144. The second phase of the Tamil Nadu Afforestation Project (TAP), funded by Japan Bank for International Co-operation (JBIC), is being implemented at a cost of Rs.567 crores. During 2007-2008, 1,27,260 acres of degraded forest adjacent to the forest areas in 230 villages will be developed under this project, at a cost of Rs.115 crores.

145. The Government has decided to erect solar fencing for 181 km around agricultural lands adjacent to forest areas in order to prevent wild animals from entering and damaging the crops in these agricultural lands. A provision of Rs.290 lakhs is made for this purpose.

146. With a view to improving the forest cover of the state through afforestation, the Government will take necessary measures to promote planting of tree saplings in the wastelands of farmers. In addition, in order to abate the air pollution in urban areas, the Forest department will raise taller tree saplings and they will be distributed to health and educational institutions. In consonance with the saying that "if you care for trees, trees will care for you", this Government will provide necessary support to transform tree plantating into a mass movement with the participation of Non Governmental Organisations.

147. This Government will continue to encourage sportspersons who bring credit to the State through their outstanding performance in National and International Tournaments. With a view to promoting the health and nurturing the sports talent of the youth in rural areas, the Government has decided to distribute sports gear of popular games like Cricket, Foot ball and Volley ball to all Village Panchayats in the State at a cost of Rs.5 crores.

148. With a view to improving the sports infrastructure across the State, new swimming pools will be constructed in district headquarter towns of Tiruvannamalai and Tiruvarur at a cost of Rs.132 lakhs. A sum of Rs.200 lakhs is allocated for improvement works in the Jawaharlal Nehru Indoor Stadium at Periamet in Chennai and Rs.50 lakhs allocated for the improvement works in the Indoor Stadium at Madurai. New sports hostels will be constructed in the district stadia at Tirunelveli and Erode at a cost of Rs.140 lakhs.

149. With a view to helping the Cinema Industry, this Government announced the reduction in fees for outdoor shooting and full exemption from payment of entertainment tax for Tamil movies named in Tamil as an incentive for interest and commitment to Tamil language. In addition, the Government has reduced the rates of admission to Cinema halls and have thus brought the public back to Cinema halls, providing a new lease of life to the Film industry thereby safeguarding the livelihood of thousands of workers employed in film industry.

150. The benefit of entertainment tax exemption for films named in Tamil will be available to the producers of movies, or the present copyright holders of old Tamil movies. This Government would continue to encourage and support the Film Industry and the world of arts by granting subsidy to low budget quality films and honouring Cinema and Television artists with awards.

151. This Government has accepted the request made by the Film Employees Federation of South India that land for house sites may be allotted to them and the responsibility for identifying an appropriate land has been entrusted to them. As the task of identifying the land has been completed, the Government Orders will be issued shortly.

152. This Government, had increased the pension and family pension of journalists and had also modified the scheme to enable the families of journalists who die in harness to easily obtain the assistance given to them. With a view to providing further benefits to them, a separate welfare fund for journalists will be established.

153. Ever since this Government has assumed office, renovation works have been undertaken and ‘Kudamuzhukku’ ceremonies have been performed in 690 temples. Many ancient temples in our State, which remind us of our rich heritage and excellence in sculpture, are not maintained properly and are in a dilapidated state. The grants received under the recommendations of the 12^th Finance Commission will be utilized to undertake restoration activities in these ancient temples without impairing their antiquity. These works will be taken up in 48 ancient temples which include Devaraja Swami Temple in Kanchipuram, Azhagiya Mannar Rajagopala Swami Temple in Palayamkottai, Maasilanathar and Varadharaja Perumal Temples in Tharangambadi, Kailasanathar Temple in Sembian Madevi in Nagapattinam district and Rajagopala Swami Temple in Thanjavur at a cost of Rs.10 crores.

154. This Government has established a separate Welfare Board for the welfare of village temple priests. Welfare benefits will be granted to them through this Welfare Board.

155. This Government, which is fully aware of the responsiblity and duty of government employees in taking the welfare schemes of the Government to the people, has restored to them the benefits which were withdrawn by the previous Government. The following are the various steps taken by this Government after it assumed office for the welfare of government employees, teachers and pensioners:

• Services of 45,987 teachers who were working on contract basis on consolidated pay were regularized in time scale of pay, involving an additional expenditure of Rs.400 crores per annum.

• Orders have been issued to fill vacant posts in Government service in time scale of pay. With a view to benefiting those who were affected by the ban order on Government recruitment, this Government has relaxed the upper age limit for entering Government service by 5 years.

• Orders have been issued to appoint on compassionate grounds the legal heirs of those employees, teachers and road Gang mazdoors who died in harness during the strike period or the period of suspension / dismissal.

