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Before new taxes, TVK Budget must first fix spending and collection efficiency
Before new taxes, TVK Budget must first fix spending and collection efficiency
The first Budget of the Tamilaga Vettri Kazhakan (TVK) government in Tamil Nadu faces a central question: before imposing new taxes, has the State collected every rupee legally due and spent existing funds efficiently? CAG data shows that in 2023-24, Tamil Nadu recorded a net underspend of Rs 33,302.53 crore against a budgeted Rs 4.47 lakh crore, with Rs 1,078 crore in unnecessary supplementary provisions. Additionally, 2.89% of revenue expenditure and 6.14% of receipts were not reconciled with official records.
The article argues for zero-based budgeting and performance-linked spending, where allocations are justified by outcomes rather than past budgets. It cites examples such as Chennai Corporation road contracts where competitive bidding reduced costs by 25.9% below estimates. On revenue, a separate CAG audit flagged Rs 1,538.18 crore in GST irregularities and 244 taxpayers outside the GST net, with only Rs 8.64 crore recovered so far. The Montek Singh Ahluwalia-led Revenue Augmentation Committee is tasked with closing compliance gaps before raising rates.
The government has also set up an Expenditure Reforms Committee to review scheme impact. The core argument is that transparent competition and data-driven governance can create fiscal value without new taxes.
Indian Opinion Analysis
Tamil Nadu's fiscal stress is structural: committed spending on salaries, pensions, and interest consumes over 70% of revenue receipts, leaving little flexibility. The CAG's audit findings on underspending and reconciliation gaps are not new, similar observations have appeared in previous reports for multiple states. What matters is whether the TVK government will institutionalise zero-based budgeting after its 1988 adoption remained on paper. The Expenditure Reforms Committee's recommendations, expected by the next Budget session, will be the key signal. Watch for whether the Budget includes a clear timeline for publishing department-wise cost benchmarks.
Source: thehindu.com
This story was synthesised by AI from the source linked above. Methodology and corrections.
