Tamil Nadu government’s earnings fell for the year as per the budget estimates, but still the populist government that is yet to earn the goodwill from the people after the change of leadership took a safe route and refrained from imposing any fresh taxes in the budget for 2017-18 presented by fisheries and finance minister D Jayakumar on Thursday.

Presenting a tax free but deficit budget – estimated at Rs 41,976.78 crore for 2017-18, and Rs 53,586.28 crore in 2018-19 and Rs 53161.96 crore in 2019-20 – said this was due to takeover of debt of TANGEDO and the deficit will be a short term phenomenon. Financial burden also increased for the government as it accepted the Ujwal DISCOM Assurance Yojana (UDAY) and has to foot 75 per cent of the debt of the electricity body.

Fiscal Deficit for 2017-18 is expected to come down to less than thee per cent of the GSDP, he added. However, the implementatioin of the seventh pay commission recommendations based on the report of the officials committee will increase the burden on State’s finances for a year or two.

The state’s economy is slowly picking up which is evident from the increase in GSDP rate in real terms from 4.85 per cent in 2012-13 to 7.94 per cent in 2016-17.However, there is a significant fall in the growth of the State’s Own Tax Revenue, especially due to the fall in the Stamps and Registration, which has negatively impacted the revenue receipts.

Decrease in share of Central Taxes due to Fourteenth Finance Commissions’s recommendations and the increase in State’s share in Centrally Sponsored schemes have also hampered the State Finances, said the Additional Chief Secretary to Government, finance department, K Shanmugam. He said that one of the major factor affecting was the lack of inflow from the centre’s share as per the 14th Finance Commission.

The central share of around Rs 6000 crore has not been released so far, he said. The government is taking efforts to get this amount released.

The closure of TASMAC liqour outlets has resulted in a drop of Rs 2,100 crore, including Rs 1,600 crore in sales tax, so far. The government has ordered closure of 1000 liqour shops so far. The increase in fuel taxes has resulted in an increase of Rs 2,000 crore in the state’s revenue.

The tax realization in commercial taxes is expected to improve due to the revision of tax rates on petrol and diesel. The trends in expenditure are steady except for the hike in salaries and pensions due to implementation of Seventh Central Pay Commission recommendations based on the report of official committee constituted for this purpose, said Jayakumar.

“The state Government will continue to take concerted efforts for faster economic recovery which will pave way for enhancing the State’s fiscal position and improve the fiscal consolidation,” said Jayakumar.

School education has received the maximum allocation as in each with Rs 26,932 crore for 2017-18. The next higher allocation is for the electricity sector. The government has allocated Rs 16,998 crore and out of this Rs 8,538 crore will as subsidy to Tangedco for providing 100 units free power to domestic consumers and free power to farmers.