Liquor sale helps TN fix fiscal deficit, but lockdown worries loom

Tamil Nadu’s fiscal deficit for the financial year ending March 31 was ₹92,305Cr against ₹1.04L Cr pegged in the interim budget; it was possible due to a successful collection of excise revenue from liquor sales

The fiscal deficit is less in the final accounts due to better revenue collection in the last quarter of the financial year 2020-21, but the first quarter of 2021-22 is likely to be a stress on the finances of the government due to the lockdown. Representative photo: iStock

Tamil Nadu’s fiscal deficit for 2020-21 is likely to be less than what was expected in the revised budget presented by the AIADMK government in February.

As per the accounts presented to the Comptroller and Auditor General (CAG) by the state government, the fiscal deficit for the financial year ending March 31 was ₹92,305 crore against the interim budget which said the fiscal deficit would be ₹1.04 lakh crore.

The fiscal deficit is less in the final accounts due to better revenue collection in the last quarter of the financial year 2020-21, but the first quarter of 2021-22 is likely to be a stress on the finances of the government due to the lockdown.

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“After the lockdown was lifted from last August onwards, government tax revenue started to increase slowly and in the last quarter too we were able to collect more revenue and on the expenditure side, we were able to lower the same and due to these, the fiscal deficit is less in the final accounts,” said a senior official.

As per the CAG data, Tamil Nadu government’s tax revenue and share of taxes from Centre was ₹1,74,255.66 crore while that of total expenditure stood at ₹2,66,560.73 crore.

“Due to COVID lockdown, our total revenue collection declined by 2.8 per cent in 2020-21 when compared with the revenue collection in 2019-20. But the total expenditure increased by 14.7 per cent in 2020-21 mainly due to the higher expenditure in the health department due to COVID,” said the official.

The state was able to collect only 82 per cent of the GST target. “While expected the GST revenue to be ₹46,195 crore but in actuals we were able to collect ₹37,942 crore. This is mainly due to the lockdown as many manufacturing companies were closed in the first and second quarter of last financial year,” said the official.

The state government was able to come close to the target with regard to the excise revenue. Excise revenue is through sale of liquor. The government met nearly 97 per cent of the target of excise revenue. While the government had a target of collecting ₹8,133 crore in the last financial year, in the actual collection, the government collected ₹7,822 crore.

The revenue deficit stood at ₹61,320.46 crore compared to the revised budget which said that the revenue deficit will be ₹65,994 crore. “The final number for the 2020-21 accounts will be known when the full budget is presented by the new government,” said the official.

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