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?

Manmohan Singh govt was better! True or False?

Precisely, its been 10 months since the new Govt came to power with resounding mandate from the people of India. What did the new govt achieve in these 10 months, is definitely a intriguing question that lingers in the minds of many educated youth, patriotic journalists and scholars. 

Mr. Modi evolved a new line of communication to the people India, selecting Twitter, Facebook and Digital Media. What lapsed in this mode of communication to the people of India, is a personal touch to a majority of Indians. These people earlier thought that a 'Chai-Wala' would make the govt come to close with them, who lacked resources to lead a dignified life. And they are 600 million of them. They are feeling that Mr. Modiji is going far and far away and out of touch with People of India. 

Mr. Obama's visit played a spotlight achievement only to people who had TVs, Laptops, Smartphones and time. For 600 million of Indians, it no longer matters who visits New Delhi and what they eat!. They realize that they have been fooled around yet again, although intelligently this time. Now, they are looking for the next election time in the cycle of Democracy's enfranchisement, obviously to punish the ones who mislead them. They are even learning, the election is nothing but repeat of Promise made and Punishment for foul promise. They come to realize nothing changes on the ground reality of their life.  Youth is feeling the pain of not finding a right job, poor are feeling the pinch of Inflation. The list is endless.

If we look at Macro economy to see the developments, nothing has been substantial improvement. GDP numbers have been skewed to make it appear better now!. Inflation continues to be a worrying factor for RBI. The lending rates did not decrease even after RBI's rate cut. New petrol and diesel excise duties have been imposed and now 50% of the petrol price is Tax to government.! Don't the Modi govt not aware that even Dalits do own two wheeler bikes and mopeds. How could any Govt impose 50% tax on petrol for Dalits,  and still claims that the Govt is poor-friendly!. 

Ten months into Govt, the Modi govt has not given any road map to improving the Tax Compliance rate, which stands at 5%. a minuscule percent, when compared to 95% tax compliance rate with other Developed countries. 

If you subtract the scams such as 2G, Coal etc., what difference did the new govt make to the people of India. It seems why Mr. Manmohan Singh said that the History will write what good his govt did!. Yes, exactly.  Only history can judge performances of Govts. Not the Twitter tweets, not Facebook updates, not late night Media frenzy to get ratings.

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Make In INDIA campaign - Where is it going?

Many in India, including political class and academic class don't seem to know one important thing when the subject of Developed nation and the America comes up for a discussion. 

Today's America, that is the entire spectrum of things in America from Bridges&buildings to Harbours&Airports to NYSE&Nasdaq to Army&Airforce to GE&Boeing to Micrsoft&Google to Airlines&Cruises to  Think tanks&Universities in DC to everything in America .......:: they did not appear in America thru a Magic or thru a miracle. The American people put their sweats over 150+ years to make all these, what we see today. 

US built over 3000 Reservoirs in California 100 years back, even before America started becoming a industrialized nation. 

Indians, as soon as they land here in America, they just magically want everything they see in America to appear in India!. That's where India needs the wisdom of Thomas Jefferson and Winston Churchill. 

Given this, where will the "Make in India" campaign travel? How long that campaign will last? 

USA was a super power in 1960 itself. If we look at their export with in GDP, it was 6% in 1960. 

India's export in GDP reached 6% in 1990 and 12% in 2000. By this strength India should be already a Developed Nation? But why is it, still not a developed nation?

It needs deep diving into details of what is India's GDP vs USA's GDP composed of!. Developing of a nation do not necessarily needs exports. 

"Make in India" campaign is not going to go anywhere, as being Spot Lighted!. The current youth are swayed away by the mis-campaign under the slogan of 'Vikas'-Development. 

Solid vision and wisdom of Thomas Jefforson's is clearly missing. Even great scholars have no say when dictated. They are simply followers taking orders!.   

I believe the Make in India campaign itself named incorrectly. I would rather want to see it "Make India" campaign. What it means is to make India into a status of Developed nation. 

