Tamil Nadu Finance Minister Thangam Thennarasu on Tuesday, 2 September 2025, said that any reforms in the Goods and Services Tax (GST) structure should not undermine the state’s revenue receipts, stressing that collective decisions with safeguards are essential.

Speaking to reporters at the Secretariat, the minister said Tamil Nadu had managed to achieve double-digit economic growth despite limited support from the Centre. “In the absence of adequate central funds, we have relied on our own tax revenue. Those who point to loans must also recognise that we have stayed within the borrowing limits set by the Finance Commission, and that these borrowings have translated into tangible economic development,” he said.

He noted that the state had been reducing both revenue and fiscal deficits and emphasised that the focus should be on the effective use of borrowings. “What matters is how we spend. Loans have been used to fuel growth and improve key indicators,” he added.

On GST reforms, Thennarasu said Tamil Nadu was not opposed to restructuring but cautioned that the process should be carried out only after thorough examination. “Around 50 percent of Tamil Nadu’s tax revenue comes from GST. Any restructuring could create a major financial shortfall for us. The Centre must ensure that reforms do not deprive states like Tamil Nadu of vital revenue,” he said.

Highlighting the state’s spending priorities, he said Tamil Nadu was committed to investing in infrastructure and social welfare programmes. If revenue streams were cut while projects were underway, he warned, development works would be seriously affected.

“Our demand is clear – the Centre must safeguard our revenue sources while undertaking GST reforms so that the benefits reach the common man without causing financial losses to the state,” the minister said.

(With inputs from Dinamani)

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Finance Minister Nirmala Sitharaman on Monday told Parliament that the government has reduced its debt burden over the last five years and the fiscal deficit targets are being aligned to reduce it further in the coming years.

The government has steadily reduced the debt over the years from 61.4 per cent of GDP in 2020-21, after the Covid-19 pandemic, to 56.1 per cent of GDP in the Budget Estimate for 2025-26, the Finance Minister said in a written reply to a question in the Lok Sabha.

“Further, the government aims to keep the fiscal deficit in each year in such a manner that the Central government debt is on a declining path to attain a debt to GDP level of about 50 (plus/minus 1) per cent by March 31, 2031,” she said. The government’s outstanding debt at the end of FY 2024-25 is provisionally estimated at Rs 185.94 lakh crore.

While internal debt accounts for as much as Rs 157.11 lakh crore of this amount, external debt comprises Rs 8.74 lakh crore, while the remaining Rs 20.09 lakh crore is made up of other public account liabilities, Sitharaman said.

In answer to another question in the Lok Sabha, the Finance Minister said: “Despite an environment of unprecedented geopolitical uncertainty, supply chain disruptions, and a weak global growth outlook, the Indian economy has exhibited resilience, underpinned by prudent macroeconomic management, credible fiscal consolidation, a resilient external sector performance, and sustained structural reforms. India remains the fastest-growing major economy, registering a real GDP growth of 6.5 per cent in 2024-25.”

The fiscal deficit of the Union government has come down from 9.2 per cent of GDP in 2020-21 to 4.8 per cent of GDP in 2024-25 and is budgeted to further decline to 4.4 per cent of GDP in 2025-26. The average retail inflation rate, measured by the Consumer Price Index, stood at 4.6 per cent in 2024-25, the lowest in the last six years, and has eased further to 2.4 per cent in April–July 2025, she said.

Despite weakened global trade, India’s export performance has demonstrated resilience, with the country’s overall exports reaching an all-time high of $824.96 billion in 2024-25. This positive trend has continued into the current fiscal year, with overall exports registering an increase of 5.46 per cent during the first quarter.

Furthermore, India’s foreign exchange reserves provide a cover for more than 11 months of goods imports. This consistent macroeconomic performance underscores the Indian economy’s ability to navigate global and economic uncertainties effectively, Sitharaman observed.

She also highlighted that the government has undertaken concerted measures aimed at protecting vulnerable sections of society from the adverse effects of economic volatility while sustaining the momentum of broad-based and inclusive economic growth.

Flagship schemes such as the Pradhan Mantri Garib Kalyan Anna Yojana, the Pradhan Mantri Kisan Samman Nidhi (PM-KISAN), the Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS), the Pradhan Mantri Awas Yojana (PMAY), the Deen Dayal Upadhyaya Grameen Kaushalya Yojana, the Stand Up India Scheme, and the Deendayal Antyodaya Yojana-National Rural Livelihoods Mission are being implemented to ensure access to the basic essentials, enhance livelihood opportunities, and improve the quality of life for the vulnerable sections.

