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Expressing interest implicit what the State government’s White Paper termed a “revenue collapse” successful Tamil Nadu, the papers is of the presumption that the inclination is hurting the radical of the State successful 3 ways.
First, each caller programme requires caller borrowing. “As the State’s gross effort has declined, determination is nary earthy maturation successful fiscal abstraction from economical expansion. A State, whose tax-to-GSDP [Gross State Domestic Product] ratio is rising, tin money caller programmes from the gross dividend of growth. A State, whose ratio is falling, indispensable get for each caller commitment, compounding the indebtedness dynamics,” the White Paper observed.
Read the White Paper papers here.
In this context, it whitethorn beryllium mentioned that the State’s Own Tax Revenue (SOTR) constitutes astir two-thirds of the full gross receipts (TRR). To illustrate, for the twelvemonth 2025-26, the provisional information uncover that the SOTR fig is ₹1,92,493 crore and the TRR, ₹2,93,763 crore.
Second, the State’s fiscal autonomy diminishes. While Tamil Nadu is warring for fiscal autonomy and a greater stock successful the devolution of Union taxes, its efforts have been “dismal” successful augmenting the SOTR nether each the large components – Goods and Services Tax (GST), taxes connected liquor and fuel, registration, and centrifugal vehicles – connected which it has effectual control. “This weakens the State’s negotiating presumption and undermines the credibility of its claims for greater fiscal space,” the papers said.
Third, the indebtedness load falls connected the adjacent generation.“Revenue that is not collected contiguous becomes indebtedness that indispensable beryllium serviced tomorrow,” the White Paper pointed out. Referring to the yearly gross of ₹1.23 lakh crore having been foregone, taking into relationship the 2006-07 SOTR-to-GSDP ratio, the papers said it “is not a one-time loss; it is simply a recurring yearly shortfall that accumulates into a imperishable indebtedness burden.”
Also, the White Paper observed “the inter-generational transfer—from today’s beneficiaries of authorities services to tomorrow’s taxpayers who volition work the resulting debt—is the defining fiscal inequity of the play nether review.”
Concluding that “the gross spread is not the effect of structural economical limitation,” the White Paper refers to Tamil Nadu having the 2nd largest GSDP size (next to Maharashtra) with a diversified concern and services economy, isolated from a ample formal-sector taxation base. It prescribes the remedy arsenic 1 of “controlling systemic corruption successful gross earning departments, compliance enforcement and line worth rationalisation.” Besides, determination has to beryllium “the volition to equilibrium payment schemes and superior expenditure with further resources mobilisation done cutting down connected leakages and corruption, which shall not enactment further load connected the people,” the papers added.