Published: 9-Feb-2015

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I welcome your comments, as long as not trolls. 

Rotten College Education System in India.

There are 35,000 colleges and 700 universities in India, where the current population is 1.25b. But, not a single University nor College earned a place in top 200 Global institutions!. Although the quality of education has been known popularly as weakest for many decades, but the future path definitely is not promising. Top global economy magazine "The Economist"(current issue 2015) concluded that the Indian education system is rotten. Global student capabilities survey company "Aspiring Minds" estimates that 70% of students would fail, if university exams were run properly, at par with US and Europe universities.  And further the company says only 3% of the students are Employable without post-recruitment training.  The economist magazine adds that poor quality is because of college owners utilize colleges as money laundry places. Will the new Prime Minister Modi reform the education system in the country? No one knows at this time.  Will India find a place in top 200 global institutions by 2028, that's when India is believed to overtake China in population, is any one's guess!.  

    The Economist - January 2015. 

Moody's and Standard&Poor to downgrade Tamil Nadu Government Sovereign Rating this year 2015!

03-Jan-2015: 3.35pm Savage, USA.

The predictions have become true. I have been predicting for over 6 months that Tamil Nadu's finances are looking grim. I even wrote that the Tamil Nadu budget 2013-14 was falling into Niagara Falls. The current news is out that the Tamil Nadu government will miss the budget target of Rs 91,835 crores by a whopping Rs. 20,000 crores. That is 21.7% shortfall of budgeted revenues. Tamil Nadu will not be able to meet the Targets of  2003 Fiscal Responsibility and Budget Management Act's goals. The result will be that the Moody's and Standard&Poor will downgrade the Sovereign rating of Tamil Nadu government, this year 2015. 

Tamil Nadu Revenue Projections 2014-15 Goes Awry!

Update. 01-Jan-2015, Savage USA

I have been monitoring to see the Tamil Nadu government's mid-year 2014-15 financial update. I have not seen an official report, although I searched google extensively today to see any publication on it. I could not find anything. However, I saw a report on Vikatan.com website. It had given some financial figures for the current year 2014-15. And I update this blog as: For the current year 2014-15, the Tamil Nadu government achieved Revenue collections for the first 6 monts ending Sep 2014 as:

1. Total revenue reached Rs. 37,056 crores only at the end of Q2,  as against the total annual budgeted Revenue of Rs. 91,835 crore.
2. Commercial Tax growth was only 1.48% during first half of current year.
3. Excise tax growth for the first 6 months only at 10.87% as against 28% budgeted growth.
4. Registrations tax collections ( stamp duty on property sales etc) had a Negative growth of -2.45%.
5. Tax collection from Vehicle taxes are also substancially lower at 7% against 39%.

6. Cental Government collections are also much lower than forecast. Tamil Nadu will not receive the full budgeted Cental share of tax Rs. 19,014 Crores cor current year!.

Let's wait and see how Mr. Panneerselvam handle this dire situation in Tamil Nadu Finances this year!..


12-Dec-2014., Savage, USA
I had heavily criticized the Tamil Nadu budget early this year. Now, I reviewed that Tamil Nadu budget's estimates if they are being met or not!. First, the Revenue forecast went awry. Tamil Nadu is scrambling to meet the Revenue projections with shocking unpublished, non-transparent, hypo-critic measures. Few months back  Tamil Nadu government secretly increased the liquor prices as much as 40% and an average increase of 17% on all brands of liquors sold at TASMAC. Now, the TN Electricity Regulator Agency, which had the Tariff revision in cold storage before Elections, brought the Tariff Revision abruptly with 15% increase to Reduce the Losses for the erstwhile TNEB(TANGEDCO). Remember the Milk prices were revised mid year, not in Budget!. Because the revenue dried up, Tamil Nadu reduced the provisions to MGNREGA  by as much as 70% this year in some districts!.