-IANS

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The Karnataka High Court has issued an interim stay order on the FIR filed by police against Union Finance Minister Niramala Sitaraman, BJP State President BY Vijayendra, former State President Nalin Kumar Kateel, ED officials and others. The single division bench headed by Justice M. Nagaprasanna passed the order on Monday while looking into the petition filed by former BJP State President Nalin Kumar Kateel and adjourned the hearing of the matter till October 22.

Senior counsel K. Raghavan appearing for BJP leader Kateel submitted that the allegations made in the FIR do not come anywhere near the definitions of extortion. He stated that even the Enforcement Directorate (ED) is made as an accused in the case. Senior counsel Prashant Bhushan appeared for the complainant Adarsh Iyer stated that by creating fear of the ED, funds were collected for a political party. This is nothing but extortion, he argued. The bench observed that extortion involves threatening and making money. Those who were extorted will have to file a complaint before the police. However, the complainant has not stated that he was extorted. Besides, Karnataka BJP is planning to file a petition before the High Court seeking quashing of the FIR against Union Finance Minister Nirmala Sitharaman, state BJP President B.Y. Vijayendra and others, sources confirmed on Monday.

The petition will be filed before the High Court by Wednesday (October 2). The FIR was registered at the Tilak Nagar police station following an order from the Bengaluru Special Court for Public Representatives. Chief Minister Siddaramaiah against whom an FIR has been registered with the Karnataka Lokayukta, has demanded the resignation of FM Nirmala Sitharaman while the BJP is vehemently demanding the ouster of Siddaramaiah following the lodging of the FIR. On Saturday, the Karnataka Police registered an FIR against FM Sitharaman in connection with allegations of ‘extortion’ through electoral bonds. The Tilak Nagar police in Bengaluru filed the FIR as per the directions of the Special Court of MLAs/MPs.

FM Sitharaman has been named as the prime accused in the case. The officials of the ED have been named as the second accused while the office bearers of the Central BJP office have been named as the third accused; former Karnataka BJP MP Nalin Kumar Kateel is the fourth accused and state BJP chief Vijayendra is the fifth accused in the case. The state BJP office bearers are named as the sixth accused. The police have booked the FIR under IPC Sections 384 (extortion), 120B (criminal conspiracy) and 34 (acts done by several persons in furtherance of common intention).

–IANS

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The Union Finance Minister Nirmala Sitharaman presented the budget for the financial year 2024-25 on 23 July 2024. While the budget was presented to achieve the Viksit Bharat agenda of the Bharatiya Janata Party-led NDA government, members and supporters of the Dravida Munnetra Kazhagam in Tamil Nadu questioned why Tamil Nadu did not feature in their agenda.

Dravidianist mouthpieces like The News Minute’s Shabbir Ahmed posted a misleading comment on his X handle. He mocked the budget for not “including/having anything for T.N.” The schemes and initiatives mentioned above are for women, the poor, farmers, tribals, and the youth. Netizens differed, asking whether this section of people was unavailable in Tamil Nadu.

Not found! #BudgetDay #Budget2024 pic.twitter.com/e2bFdCnx6M

— Shabbir Ahmed (@Ahmedshabbir20) July 23, 2024

By Shabbir’s logic, if one searched for Kerala, Karnataka, UP, or M.P., one would not find any results. The budget is presented for the country as a whole and not per state.

Applying the same logic to the budget presented by the Tamil Nadu government earlier this year, 27 districts out of a total of 38 districts in Tamil Nadu are not named in the document. So have these 27 districts of the state been ignored by the government?  

These districts include Ariyalur, Chengalpattu, Cuddalore, Dharmapuri, Erode, Kalakurichi, Kanchipuram, Karur, Madurai, Mayiladuthurai, Nagapattinam, Kanyakumari, Pudukottai, Ramanathapuram, Ranipet, Tenkasi, Thanjavur, Theni, Thiruvallur, Tiruvarur, Tiruvannamalai, Tirunelveli, Tirupattur, Tiruppur, Nilgiris, Vellore and Villupuram. None of these names appears in the budget document presented by the TN Finance Minister.

