CHENNAI: The rising fiscal deficit of the state, which is expected to be Rs 3.97 lakh crore, has raised concern among the economists who believe the state has hardly any money left to invest in major schemes as most of it will be spent on paying interest, salaries and pensions. The budget presented on Friday also did not have any new populist scheme that might add to the burden of the exchequer.
Dr K Jothi Sivagnanam, Professor and Head, Madras University, told Express that the huge fiscal deficit would mount pressure on the growth rate.“We expect the interest component to rise from 17 per cent to 20 per cent in the budget and similarly, the payment of salaries and pensions to be another 20 per cent of the total revenue. As a result, the state hardly has enough money left for other public expenditure,” he says.
This comes as the state government estimated that Rs 43,000 crore would be raised as net borrowings in 2019-2020 as against the permissible borrowing of Rs 51,800 crore. “Therefore, the net outstanding debt at the end of March 31, 2020 will be Rs 3.97 lakh crore and the debt-GSDP ratio will be 23.02 per cent, which is well within the debt-GSDP norm of 25 per cent,” the budget, which was announced by Paneerselvam, stated.
Former bureaucrat M G Deivasahayam said that the fiscal deficit is prevalent despite the taxes being collected from various means. “The government is borrowing despite every service provided by the government being paid by the public. Even, people are paying for water and also roads,” he said while questioning the ballooning fiscal deficit.
Economist J Jayaranjan said that the huge fiscal deficit was due to lack of tax base for the states as everything has been transferred to GST. Trade sources indicated that since the state has substantial wealth and assets, a proposal was submitted to involve a reputed agency on optimal use of such wealth and eliminate public debt.