State of Tamil Nadu Economy from Budget 2015-16

Tamil Nadu government presented its budget to the assembly today. I did not have lot of motivation to study details of budget, because Tamil Nadu is gloomy as we all know from Mr. Panneerselvam is a proxy Chief Minister of Tamil Nadu. And we all know the government apparatus is just hanging there to collect the monthly pay checks.!

The revised estimate of Revenue for current year 2014-15 is reduced to Rs. 85,772 from original budget of Rs. 91,835. The reduction is Rs 6063. In Last year's budget, TN govt projected 10% growth in its Revenue. However, the government only achieved 2.9% revenue growth. 

What does this mean? If you subtract the inflation to bring the Tax Growth to constant prices, the net Growth of Tax revenue is Negative? 

If state GDP is grown around 10 as per the Statistics, why would the Revenue growth is only 2.9%?

This tells the pathetic state of Tamil Nadu economy. I believe the Tamil Nadu's economic growth, after adjusting to Constant prices, would be in negative. Tamil Nadu is in recession. But, no one wants to admit it yet. 

Budget FY16 - Hidden facts unearthed.

1. For the current year FY15, the original projected Tax Revenue was Rs. 977258 Crores. But the revised revenue is set at Rs. 908463 Crores. This amounts to a whopping 43% Revenue shortfall over the budgeted Revenue Growth. If the GDP had grown at 7.4% above the original prediction as per released statistics of CSO , can the Finance Minister explain why then there is a shortfall  Rs 69,403 crores in tax revenue, which 7.1% lower than projected Tax Revenue of Rs 9,77,258 Crores?

2. For the next Fiscal FY16, FM projects the GDP will grow at 8% range. If he truly believed it, why then he projected only 1.2% revenue growth ie. Rs. 919842 Crores against this year's Rs 908463 Crores?  Can any Economist explain this. When GDP growth is 8% in a developing country, Govt Tax Revenue will grow only 1.2%?  This sounds really weird.

3. The above two items are of paramount important in any nation's Budget. If we are missing explanation for this ambiguity, how much can one believe the rest of the budget documents?