Can P.T.R. Palanivel Thiagarajan Make Tamil Nadu Debt-Free?
Many are expecting that the new Finance Minister, P.T.R. Palanivel Thiagarajan, will make Tamil Nadu debt-free. However, the likelihood of this happening is extremely slim. In this article, we will explore the feasibility of this goal and the challenges that Thiagarajan is likely to face.
The Improbable Goal: Making Tamil Nadu Debt-Free
The idea of making Tamil Nadu debt-free is both unrealistic and counterproductive. Unless the current government agrees to pay off the debt using their own resources, which is highly unlikely, this goal remains a distant dream. While it would be an impressive achievement if Thiagarajan were to accomplish this, it is not a practical or necessary objective for the government.
It is important to note that governments operate on debt. The real question is how this debt is utilized. Debt used to create more assets is seen as beneficial, while debt used merely to pay off interest on earlier debt is not. It is crucial to maintain fiscal discipline while ensuring that resources are directed towards productive endeavors.
Challenges and Realistic Expectations
Thiagarajan will face numerous challenges in managing Tamil Nadu’s finances effectively. Here are some realistic expectations:
Publishing a White Paper on State Finances
One of the first steps Thiagarajan can take is to publish a comprehensive white paper on the state’s finances. This document would document the past 7 years of fiscal mismanagement and serve as a reference for future policy-making. Transparency in financial management is critical for public trust and accountability.
Reducing Revenue Deficit
Reducing the revenue deficit to below 5% would be a significant achievement. If Thiagarajan can reduce the revenue deficit to 3% within the next five years, it would be considered a stupendous success. The focus should be on maintaining and improving this figure over time to ensure fiscal stability.
Improving Tax Collection and SOTR Levels
Another key objective is to reduce revenue loopholes and increase the state’s own tax revenue. This would help sustain the State Own Tax Revenue (SOTR) at 80% levels, which is crucial for maintaining fiscal health. It is essential to implement measures to ensure that taxes are collected efficiently and effectively.
Promoting Industrialization and Economic Growth
Promoting industrialization is a crucial component of Tamil Nadu’s economic development. Thiagarajan should aim to increase the per capita income to 2.5-2.7 lakh rupees by the end of his term. A reasonable target should be to achieve a per capita income of around 2.2 lakh rupees, which represents the historical growth rate. This would help in reducing poverty and improving the overall economic conditions of the state.
Reducing Debt Servicing Costs
Reducing debt servicing costs to historical levels of 12% would be a major achievement. Currently, the debt servicing cost is at unsustainable levels of 17%. Thiagarajan’s efforts to bring this down to 12% would be a significant feat, and it would free up more resources for other essential services and development projects.
Redirecting Focus to Merit, Not Speculation
It is important to redirect focus from unrealistic goals, such as closing the Tamil Nadu State Minor Irrigation Board (TASMAC), which is often discussed in WhatsApp groups and other informal channels. TASMAC plays a crucial role in providing water to farmers, and its closure would be highly detrimental to the agricultural sector.
In conclusion, while the goal of making Tamil Nadu debt-free is unrealistic, P.T.R. Palanivel Thiagarajan has the most challenging task of cleaning up the fiscal mess left by the previous government. His efforts to improve transparency, reduce the revenue deficit, and promote industrial growth will be critical in ensuring that Tamil Nadu’s economy thrives in the coming years.