Reclaiming Tamil Nadu's fiscal autonomy: Challenges in revenue, spending, and federal transfers
This article analyzes Tamil Nadu's fiscal challenges, arguing that the state's economic growth is not translating into sufficient revenue, leading to a decline in fiscal autonomy. It highlights that TN's own tax revenue as a percentage of GSDP has fallen from 7.4% in 2011-12 to 6.2% in 2020-21, while its share in central taxes has also decreased. The state faces increasing expenditure on welfare schemes and social sectors, but its ability to fund these is constrained by declining revenue and reduced central transfers. The article calls for a comprehensive white paper to address these issues, emphasizing the need for greater fiscal autonomy and a review of central-state financial relations.
Key Points
- Tamil Nadu's fiscal autonomy is declining due to insufficient revenue generation despite economic growth.
- The state's own tax revenue as a percentage of GSDP has significantly decreased over the last decade.
- Tamil Nadu's share in central taxes has also fallen, impacting its ability to fund welfare and social sector schemes.
- The state faces a mismatch between increasing expenditure demands and constrained revenue sources.
- A comprehensive white paper is proposed to address these fiscal challenges and advocate for greater fiscal autonomy.
Exam Facts
- Tamil Nadu's own tax revenue as a percentage of GSDP declined from 7.4% in 2011-12 to 6.2% in 2020-21.
- The state's share in central taxes declined from 5.3% (13th Finance Commission) to 4.079% (15th Finance Commission).
- The article mentions the 13th, 14th, and 15th Finance Commissions.
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