Tamil Nadu: Critical Issues of Unemployment and Revenue Generation Unaddressed in Budget

The last full Budget of the All India Anna Dravida Munnetra Kazhagam’s (AIADMK) government in Tamil Nadu before the next state election has fallen well short of expectations. No new projects have been announced and severe revenue deficits courtesy a drastic reduction in revenue receipts from the Government of India has forced the state government to depend largely on borrowings. The Finance Minister promptly linked the economic crisis gripping the country to issues affecting the state. Growth rate for the state was pegged at 7.27% in 2019-20 as compared to 8.17% in 2018-19.

The budget has also failed to explore provisions to increase income through non-tax revenues. Opposition parties were quick to criticise the budget for a lack of vision in addressing multiple issues affecting the state. The state has planned to borrow nearly Rs. 59,000 crores during the next financial year while the existing burden is about Rs 4.56 lakh crores.

NO MEASURE FOR UNEMPLOYMENT AND PUBLIC EDUCATION

The budget leaves a huge vacuum for addressing unemployment at a time the state is witnessing high unemployment rates, even higher than the national average. The last full budget of the AIADMK government had also failed at addressing the issue. The allocation for education saw a marginal increase and root causes have not been looked at.

While speaking to NewsClick, educationist and academician Prince Gajendra Babu said that the increase in allocation for education will not address issues on the ground. “Establishing language labs in schools is not meant to improve quality. Basic issues are not being understood by the government of Tamil Nadu without which we cannot move towards a solution".

Insisting that the increased allocation will be enjoyed by private schools under the Right to Education (RTE), Prince added that there is an “urgent need to strengthen the public education system, but the government has not even bothered to think about this".

REVENUE DEFICIT- HUGE HINDRANCE

The shortfall in revenue deficits play a crucial role in the state budget. The non- payment of tax shares to the state Government by the union government has added to the increasing burden with the Union Government owing around Rs 12,263 crores.

Economist and academician Prof. Venkatesh Athreya said that after the introduction of the introduction of Goods and Services Tax (GST) “many of the state governments are struggling to generate revenue. The shortfall in GST revenues to the union government has affected many state governments. Even worse is the state's inability to generate revenue through non-tax sources leading to the additional borrowings to meet expenditures."

At a press conference earlier this month, the Union Finance Minister said that Tamil Nadu is not the only state to have dues.

"The unilateral decision of the union government on foregoing the revenues is another telling blow on the shares of the state government. There should be considerable change in such power vested in the union government," Prof. Athreya added.

INSUFFICIENT ALLOCATION AND LACK OF TRANSPARENCY

The budget saw a marginal increase in allocation to various departments, though actual requirements remain even higher. "Such a marginal increase across many departments won't suffice as requirements are even higher. Little or no attention to crucial areas like municipal administration and water supply which saw almost a zero increase would have adverse impacts,” said Athreya.

The state government has also announced a few projects with the aid of the World Bank. The lack of transparency on the conditions raise alarming questions.

Prof Athreya mentioned that a number of projects are in the pipeline to get aid from the World Bank. “What is not explained are the conditions based on which these aids are obtained. For example a billion dollars is the amount expected to be borrowed for Chennai alone. The impact of such a huge loan would definitely affect residents.”

The struggling small and medium scale industries do not have a reason to rejoice while farmers who expected an announcement on minimum support price (MSP) for paddy and sugarcane procurement have been left disappointed. Aside from announcements like 4% reservation to differently-abled persons in jobs and funds for museums in Keezhadi and Athichanallur, the budget has left many unimpressed as much was expected from a Government facing elections in a year’s time.