27 மாவட்டங்களை புறக்கணித்த திமுக?#chanakyaa #rangarajpandey #dmk #Budget #CentralGovt #bjp #modi #NirmalaSitharaman #UnionBudget2024 #MKStalin
Stay informed with the latest news through Chanakyaa via https://t.co/sbYbLDGPqW pic.twitter.com/pAO2keCAPh

— சாணக்யா (@ChanakyaaTv) July 24, 2024

Netizens questioned if this was the infamous “Dravidian Model” of governance.

What is this ? This isDravidianmodelgovt ? @mkstalin @CMOTamilnadu @arivalayam @DMKITwing @BJP4TamilNadu @draramadoss @ProfessorBJP @asuvathaman @KolahalasTV https://t.co/k6hEdMJWzs

— D.A.SRIDHAR (@ASRIDHAR_DKV) July 24, 2024

Additionally, BJP leader H Raja noted that “Tamil Nadu was not mentioned in 6 of the 10 budgets presented during the UPA era – 2004-20014 period. So is the Congress DMK alliance an anti-Tamil Nadu alliance?”

UPA அரசு இருந்த 2004-20014 காலகட்டத்தில் சமர்பிக்கப்பட்ட 10 பட்ஜெட்களில் 6 ல் தமிழகத்தின் பெயர் குறிப்பிடப்படவில்லை. எனவே காங்கிரஸ் திமுக கூட்டணி தமிழக விரோத கூட்டணி. @CMOTamilnadu @BJP4TamilNadu https://t.co/3L8eACmMeW

— H Raja (@HRajaBJP) July 24, 2024

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On 22 December 2023, Union Finance Minister Nirmala Sitharaman conducted a press conference to provide insights into the Central Government’s actions in response to the recent floods affecting Chennai and the southern districts of Tamil Nadu.

She said that the Centre has disbursed ₹900 crore in two installments for Tamil Nadu in the current fiscal year.

Commenting on the DMK government’s to give ₹6000 as relief amount, Sitharaman expressed her concern over the mode of payment, questioning why the funds were being disbursed in cash rather than through direct benefit transfer. She asserted, “This is government money, not my father’s money or your father’s money.”

The Finance Minister’s comments came in response to a remark made by DMK Minister Udhayanidhi Stalin who had said “Are we asking their father’s money? We’re asking to give back our money”.

Sitharaman retaliated, accusing Udhayanidhi of consistently using derogatory language. Drawing parallels to a previous controversy about eradication of Sanatana Dharma, she said, “This is the pattern of their language; even during the Sanatana dharma controversy, he employed similar expressions.

“Those asking ‘Is it your dad’s money?’, can we similarly say he is enjoying power because of his dad’s assets? Can we ask like that? He has ben elected by the people and we give him the due respect for that. These talks like ‘unga appan, unga aatha’ (derogatory way of saying your father, your mother), these kind of talks are not good in politics. He wishes to progress further in politics right? That family is also aspiring right? The language they use. His grandfather was such a big Tamil scholar. The words that come through the tongue should be measured in accordance with the position they hold.“, she said.

திரு உதயநிதி ஸ்டாலின் அமைச்சராக இருக்கும்போது பொறுப்புடன் பேச வேண்டும். "அப்பன் வீட்டு பணமா" போன்ற பேச்சுகளை அவர் தவிர்க்கவேண்டும் – மாண்புமிகு மத்திய நிதி அமைச்சர் திருமதி @nsitharaman அவர்கள். pic.twitter.com/seVM56YtQM

— K.Annamalai (@annamalai_k) December 22, 2023

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Government of India has decided to clear the entire pending balance GST compensation of ₹16,982 crore for June 2022.

Since, there is no amount in the GST compensation Fund, Centre decided to release this amount from its own resources and the same will be recouped from the future compensation cess collection. With this release, Centre would clear the entire provisionally admissible compensation due for five years as envisaged in the GST (Compensation to States) Act 2017.

In addition, Centre would also clear the admissible final GST compensation to those States who has provided the revenue figures as certified by the Accountant General of the States amounting to ₹16,524 crore.

Maharashtra will receive the highest amount of ₹2102 crore. Karnataka will get a ₹1934 crore and Tamil Nadu will get ₹1201 crore.

(Published from PIB)

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Respected Madam,

I understand budget making for a diverse and mammoth country like India is a herculean task. It is a tightrope walk where in social justice has to be delivered while simultaneously taking care of the aspirations of the burgeoning middle class and the jobs-creating corporate.

