TN interim budget: Debt may touch Rs 5.70 lakh crore by March 2022, OPS attributes it to pandemic
CHENNAI: Presenting the interim budget for the year 2021-22, Deputy Chief Minister O Panneerselvam on Tuesday said that the overall debt outstanding as on March 31 is estimated to be Rs 4,85,502.54 crore and as on March 31, 2022, it is estimated to be Rs 5,70,189.29 crore.
“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,” Panneerselvam pointed out.
Stating that the pandemic had led to a deterioration in the fiscal position of the state, Panneerselvam 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.”
Panneerselvam concluded his speech by saying, “The people of Tamil Nadu trust no one more than Amma’s (J Jayalalithaa) government led by Chief Minister Edappadi K Palaniswami to deliver good governance and resume the task of fiscal consolidation. I am confident that we will return to complete this task.”
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. The 15th Finance Commission has reset the debt-GSDP norms recognising that increased borrowings will be required in 2020-21 and 2021-22 to sustain the levels of expenditure.
Panneerselvam reiterated his call to the Centre to merge cesses and surcharges with the basic rate of tax so that the states receive their legitimate share of the revenue. Also, the Deputy Chief Minister stuck to the convention that no major announcements should be made in the interim budget.
Total revenue receipts in the interim budget estimates 2021-22 are estimated at Rs 2,18,991.96 crore. The overall revenue revenue deficit for 2021-22 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.”
The aggregate revenue receipts in the revised estimates for 2020-21 are estimated to be Rs 1,80,700.62 crore which represents a decline of 17.63 percent from the budget estimates 2020-21.
The Deputy Chief Minister informed the House that the Covid-19 pandemic has necessitated an additional expenditure of Rs 12,917.85 crore primarily for health and relief related expenditure. Due to the economy measures announced by the government, approximately Rs 13,250 crore was saved.
Despite the difficulties faced in implementing projects during the Covid-19 pandemic, capital expenditure is expected to increase to Rs 37,734.42 crore in the revised estimates 2020-21 which is Rs12,102.84 crore higher than the capital expenditure of Rs 25,631.58 crore actually incurred in 2019-20.
On the whole, the fiscal deficit in the revised estimates 2020-21 is expected to widen to Rs 96,889.97 crore which is 4.99 percent of the GSDP. This is within the limits recommended by the 15th Finance Commission and is in accordance with the amended Tamil Nadu Fiscal Responsibility Act, 2003.