• Benefits which had been granted to Government employees and teachers till 2000-2001 like Bonus and Special Ad-hoc Bonus, and the Pongal gift for pensioners, have been given again at a cost of Rs.250 crores.

• The service of the Government employees and teachers during the strike period has been ordered to be treated as duty with pay.

• The minimum service required for Government employees to be entitled to full pension has been reduced from 33 years to 30 years.

• The earlier method of determining pension based on 50% of pay last drawn or 50% of the average pay of last 10 months whichever is higher has been restored instead of calculation of pension based on 50% of average pay of last 10 months of service alone.

• The Government has ordered to pay the employees Rs.872 crores of arrears which were due following the implementation of recommendations of the V^th Central Pay Commission, in three equal annual installments commencing from 2006-2007.

Apart from these, after examining the requests received from Government employees and pensioners, with a view to motivating them further, this Government will provide the following concessions.

• The Government of India has increased the rate of Dearness Allowance payable to its employees, pensioners and family pensioners from 29 % to 35 %. Taking note of this, this Government has also decided to raise the Dearness Allowance payable to State Government employees, teachers, pensioners and family pensioners by 6 percentage points and the increased Dearness Allowance at 35 % will be payable from 1.1.2007. The arrears of the increased Dearness Allowance will be paid in cash. The Government will incur an estimated additional expenditure of Rs. 150 crores in the current year and Rs.600 crores in the coming financial year for this purpose.

• The Government has accepted the demand that the concessions to Government employees regarding method of calculation of pension and the minimum service required for full pension, which were restored by this Government, should also be extended to persons who retired between 1.4.2003 and 30.7.2006. Hence, their pension will be re-fixed with the minimum service for full pension being considered as 30 years and 50% of pay last drawn or 50% of the average pay of last 10 months, whichever is higher as the basic pension.

• The Festival Advance payable to Government employees and teachers, on festivals like Pongal, as specified by the Government, has been remaining unchanged as Rs.1,000. This Government has accepted the demand for increasing the quantum of Festival Advance and it will be doubled from Rs.1,000 to Rs.2,000 from the coming financial year.

• The entitlements of Government servants who are travelling on duty or by availing Leave Travel Concession (LTC) were restricted from 1.12.2001. This Government has decided to lift these restrictions and restore all entitlements to the position as existed before 1.12.2001.

Introduction of e-tendering system

156. It was the DMK Government which had enacted the Tamil Nadu Transparency in Tender Act in 1998 to ensure open and fair procedures while undertaking construction and procurement of goods and services by the Government and Governmental organisations. The Hon’ble Chief Minister had recently announced that e-tendering will be introduced with a view to making the tendering process even more transparent and that under the e-tendering system, tenderers will be able to download the tender applications from the internet and can submit tender bids on-line without any hindrance. e-tendering will be implemented in two phases and in its first phase, starting from 1.7.2007, tender forms for open tenders for a value exceeding Rs.10 lakhs can also be obtained through the internet and in the second phase, starting from 1.10.2007, bids can also be submitted on-line through the web sites of the concerned departments. In respect of the open tenders of value exceeding Rs.5 lakhs and up to Rs.10 lakhs, existing procedure will be continued.

High Level Monitoring Committee

157. Ever since this Government assumed office, in fulfilment of all promises in the election manifesto, this Government has been successfully implementing a number of welfare schemes with the sole objective of the welfare of the people of Tamil Nadu. With a view to ensuring that the benefits of these schemes reach all eligible beneficiaries and to continuously monitor the implementation of these schemes, the Government has decided to constitute a State Level High Level Monitoring Committee headed by the Hon’ble Chief Minister comprising of the representatives of political parties in the Legislative Assembly on the lines of the Committee constituted to monitor the Free Colour Television Scheme. The Committee would monitor the implementation of the major welfare schemes of the Government, namely Public Distribution system, Free Gas Stove Scheme, Dr.Muthulakhsmi Reddy Memorial Maternity Assistance Scheme, Moovalur Ramamirtham Ammaiyar Memorial Marriage Assistance Scheme, Scheme for assistance to Educated Unemployed Youth and Free Bi-cycle Scheme for +1 Students. In addition, the Committee will also advise the Government for making these schemes more effective.

Plan Programmes

158. 2007-2008 will be the first year of the Eleventh Five Year Plan. Approval of the Planning Commission has been obtained for a higher Annual Plan outlay of Rs.14,000 crores for 2007-2008 during the meeting held between the Hon’ble Chief Minister and Deputy Chairman of the Union Planning Commission on 5.2.2007.

