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POVERTY REDUCTION STRATEGY TN

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may be noted that even with the introduction of VAT, given the high petroleum prices<br />

and since these are subjected to special rates within the structure of state VAT, it is likely<br />

that the state government will achieve its revenue rising targets.<br />

Table 3.7: Tamil Nadu Finances in the Medium Term: Projections 2007-08 to<br />

2014-15<br />

(Percent to GSDP)<br />

Fiscal Indicators 2007-08 RE 2008-09 (PR) 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15<br />

Own Tax Revenues 10.11 10.11 10.24 10.38 10.52 10.66 10.81 10.95<br />

Own Non-tax Revenues 1.04 1.04 1.04 1.04 1.04 1.04 1.04 1.04<br />

State's Own Revenue 11.15 11.15 11.28 11.42 11.56 11.70 11.84 11.99<br />

Total Central Transfers 4.93 4.97 5.01 5.04 5.06 5.08 5.07 5.07<br />

Share in Taxes and Duties 2.79 2.83 2.86 2.90 2.93 2.95 2.96 2.98<br />

Grants 2.14 2.14 2.14 2.14 2.13 2.12 2.11 2.09<br />

Total 16.08 16.12 16.29 16.46 16.62 16.77 16.92 17.06<br />

Revenue Receipts<br />

Interest payments 2.13 1.78 1.86 1.87 1.86 1.86 1.85 1.84<br />

Pensions 2.32 2.36 2.26 2.16 2.06 1.96 1.86 1.76<br />

Other General Services 1.60 1.60 1.50 1.41 1.32 1.23 1.15 1.07<br />

Total General Services 6.05 5.74 5.62 5.44 5.24 5.05 4.85 4.67<br />

Education 2.56 2.74 3.34 3.63 3.93 4.25 4.58 4.93<br />

Medical and Public Health 0.66 0.71 0.86 0.93 1.01 1.09 1.18 1.27<br />

Other Social Services 2.63 2.40 2.34 2.28 2.21 2.14 2.07 2.00<br />

Total Social Services 5.85 5.85 6.53 6.84 7.14 7.48 7.82 8.20<br />

Economic Services 2.72 2.67 2.65 2.63 2.59 2.56 2.52 2.47<br />

Grants-in-aid and<br />

1.15 1.07 1.06 1.05 1.04 1.02 1.01 0.99<br />

Contributions<br />

Total 15.77 15.33 15.87 15.95 16.01 16.12 16.20 16.33<br />

Revenue Expenditure<br />

Revenue Surplus 0.32 0.79 0.43 0.51 0.60 0.66 0.72 0.73<br />

Fiscal Deficit 2.56 2.92 3.00 3.00 3.00 3.00 3.00 3.00<br />

Primary Deficit 0.44 1.14 1.14 1.13 1.14 1.14 1.15 1.16<br />

Non-debt Capital Receipts 0.85 0.87 0.83 0.79 0.76 0.72 0.68 0.65<br />

Capital Receipts 3.42 3.79 3.83 3.79 3.76 3.72 3.68 3.65<br />

Capital Expenditure 2.88 2.94 4.25 4.30 4.36 4.38 4.40 4.38<br />

Total Expenditure 18.65 18.27 20.12 20.26 20.37 20.49 20.60 20.71<br />

Outstanding Liabilities 22.73 22.52 22.58 22.63 22.60 22.56 22.45 22.36<br />

Source (Basic Data): State Budget Documents.<br />

It is shown in Table 3.7 that education and health expenditures can be increased<br />

progressively such that by 2014-15, the share of expenditure on education as percentage<br />

of GSDP would have increased to a level close to 5 percent and expenditure on health<br />

would have increased to nearly 1.3 percent of GSDP. In order to provide for the salary<br />

increases in the wake of the recommendations of the Sixth Pay Commission for education<br />

and health sectors which are highly salary intensive sectors we have provided for<br />

substantial step up in 2008-09 and 2009-10 in the growth rate of revenue expenditures.<br />

In 2008-09, for example in education the growth rate is about 25 percent and for 2009-<br />

66

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