Tamil Nadu’s own-tax effort has ‘collapsed’, says White Paper
GS3Economy · S&T · Environment · Security· Fiscal policy, budget & taxation (GST)· Mains·
Why in news
Finance Minister N. Marie Wilson presented a White Paper highlighting a historic decline in Tamil Nadu's State Own Tax Revenue (SOTR) ratio compared to peer states.
Background
Tamil Nadu's SOTR-to-GSDP ratio fell from 5.93% in 2021-22 to 5.45% in 2025-26. The report identifies systemic corruption and leakages as primary drivers of this decline rather than structural economic factors.
Facts for Prelims
- FactTamil Nadu's SOTR-to-GSDP ratio reached a historic low of 5.45% in 2025-26.
- FactSOTR-to-GSDP ratio in 2021-22 was 5.93%.
- FactMining revenue stagnation was noted despite increased royalty collections in the state.
For Mains
Q. Analyze the fiscal implications of declining State Own Tax Revenue (SOTR) on state-led development and discuss measures to curb systemic leakages in revenue collection.
Dimensions to cover in your answer
- Revenue leakage: Inefficient monitoring of royalty collections and mining revenue despite increased tariff rates.
- Fiscal disparity: Widening gap between SOTR-to-GSDP ratios of industrial leaders like Maharashtra and Gujarat versus southern peers.
Keywords: Fiscal Federalism · Revenue Leakage · SOTR-to-GSDP Ratio · Systemic Corruption · Fiscal Autonomy
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