159. Doubling the Tenth plan outlay of Rs.40,000 crores, the Eleventh Plan will be implemented with an outlay of Rs.80,000 crores. The Government will implement plan programmes with the objective of achieving an average annual growth rate of 9% in the State’s economy during this Plan period.

Commercial Taxes

160. As announced in the last Budget, a separate legislation has been enacted and Value Added Tax (VAT) has been introduced in the State with effect from 1.1.2007. The VAT system and the various concessions available under it have been widely welcomed by the public and the business community.

161. In place of higher and multiple rates of tax under the Tamil Nadu General Sales Tax (TNGST) regime, only three rates of tax are prescribed under VAT. Additional Sales tax, resale tax and surcharge have also been abolished under VAT. Under VAT, manufacturers and traders have the facility to get credit for the input tax paid. Further, the small traders who purchase goods and resell them within the State itself having a turnover of up to Rs.10 lakhs are exempted from registration and payment of tax and such traders whose turnover exceeds Rs.10 lakhs but does not exceed Rs.50 lakhs are given the option to pay tax at a compounded rate of half percent. Self assessment by dealers has been provided for with abolition of requirement for annual renewal of dealer registration. The VAT Act also provides for continuation of the various tax exemptions granted under TNGST Act including the exemptions for edible oil, pulses and gram and jaggery.

162. Having regard to the requests made by the representatives of the trading and manufacturing community in the pre-budget meeting conducted by the Government on 24.2.2007 and keeping in mind the interest of consumers, traders and manufacturers, the following tax concessions are announced. In consonance with the policy of this Government not to tax goods used regularly by housewives, common people and farmers, it has been decided to remove Value Added Tax levied on the following goods:

• Kerosene pressure stove

• Fertiliser mixture manufactured out of chemical fertilizer for which tax has been paid locally

• All seeds used for sowing purpose

• Packed drinking water sold in sealed refill cans and sachets

• Local sale and inter state sale of coconut other than copra

• Peas flour

• Fried peas

• Coconut shell powder

• Panchamirtham, Namakatti, Vibudhi and Prasadam sold by any dealer

• 38 specified traditional medicine

• Seashell, Sea weed, Agar Agar and Alginate

• Synthetic gems

• Thanjavur plates

• Cloth bag

• Instruments for drawing and dissection

• Graph and Exercise note books

• Mathematical learning instruments

• Wood covered lead pencils, writing pencils, erasers, ebonite pens, ebonite ball pens, writing ink including ink tablets

• Pillow covers, bed sheets and towels made from hand looms and power looms cloth other than those made of mill made cloth

• Camphor in all forms

• Cashew shell

• Tax exemption granted to all edible oils in the last budget will be extended to all refined oils.

• The turnover limit for exemption for edibile oils including refined oil, oil cake and deoiled cake was fixed as Rs.300 crores in 2000. This turnover limit will be increased as Rs.500 crores

• Tax exemption granted to pulses and grams in the last budget will be extended to Mochai, Karamani, Thatta Payaru, Kollu and Avarai.

• The turnover limit of Rs.300 crores for the exemption for pulses and grams fixed during 2000 will be increased to Rs.500 crores per item

• The rate of tax on wheat will be reduced from 4% to 2%

• Rate of tax on bottled mineral water purchased after paying tax and sold by non-star hotels and sweet stalls will be reduced from 12.5% to 2%.

Similarly, the rate of tax on the following commodities which are used by common people and now liable to tax at 12.5% will be reduced to 4%. They are -

• Chicory and unbranded Coffee powder other than instant coffee

• Masala Powder with brand name

• Tapioca chips, flour, tapioca waste

• Bajji flour

• Energy (Sathu mavu) flour

• Unbranded ghee

• Date syrup

• Interesterified vegetable oil (vanaspati)

• Unbranded bakery products including bun, rusk, biscuits and cakes

• Diagnostic kits, Diagnostic reagents, accessories, blood bags and disposables

• Wet grinders

• R.C.C.pipes (without input tax credit on purchase of cement)

• Jolleys, door and window frames made of R.C.C. (without input tax credit on purchase of cement)

• Unbranded steel furniture

• All plastic goods other than doors, windows, frames, profiles, automobile, industrial and sanitary items

• Kuthuvilakku, Agalvilakku, Pavai vilakku, Yanai vilakku, Karthikai vilakku, Kovilmani, Karpoora thattu, Dhoopakal

• Moulded idols

• Audio cassettes including pre recorded cassettes

• Accounts Books and Diaries

• School bags and unbranded travel bags

• Shields

• Barbed wire, wire rod and wire links

• Mop made of cotton yarn

• Used cars/ Motor vehicles on value addition without input tax credit

• Textile machinery and parts

• Fasteners including nails, bushes, washers and rivets

• Electroflux

The Government have also decided to levy tax at 4% on certain goods which are consumed or used by industries in manufacturing:-

• Superior Kerosene Oil (without input tax credit)

• Molasses purchased and used in manufacture of chemicals by chemical industries which were earlier permitted to procure molasses at 20% tax. They are not eligible for input tax credit.

