthen growth and attract investment from outside. With higher growth, the revenues accruing to the government will also increase. Further, expenditure has to be restructured such that capital expenditure is increased with focus on infrastructure, and revenue expenditure has to be increased in social sectors like health and education. 3.5 Suggested Fiscal Restructuring We draw out a plan for fiscal restructuring to demonstrate that considerable scope exists for creating additional fiscal space for augmenting expenditures on education and health, while keeping within the contours of the Fiscal Responsibility and Budget Management Act of Tamil Nadu. Using 2007-08 revised estimates as base numbers for the revenue items and using 2008-09 BE for most expenditure items, it is shown that within a set of reasonable assumptions, considerable fiscal restructuring can be undertaken to strengthen health and education as well as other social services for achieving the MDGs. The main assumptions are that in the current year (2008-09), nominal growth rates will be as high as 16 percent due to the higher inflation rate currently being experienced in India as well as in the states. This implies that if we take a combination of 7 to 7.5 percent of real growth and 9 percent plus inflation, a nominal growth of 16 percent quite likely. However, it is expected that inflation will be moderated in 2009-10, and we take 15 percent growth rate in nominal terms 2009-10 onwards. Own tax revenue buoyancy is taken at 1.1 which involves only a marginal increase in the tax-GSDP ratio over time. It 65

World Comparative Economic And Social Data
Police Stations - Tamil Nadu Police
N u m b e r o f S c h o o l s - DISE
Census 2011 population of Latur district
PDF: 1.0MB - Population Reference Bureau