CHENNAI: Amid concerns over a sharp decline in Tamil Nadu’s own revenue, the state govt has constituted a six-member expert committee headed by noted economist and former Planning Commission deputy chairman Montek Singh Ahluwalia to suggest measures to augment its receipts.The committee includes K P Krishnan, chair professor of economics at the National Council of Applied Economic Research, tax policy expert Arbind Modi, who is associated with the IMF’s fiscal affairs department, former Central Board of Excise and Customs chairman Najib Shah, finance secretary M A Siddique, and Madras Institute of Development Studies director M Suresh Babu. “There is a need to align the growth of revenue in sync with the growth in the economy and to augment and sustain the resource base,” a govt order said. The previous DMK regime had constituted an Economic Advisory Council featuring eminent economists such as Raghuram Rajan, Esther Duflo and Arvind Subramanian.The Montek panel will advise the govt on measures to improve the state’s tax and non-tax revenues and strengthen revenue buoyancy, administrative efficiency and fiscal self-reliance. It will identify new and under-tapped revenue sources and explore non-tax avenues such as dividends from public sector undertakings, monetization of land and other govt assets, and revision of user charges.It has also been asked to recommend measures to plug systemic leakages, curb tax evasion and address administrative inefficiencies in revenue-collecting departments. Its mandate includes suggesting changes in administrative processes and greater use of technology. The committee will examine ways to increase revenue from liquor through changes in regulation and taxation policy.The govt order cited the white paper on fiscal management released in June. The document said the decline in collections from major sources, including GST, VAT, excise and mines and minerals, was driven largely by “administrative decisions, leakages and corruption in the past rather than an underlying economic slowdown.” It said addressing the revenue shortfall would require sustained, multi-year reforms aimed at curbing corruption, improving compliance and mobilizing resources more efficiently.According to the white paper, Tamil Nadu’s state own tax revenue-to-GSDP ratio fell to 5.45% in 2025-26, its lowest level in two decades. The annual revenue foregone due to the decline was estimated at about Rs 1.23 lakh crore, which is equivalent to nearly 90% of the state’s fiscal deficit in 2025-26. While Maharashtra and Karnataka maintained or improved their own-tax effort, Tamil Nadu recorded a steady decline, reflected in collections from GST, VAT on petroleum products, state excise, stamp duty and motor vehicle tax, the white paper said.