• Certain goods like industrial gases, textile machinery etc. are ultimately used or consumed as industrial inputs. It has been decided to list such goods to be taxable at 4% when sold either by the manufacturer or by trader as industrial input.

• Entry 67 of Part B in First Schedule to the TN VAT Act,2006 provides for notifying ‘industrial inputs’. Already 27 items have been notified under the entry. Instead of issuing notifications periodically and indefinitely, it has been decided to amend the relevent entry to make the definition of ‘industrial input’ read as follows:

  ‘any goods falling under Part C of the First Schedule to the TN VAT Act including consumables, packing materials and labels but excluding plant and machinery, ethyl alcohol, absolute alcohol, methyl alcohol, rectified spirit, neutral spirit and cement for use in manufacture and assembling, packing or labeling in connection with such manufacture inside the State for manufacture of goods other than those falling under Second Schedule’

• Traders who have a turnover up to Rs.50 lakhs and opted to pay tax under compounding system at half percent are now liable to pay tax even on the turnover relating to sale of those goods which are exempt from tax. With a view to ensuring that they need to pay tax only on the turnover relating to sale of taxable goods, necessary amendment will be made to the VAT Act.

• Accepting representations made by traders, it has been decided to list the commodities taxable at 12.5% as Part C of First Schedule to the VAT Act.

All the tax proposals announced herein shall be deemed to come in to effect from 1.1.2007.

REGISTRATION DEPARTMENT

163. In the Registration Department, there are about 27,000 registered documents pending determination of correct market value for a long time. The stamp duty due to Government from these documents, which is currently remaining blocked, is estimated at Rs.400 crores. The Government will introduce a new scheme which will enable it to receive this blocked amount without any further delay and at the same time, will enable the parties also to avail stamp duty concession and get back the registered documents after payment of concessional stamp duty.

164. There are around 15,000 document writers and 15,000 assistants engaged in document writing associated with the various registration offices in the state. With a view to promoting their welfare, a separate ‘Document Writers Welfare Fund’ will be created.

Overall Financial Position

165. Hon’ble Speaker Sir, I will now present the details on the fiscal projections for the Budget Estimates for the year 2007-2008. The total revenue receipts of the Government for 2007-2008 is estimated at Rs.44,532.28 crores and the total revenue expenditure is estimated at Rs.44,633.66 crores. This will result in a revenue deficit of Rs.101.38 crores.

166. The total capital expenditure of the Government, including loans and advances (net) in 2007-2008 is projected at Rs.7,699.18 crores. This, coupled with the revenue deficit, will result in a total fiscal deficit of Rs.7,800.56 crores. The projected fiscal deficit constitutes only 2.84% of the Gross State Domestic Product (GSDP). The Hon’ble Members may note that as per the Fiscal Responsibility Act, 2003, fiscal deficit should not exceed 3% of the Gross State Domestic Product and so the projected fiscal deficit is well within this limit. Taking into account the net Public Account, the overall deficit will be Rs.3.75 crores. This deficit will be made good by economy in expenditure and better tax administration.

167. A plan of action for future has been indicated in the Medium Term Fiscal Plan given as annexure to the Budget Speech. I request that this may be taken as read as part of the Budget Speech. This Government will effectively adhere to the fiscal targets indicated in the Medium Term Fiscal Plan.

168. Be they, promises made in the election manifesto, Acts enacted in this House or plans and programmes sought to be implemented against all odds, accepting as a word of caution of the wise counsel of Kural that -

‘The world cares not those who lack the will-power to act, despite other strengths at their command’

this Budget has listed with a great sense of responsibility, the deeds this Government has already performed and tasks it proposes to carry out. Assuring this House that this Government shall discharge its duties for ever, whatever may be the circumstances, only with a view to finding ways and means for attaining a life of prosperity for an ordinary member of an average middle income family and his dependents, in his capacity as a member of this society - be him, a farmer, a weaver, a labourer, a trader or a Government employee, I place the Budget Estimates for the year 2007-2008 before you and my beloved Tamil people, conveying my heart felt thanks to the Finance Secretary Thiru K.Gnanadesikan, I.A.S. and other officials of all Government departments including Finance department who have assisted in preparation of this Budget as an instrument to discharge our duties in a righteous manner.

Vanakkam

K. ANBAZHAGAN,
MINISTER FOR FINANCE

Chennai,

23^rd March 2007

Panguni-9,

Thiruvalluvar Aandu 2038