CHENNAI: Tamil Nadu has a classic debt problem. Facing a slump in revenues, it is now stuck in a debt trap. The revised State Budget for the financial year (FY22), presented on Friday, shows that the debt will be much higher than what was predicted by the White Paper on Monday.
The State’s revenue deficit for FY22 is expected to be much higher at Rs 58,692.68 crore, against the earlier estimate of Rs 41,417 crore. This is because the government’s estimated expenditure has been kept steady compared to the interim Budget presented by the previous government, while the new revenue estimates are far lower by about Rs 16,496 crore, or 7.5 per cent.
This, naturally, is expected to increase the State’s public debt levels higher than earlier envisaged, since the deficit will need to be made up for with higher borrowings. In fact, unlike the earlier estimate of lower net public debt, the revised Budget expects this figure to be higher than in the last fiscal year.
According to the interim Budget presented earlier this year, the State’s net public debt for the current fiscal year was estimated at Rs 82,299.63 crore — which would have brought the State’s public debt to a whopping Rs 5.7 lakh crore by the end of this fiscal. But the revised Budget pegs it at 20 per cent more than this.
Improving tax base
The government’s keenness on promoting industrial growth, the only way to improve its tax base, was also evident. It wants to put Tamil Nadu in the top three in the ease-of-doing-business ranking and simplify the land acquisition process. It was also cautious in ensuring adequate compensation for land owners by promising to create a mechanism for it.
In the matter of climate change, the budget had a long-term vision and promised measures to mitigate the impacts. On matters of importance for common man, the Budget said the government aims to deliver piped drinking water to even remote villages and a minimum quantity of water per person across the state.