Tamil Nadu's economy poised to grow by 2% in 2020-21 despite country's negative growth: OPS
CHENNAI: Presenting the interim budget for 2021-22, Deputy Chief Minister O Panneerselvam on Tuesday informed the state Assembly that Tamil Nadu's economy is expected to register a positive growth rate of 2.02 percent in 2020-21 at a time when the country faces a negative growth rate of 7.7 percent.
However, the debt burden of the state is expected to touch 4.85 lakh crore by March while it is likely to be around Rs 5.70 lakh crore by March 2022. Panneerselvam attributed this to the Covid-related developments but said that the debt level was well within the norms of the Fiscal Responsibility Act.
The Deputy CM almost stuck to the convention that no new initiatives should be announced in the interim budget except for a few announcements like hiking the insurance cover for BPL families, introduction of computer science classes for Standards 6 to 10 in all government high and higher secondary schools, special project for the differently abled - RIGHTS - with an outlay of Rs 1,700 crore, finalisation of a FinTech Policy to enable Chennai to develop as a global hub for fin tech enterprises and a Rs 816.80 crore storm water drain project for Pallikaranai marshland.
"The Covid pandemic has caused a sharp drop of revenue but the expenditure levels had to be enhanced to protect people's welfare. Hence, it is completely unavoidable that the government had to resort to borrowings resulting in a higher fiscal deficit. The government judiciously borrowed based on the Government of India authorisation for enhanced borrowings of upto two per cent of GSDP," said
Panneerselvam defending the increasing debt burden of the state.
"The strongest performance is of the primary sector at 5.23 per cent, with the livestock and fisheries sectors registering even stronger growth. The growth in the secondary sector is 1.25 percent and in the services sector is 1.64 per cent. This is significantly better than the expected growth performance in 2020-21 and is due to the expeditious and effective measures taken by the government of Tamil Nadu to tackle the pandemic. I have no doubt that in 2021-22, the growth performance will be even stronger," the Deputy Chief Minister noted.
Stating that the Covid pandemic had led to a deterioration in the fiscal position of the state, Pannneerselvam said, "With deft fiscal management we have contained the extent of deterioration. The reform agenda which we had taken up to improve the tax-GSDP ratio, to find ways to raise additional revenues, to contain losses of large PSUs and to find adequate resources for growth enhancing expenditure will need to continue."
The Deputy Chief Minister said the debt-GSDP ratio of Tamil Nadu as on March 31, 2021 would be 24.98 percent and as on March 31, 2022 would be 26.69 per cent of GSDP, which would be well within the norms prescribed by the 15th Finance Commission.
"To finance the overall fiscal deficit during 2021-22, it is estimated that Rs 84,686.75 crore will be raised as net debt against the overall permissible limit of Rs 85,454 crore," he said and underscored the point that the 15th Finance Commission has reset the debt-GSDP norms recognising that increased borrowings would be required in 2020-21 and 2021-22 to sustain the levels of expenditure.
Total revenue receipts in the interim budget 2021-22 are estimated at Rs 2,18,991.96 crore while the overall revenue revenue deficit is estimated to be Rs 41,417.30 crore. Accordingly, capital expenditure in 2021-22 is expected to increase by 14.41 percent to Rs 43,170.61 crore.
Given that revenue receipts have dropped considerably in 2020-21, a rebound is expected in 2021-22, said Panneerselvam, added, "The SGST revenues are expected to be Rs 45,395.50 crore, VAT revenue is expected to be Rs 56,413.19 crore and overall Commercial Taxes revenue is expected to be Rs 1,02,477.14 crore in 2021-22. The receipts from State Excise Duty are estimated at Rs 9,613.91 crore. Motor Vehicles Tax collection is expected at Rs 6,581.75 crore."
Giving other details of the budget, the Deputy Chief Minister said the total receipts on account of the states own tax revenue in the interim budget is estimated at Rs 1,35,641.78 crore while the receipts on account of non-tax revenue are expected to be Rs 15,648.42 crore.
The total revenue receipts in the interim budget are estimated at Rs 2,18,991.96 crore. Revenue expenditure has been projected on a realistic basis for the year 2021-22 at an aggregate level of Rs 2,60,409.26 crore. On this basis, the overall revenue deficit for 2021-22 is estimated to be Rs 41,417.30 crore.
The DMK and its allies boycotted the interim budget presentation and announced that they would be boycotting the rest of the session.