It is that time of the year where you are having your ears to the ground taking inputs from across the spectrum which can help in the budget preparing process. As a common man and a finance professional, here are my humble suggestions on the personal taxation front to you to not only improve the budget process but also address long standing and repetitive demands.

1. Linking Of Income Tax Slabs Wth CPI 

The aspiring middle class places the demand for revising the tax slabs, basic exemption limit and the various exemption limits like 80 C and 80 D every other year. It would be worthwhile if you can consider linking these limits to the Consumer Price Inflation (CPI) index and automatically revise it every year in line with CPI index. This would address the long-standing demand of the middle class who place the demand of hiking the limits every year. As inflation is an indirect tax on the poor and the middle class, linking the limits with CPI index will soothe the hearts and the soul of the middle class. It will also lend predictability and stability to the tax regime and help manage personal finances better for the middle class. And the basic exemption limit can be hiked to ₹8 lakhs in sync with EWS and OBC creamy layer cut-offs.

2. Rationalisation Of Income Tax Exemptions

This government’s nudge to migrate tax payers to the new tax regime hasn’t yielded fruit so far. The government can instead tweak old tax regime and rationalise it further. All exemptions like 80 C, 80 D, 80 E, housing loan exemption under Sec 24 and the numerous other exemptions under various other sections must be bundled together and an exemption limit of ₹6 lakhs can be provided to all tax payers under the old regime itself without any internal quota like limiting 80 C to ₹1.5 lakhs and 80 D to ₹25,000/₹50,000. Bundling all these popular exemption limits without any internal quota will provide the tax payers with greater flexibility, freedom to invest in equities and real estate or spend on school fees and take insurance as they wish to. Linking of exemption limits and tax slab with CPI together with this bundled exemption flexibility will be of great benefit to the middle class in planning their personal finances better.

Once this flexibility is provided, the government can even do away with Standard Deduction, 80 TTA, and allowances like LTA and HRA allowances which are always grey and provide an opportunity to evade or falsify records by tax payers.

3. Aligning Capital Gains Taxation Across All Asset Classes

Capital gains taxation varies across asset classes – both holding period and tax rate varies like for real estate, the holding period is two years to be considered as long term, for equity it is a year and for fixed income funds of mutual funds, it is three years. Similarly, the rate too differs across asset classes and so does the indexation benefit. Uniformity in duration, taxation and indexation benefit can be bought in across asset classes. A benign long-term rate of 10% and a short-term rate of 15% and a duration of 2 years can also be ushered in across asset classes to disincentivise evasion, increase collection and boost compliance better. Ushering in a benign tax slab for capital gains along with the doing away with the concept of indexation will go a long way in simplification of tax regime.

4. Clear Roadmap For Taxation

After rationalising the exemptions and the exemption limit, the Government of India must clearly specify that these taxation norms and limits will be in force for at least 20 years and that government will not retrospectively change them like the changes which were implemented few years back especially limiting the housing loan exemptions on the interest front to just ₹2 lakhs causing great difficulty to the middle class who took loans to buy a dream home hoping the exemptions will stay for 20 or 25 years. A clear roadmap on personal taxation is essential and such a roadmap will also improve the credibility of the government big.

5. Time-Bound Income Tax Return Processing And Despatch Of Refunds

Finance Ministry has to take special care and ensure all bugs are rectified on the income tax portal before 31 March 2023 and ensure the system is up and running as early as 1 April 2023 for filing of returns. That would be a record of sorts as the portal was never up and running on the very first day of a financial year for filing of returns. Similarly, a time bound processing of both the returns and refunds must be adopted and institutionalised.  Early bird incentives like faster processing of both returns and refunds must be given. Returns filed before 31 May of every year can be processed and refunds issued within a maximum of 15 days and for those filed after 31 May, the process must be completed in 30 days. Just like the government expect every citizen to pay taxes on time, an abiding citizen must be given the luxury of getting refunds within a stipulated period of time. The Finance Ministry  must give this commitment in the Budget and take the Government-Tax payer relationship to next level.

Thank you.

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DMK leader PTR Palanivel Thiagarajan aka PTR, who happens to be the Finance Minister of Tamil Nadu through his dynastic privilege, is known for making headlines with his bloated ego and arrogance. He is at it once again.

In a recent television debate on freebies, PTR went on a rant asking if those in the Central government are economic experts having double Ph.Ds or Nobel Prize, and whether they’ve shown any economic progress to listen to them.

As usual, the man started blowing his own trumpet saying that he was doing a better job than the Union Government.

But here is his track record.

