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Here is a thread on the financial situation of Tamil Nadu.
State has total tax and non tax revenues of around 1.34 lakh crores. Salaries, pensions and interest on debt alone is 1.36 lakh crore expenditure annually. Another 16000 crore goes to repayment of debt principal. 1/n
So how does TN manage? Ans: From State's share of Central taxes & grants from Centre which total around 57000 crore & further borrowing which is expected to be more than 70000 crore this year.Of total revenue receipts of 1.9 lakh crore 62% is for salary/pension/interest. 2/n
Let us look at State tax revenues. Bulk of it is from Sales Tax,VAT which comes from Liquor and Petroleum products (50K crore) & GST revenues.(42K crore). Stamp duty, registration and vehicle tax net around 20k crore. Over the last 2 months every one of these has been hit 3/n
The loss incurred could well be around 15k crore or more and on top of this is the expenditure incurred on #Covid containment measures. So this cd set the State back hugely. Remember that going forward also the GST share may be low for next several months. 3/n
So why not borrow more? State already pays 52000 crore each yr on debt servicing. This yr we are borrowing over 70 k crore (likely 80 k crore).In a year when GDP is going to be hit the debt cannot be allowed to increase beyond a point as it may become unmanageable. 4/n
If this happens money for spending on welfare & development projects (which is already low) will hv to be cut &that will impact people greatly. What about cutting the wage and pension bill? Politically unthinkable. What abt raising prices on milk,electricity,bus etc.? 5/n
That will be unpopular and elections are less than a year away. So what is to be done to fill the khajana? Let the wise men provide answers. And then support whatever harsh measures they propose. And simply saying borrow even more is not the answer. 6/6
All figures are approximate ones, not down to the last rupee.
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