CHENNAI: With the pandemic triggering livelihood loss and putting urban households at the risk of penury, the First Tamil Nadu Housing Sector Strengthening Program Development Policy might mitigate the crisis by expanding access of the urban poor to affordable housing options, a World Bank report has said.
Financing for the First Tamil Nadu Housing Sector Strengthening Program Development Policy was approved by the World Bank Board of Executive Directors in May to support Tamil Nadu's increase in its access to affordable housing for low-income families.
The report stated that 48.4 per cent of the State's 72.1 million population lives in cities, and the urban population is expected to touch 63 per cent by 2030. "The State has not been able to meet the increased demand for housing and urban services. Affordability issues, supply-side constraints, and weak
institutions are the major challenges in the State," it added.
The new policy will provide general budgetary support at a time when the State government accelerates its efforts to address the socio-economic impact of the pandemic.
The report also stated that Tamil Nadu's fiscal policy framework is considered adequate for the Development Financing Policy (DFP), for which the World Bank is extending loans to the state. "While the State's debt to GSDP ratio may rise in the next few years, this is expected to be a temporary deviation as eventually nominal growth and interest dynamics will return to the point where the debt-to-GDP ratio starts declining again," it further said.
Noting that Tamil Nadu has room to reduce capital expenditures, if required, in the event of a sharp revenue shortfall or to accelerate fiscal consolidation, the report also observes that the risk of a decline in the devolution of taxes by the Central government is mitigated to some extent by the 15th Finance Commission's interim recommendation to maintain the states' share of pooled revenues at 41 per cent, increase in the state's share in Central pool of taxes from 1.69 to 1.72 percent and award of a sizeable revenue deficit grant for the State for the financial year 2020-2021.
The report also stated that committed expenditures, subsidies and transfers are projected to decline from 11.1 per cent of GSDP in 2019-2020 to 10.6 per cent by 2022-2023, while the spending on salaries and pensions are projected to remain stable.