Big Talk, Small Work

As soon as the DMK government came to power, the first thing that this ‘rockstar’ Finance Minister did was to take long-term loans from the Reserve Bank of India (RBI) by issuing bonds.

According to data from the RBI, Tamil Nadu raised ₹72,500 crore during the fiscal 2021-22 through market borrowings.

Well, even if one were to give the leeway that the state was recovering from the aftermath of pandemic-induced lockdown, it is not as if the Finance Minister propelled the state towards a V-shaped recovery months later turning Tamil Nadu into a revenue surplus state.

In fact, the Tamil Nadu government has been the top borrower among States in the fiscal 2021-22 and PTR has said that he plans to borrow ₹90,116.52 in FY 2022-23.

The state’s debt has increased by over 34% in just over a year. Before PTR came to power, Tamil Nadu’s debt was ₹4.85 lakh crore. The motor-mouth Finance Minister himself has stated in Budget 2022-23 that the state is going to close 2023 year at ₹6.54 lakh crore debt.

Tamil Nadu’s borrowing last year was ₹1,08,175 crores and this year, it is expected to be ₹1,20,979 crores. The debt to GSDP ratio of Tamil Nadu was 25.84% and is projected to rise to 26.29% in 2022-23.

In May 2021, PTR in an interview had said that he would restructure debts to reduce the interest burden. When he took over as Finance Minister the state’s debt was ₹2,63,976 (₹2.63 lakh) per family. 15 months later, the burden on every family in Tamil Nadu has increased to ₹3,02,300 (₹3.02 lakh). That’s a whopping ₹38,324 increase per family.

The net public debt for the year 2021-22 was ₹88,451.23 crore which is ₹1812 crore more than the previous year. For the year, 2022-23, the net public debt is going to shoot up to ₹93,851.33 (the 2022-23 Budget speech of PTR says ₹90,116.52 crore).

Dravidian Model – TASMAC Model Of Growth

Gujarat and Uttar Pradesh, the two states which the Dravidian Stockists loath, detest and discredit, have projected a revenue surplus of ₹1,006 crore, (0.05% of the GSDP) and ₹43,124 crore (2.11% of the GSDP) respectively for 2022-23.

However, Tamil Nadu’s is projected to have a staggering revenue deficit of ₹52,781 crore (2.12% of the GSDP) according to Budget 2022-23. This has been the achievement of the much-hyped Dravidian Model.

On the other hand, 17 states following the non-Dravidian Model have outperformed Tamil Nadu when we compare the revenue deficits of 2020-21 (pandemic year) and 2021-22 (recovery year).

A bulk of the revenue for Tamil Nadu comes through liquor sales through the state-owned Tamil Nadu State Marketing Corporation Limited (TASMAC).

The state’s economy basically runs on liquor and both the two major Dravidian parties have to be blamed for this.

But credit should be given where due. After PTR took over, the Tamil Nadu government earned a whopping ₹36,013 crore from liquor sales in FY 2021-22, the highest ever and an increase of ₹2,201.99 crore from the previous year. For this tremendous achievement, the DMK government announced a hike of ₹500 for TASMAC employess earmarking ₹16.67 crore for the purpose.

Hail the Dravidian Model!

How ‘Free Power’ Is Coming Back To Haunt

Tamil Nadu is a power surplus state yet it owes several thousand crore rupees to power discoms which are languishing in debt.

The recent risk analysis published by RBI notes that Tamil Nadu’s TANGEDCO (Tamil Nadu Generation and Distribution Corporation Limited) owed a third of the money (₹1.24 lakh crore) to be paid to power distribution companies.

A government dashboard shows Tamil Nadu as the state with the highest dues to be paid to power generation companies. Tamil Nadu has the second highest overdue of ₹21,299 crore in the country.

The RBI risk analysis report notest that Tamil Nadu, will have to shell out 5.2% of its GSDP to clear 75% of the dues to the discoms.

This is a doing of both the AIADMK and DMK in equal measures. Both the AIADMK and DMK governments have mindlessly given ‘free power’ for farmers which has been exploited through multiple connections and power theft.

The erstwhile AIADMK regime failed to increase power tariffs for domestic consumers over the years for want of votebank politics.

Realizing that the free power for farmers was being misused, the AIADMK tried to roll out metering for all connections. However, the DMK which was in opposition had strongly opposed bringing farmers under metering. It had peddled lies that metering would lead to farmers paying electricity bills who have been enjoying free power. Today, PTR is strongly batting for bringing farmers under metering and is struggling to proceed with it thanks to the myopic votebank politics done by his party.

The state is struggling to find its feet in fixing this problem. In 2021, power subsidy alone cost the state exchequer more than ₹21,300 crore or 1.1% of GSDP. As of June 2022, TANGEDCO’s debt has climbed to ₹1.40 lakh crore.

Even amidst the burgeoning debt, the MK Stalin-led DMK government has provided 1 lakh free power connections to farmers in April 2022.

Quality Of Revenue Expenditure – Gujarat Vs Tamil Nadu

While the “highly intellectual”, american-educated, Ph.D holding, former investment banker – turned- rockstar Finance Minister has extraordinary brains to compare the finances of a state with the Union Government, let us ordinary mortals having pea-sized brain compare apples with apples and oranges with oranges.

Take the case of Gujarat which shares a lot of similarities with Tamil Nadu. Gujarat has an area of 196,024 sq.km and Tamil Nadu has an area of 130,0558 sq.km. Tamil Nadu has a population of around 7 crore and Gujarat has around 6.3 crore. Both the states have a coastline and are a base for a lot of industries.

Yet, Gujarat manages a revenue surplus every year while Tamil Nadu has a revenue deficit.

Let’s take a look at the quality of revenue spending for both the states.

68% of Tamil Nadu’s revenue receipts goes towards committed expenditure items like salaries (31%), pension (17%), and interest payments (20%).

On the other hand, only 45% of Gujarat’s revenue receipts goes towards salaries (21%), pension (10%), and interest payments (15%).

In fact, Tamil Nadu has a very high Interest Payements – Revenue Receipts (IP-RR) ratio of 21% which is the second-highest in the country after Punjab.

Tamil Nadu’s budgeted capital outlay (expenditure towards creation of assets like school buildings, hospitals, and roads and bridges) for the year 2021-22 was ₹42,181 crore. However, as per the revised estimates, only ₹37,936 crore went as capital outlay, a 10% decrease from the budget estimates. The different between the budgeted and revised estimates of capital outlay for Gujarat is just 5.8%.

For a party that claims social justice as its core ideology, the DMK government has cut down the “social welfare and nutrition” budget by 34% this year. The expenditure on agriculture and health has been decreased by 2% and 12% respectively.

By adjusting the capital outlay and cutting down on crucial expenditures, the foreign-educated highly intellectual Finance Minister claims to have reduced the fiscal deficit.

A Mohammad-bin-Tughlaq At Best

Two months after coming to power, when people started demanding for the promises to be fulfilled, Palanivel Thiagarajan released a white paper in order to absolve the DMK government’s inability to fulfill the many unfulfillable promises and to shift the blame on the previous AIADMK regime. And this white paper became the premise for taxing citizens more.

The minimum fare in Metropolitan Transport Corporation (MTC) buses was increased from ₹5 to ₹10.

Property tax has been increased to the tune of 50-150%. It is pertinent to mention that the DMK in its manifesto had promised to not increase property tax.

State-owned Aavin has increased the prices of milk powder, curd, ghee, and other milk products.

Electricity fare is set to rise by 12% to 52% from September 2022 as the DMK government has proposed a tariff hike for all consumers. Tamil Nadu’s industrial power tariff is already higher than many states and this increase will make it even more expensive.

The DMK in its manifesto had promised to reduce petrol and diesel prices by ₹5 and ₹4 respectively. After much grilling, it was announced that the price of petrol would be reduced by ₹3. Nothing has been to reduce the prices of diesel and LPG cylinder. When PTR was asked in a press meet whether the government will reduce fuel prices, he retorted saying “Have we put any date on fulfilling the promise?”

That is when it ‘dawned’ on the people – none of the promises made by the DMK have any dates mentioned!

The Central government however, has reduced taxes on petrol twice so far without even announcing in their manifesto.

Tamil Nadu Gets As Good As It Gives

The oft repeated rhetoric about Tamil Nadu getting only 35 paisa for every ₹1 rupee that it contributes has been busted in this article.

In the FY 2021-2022 the tax devolution has increased by 50.2%  and grants has increased by 19% compared to the previous financial year.

PTR – A Non-Perfoming Asset For The DMK

PTR is good at two things –  self-trumpeting about his dynastic privilege and cyber-bullying those who disagree with him like a third-grade troll.

The man has no qualms in flaunting his dynastic privilege boasting about it time and again in every medium, every platform and every tweet. If one were to see any interview, press meet or even a tweet of Palanivel Thiagarajan, it would be more about him blowing his own trumpet than about the issue. Just like it happened in the India Today debate where he turned the tables saying he was doing a better job with his minions going gaga over his condescending attitude.

PTR is known for picking fights with anybody who he disagrees with. From abusing woman journalists to making personal attacks on political opponents and public personalities, the man has gained the reputation of a foul-mouthed, uncouth person unfit to be in public life. He calls anybody who admires PM Modi for his leadership as ‘cultists’ but it is PTR who is part of a cult that has to swear allegiance to one family. In fact, PTR comes from a legacy of being in servitude. His grandfather was at the servitude of the British, his father for Karunanidhi and now he is at the servitude for MK Stalin.

So, instead of covering up his non-performance with false bravado, it would do good for himself and the state if PTR disciplines his tongue and focuses on fiscal discipline.

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The Finance Minister of Tamil Nadu PTR Palanivel Thiagarjan not only questioned the credentials of Prime Minister Narendra Modi on his economic policies but also arrogantly asked if those in the Centre are economic experts with double Ph.Ds and Nobel Prize to listen to them on the question of freebie culture bringing down the economy of the country.

He also went on to add that out for ₹1 rupee that Tamil Nadu gives to the treasury of the nation it hardly gets 30 paisa back. This is a oft repeated comment made not only by PTR but also his fellow Dravidian Stockists in media and public platforms.

PTR has time and again maintained that the state of Tamil Nadu contributes not less than ₹1,10,000 crores to the national exchequer through various taxes and in return gets hardly ₹35,000 crores back.

PTR’s statement must be taken with a pinch of salt since he assumes that he can weave a fake narrative by only considering Central government’s transfer to the state government under the head of tax devolutions.

But there are several factors which need to be kept in mind while we arrive at the conclusion regarding the contribution by the Central government to states.

There are 3 things which need to be considered:
1. Transfers from Central Government to state under various heads
2. Development Funds particularly regarding infrastructure
3. Direct Benefit Transfer to the people of the state

One of the allegations that the PTR and the DMK Government keeps on the central Government is that there is unidirectional downward trajectory in allocation of revenue and proportion of the revenue allocated to Tamil Nadu and similar states has decreased significantly ever since Modi came to power in 2014 which is far from the truth.

Tax devolution had increased by 91% in NDA 1 Government compared to UPA 2 and Grants had increased by 171%. In fact, in the FY 2021-2022 the Tax devolution has increased by 50.2% compared to the previous financial year. Financial Grants has also increased by 19% this year compared to the previous year.

In the interest of the economy of the state it would be prudent on the Finance Minister of Tamil Nadu to focus on fiscal discipline instead of blaming the central government for lack of allocation of financial resources.

Infrastructure Development In Tamil Nadu Under Modi

Ever since 2014 the infrastructure development is happening at a rapid pace all over the country. Tamil Nadu is seeing unprecedented growth in the development of infrastructure be it in the construction of National Highways or new railway lines or in the development of ports and waterways. A partial list of development projects would reveal that NDA Government has either spent or allocated over ₹2.49 lakh crores for the infrastructure projects in Tamil Nadu.

Direct Benefit Transfers To The People Of Tamil Nadu From The Central Government

Former Prime Minister Late Rajiv Gandhi made a startling revelation four decades back that out of every ₹1 spent for the welfare of people by the government hardly 15 paisa reaches the beneficiary. In order to end this malaise Modi government gave a push to digital economy and direct benefit transfer which has ensured that corruption by middlemen is eradicated to a large extent. People of Tamil Nadu have been greatly benefited by the various schemes of Modi which ensured that farmers receive ₹6000 directly into their bank accounts in 3 instalments every year, low interest loans are available to the entrepreneurs and street vendors, subsidized LPG connections are given to women, etc. It has been observed that Tamil Nadu tops in availing PM Mudra loans for entrepreneurs every year from the time of inception. Over 4 crore people have benefited from the various schemes.

In order to reduce the hardships of the poor people during the COVID induced lockdown periods Modi Government launched the Pradhan Mantri Garib Kalyan Anna Yojana through which food grains were supplied free of cost to people. Tamil Nadu received 45 lakh metric tonnes of rice worth ₹15,075 crores as on April 28, 2022 and the scheme will continue till September 2022.

Hence it is crystal clear that Tamil Nadu Government and people receive far more than what PTR falsely claims as injustice to the people of Tamil Nadu.

In the last 15 months PTR has put the economy of the state in a mess as various parameters indicate that Tamil Nadu is approaching bankruptcy. Hence it is imperative on the part of Finance Minister to stop indulging in mere rhetoric on his family and his overseas education credentials and instead start focusing on delivery as a state Finance Minister lest he would drive the state to the situation of Lehman Brothers which went bust during his tenure in that firm.

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Budget making for a diverse and mammoth country like India is a herculean task. It is a tightrope walk where social justice has to be delivered while simultaneously taking care of the aspirations of the burgeoning middle class and the jobs creating private enterprises. Cutting to the chase, here are some suggestions from an aspirational Indian, that can improve the Budget preparing process as well as address long standing and repetitive demands.

1. Linking Of Income Tax Slabs With CPI

The aspiring middle class places the demand for revising the tax slabs, basic exemption limit and the various exemption limits like 80 C, 80 D and 80 G every other year. It would be worthwhile if the Finance Ministry can consider linking these limits to the consumer price inflation index and automatically revise it every year in line with CPI index. This would address the long-standing demand by the middle class of hiking the limits. As inflation is a tax on the poor and the middle class, linking the limits with CPI index will soothe the hearts and the soul of the middle class. It will also lend predictability and stability to the tax regime and help manage personal finances better for the middle class.

2. Rationalisation Of Income Tax Exemptions And New Tax Regime

This government must nudge taxpayers to migrate to the new tax regime by making it more attractive. Exemptions like 80 C, 80 D and housing loan exemptions must be offered to those migrating to the new tax regime and all three can be bundled together. An exemption limit of 4 lakhs can be provided to those who migrate to the new tax regime. Bundling all 3 popular exemption limits without any internal quota will provide the taxpayers with greater flexibility and incentivise them to move to the new tax regime. Linking of exemption limits and tax slab with CPI together with this bundled exemption flexibility will be of great benefit to the middle class in planning their personal finances better.

3. Aligning Capital Gains Taxation Across All Asset Classes

Capital gains taxation varies across asset classes. Both holding period and tax rate vary for different kinds of assets. For real estate, a holding period of two years is considered long term, for equity it is a year and for fixed income funds of mutual funds, it is three years. Similarly, the rate too differs across asset classes and so does the indexation benefit. Uniformity in duration, taxation and indexation benefit can be bought across asset classes. A benign long-term rate of 10% and a short-term rate of 15% and a duration of 2 years can also be ushered in across asset classes to disincentivise evasion, increase collection and boost compliance better.

4. Reforms In Real Estate And Gold Transactions

There is also a huge concealment of capital gains and ill-gotten wealth in real estate and gold. A big, big difference exists between guideline value aka circle rate and market value of the properties across states. The Union Budget must incentivise the state governments to correct this anomaly, by aligning both guideline value and market value and revise it periodically through an Index mechanism on the lines of stock indices. Monetary incentives like interest free enhanced borrowing limits can be provided to the states who implement this reform. This reform along with reduction in long term capital gains to 10% will increase tax revenues and boost compliance big over the next decade. Similarly, making PAN mandatory for every transaction in gold as an asset class irrespective of the transaction size will also decrease evasion and boost revenues for the government. This can be accompanied by a dramatic reduction in customs duty on gold to 0% which will not only prevent smuggling but also be the carrot shown to the sector as the stick of PAN for every transaction is implemented. Both these measures can dramatically change the structure of the economy for the better.

5. Revamp Of Income Tax Return Filing Portal And Process

Bugs in Income Tax return filing software still persists. The Finance Ministry has to take special care and ensure all bugs are rectified before March 31st 2022 and ensure the system is up and running as early as April 1, 2022 for filing of returns. That would be a record of sorts as the portal was never up and running on the very first day of a financial year for filing of returns. Similarly, a deadline for the government to process both the returns and refunds must be adopted and institutionalised. Early bird incentives like faster processing of both returns and refunds must be given. Returns filed before May 31st of every year can be processed and refunds issued within a maximum of 15 days and those after May 31st 2022, the process must be completed in 30 days. Just like the governments expect every citizen to pay taxes on time, an abiding citizen must be given the luxury of getting refunds within a stipulated period of time. The Hon’ble Finance Minister must give this commitment in the Budget and take the Government-Taxpayer relationship to the next level.

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