Ahead of 2021 Assembly election, the Tamil Nadu Chief Minister K Palaniswami-led AIADMK Government today presented its last full-fledged budget focussing more on populist schemes and showing a fiscal deficit.
The state’s economy grew at 8.17 per cent in 2018-19 and is projected to frow by about 7.27 cent in 2019-20, according to State’s Budget document, which was presented by Deputy Chief Minister and Finance Minister O Paneerselvam, who tabled his ninth full budget at the State assembly.
Tamil Nadu's nominal GSDP growth is estimated to be 12 per cent in 2021-22 and 2022-23.
The State, which is known for implementing various 'social schemes', expects net debt outstanding to rise to Rs 4.56 trillion at end of March 31, 2021 from Rs 3.97 trillion (2019-20 Budget estimates).
Fiscal deficit is estimated to be at Rs 59,346 crore, while in 2019-20 (Revised Estimate) it was Rs 55,058 crore and Rs 47,335 crore in 2018-19. The proportion of fiscal deficit in GSDP is expected to be at 2.84 per cent as against 2.97 per cent in 2019-20 and 2.84 per cent in 2018-19.
Revenue deficit during 2019-20 grew to Rs 25,071 crore as against a projection of Rs 17,204 crore and is estimated to be at Rs 21,617.64 crore, in 2020-21.
A fiscal path is also being laid to reduce the revenue deficit in a phased manner and thereby enhance the allocation for creation of productive assets. Focus will be on resource availability, including exploring resource augmentation measures, improving efficiency in expenditure and accounting for probable fiscal contingencies without compromising on growth creating expenditure and at the same time meeting committed expenditure needs.
Owing to the slow down of growth in certain sectors of the economy, tax receipts of the State government, particularly of Goods and Services Tax (GST), Value Added Tax on non-GST goods and Motor Vehicle taxes, revenue receipts are expected to fall short of budget targets.
The State’s own tax revenue has come down to Rs 1.2 trillion compared to budget estimate of Rs 1.25 trillion during 2019-20. The government expressed hope that the outstanding issues relating to the settlement of Rs 4073 crore due to Tamil Nadu as IGST from the year 2017-18 will b settled before the end of the current fiscal year.
The inter-se horizontal share of the state has increased marginally from 4.023 per cent to 4.189 per cent.
Tamil Nadu has so far received Rs 7,096 crore as GST compensation. Central Government grants of Rs 17,957.31 crore have also been received so far this year.
In the first year of implementation of GST in 2017-18, instead of distributing 50 per cent of the unallocated IGST in proportion of SGST collection in various states, the Government of India incorrectly appropriated the entire unallocated portion of IGST to the tune of Rs 88,344.22 crore to the Consolidated Fund of India and distributed 42 per cent of this to the States as per the 14th Finance Commission's devolution formula.
This resulted in a net loss of Rs 4,073 crore to Tamil Nadu and we are insisting on the immediate release of this amount due to Tamil Nadu.
Recently, Union Finance Minister Nirmala Sitharaman promised to disburse GST dues to all States in two instalments. As such, the State would get a substantial amount, and this is likely to ease the burden a little.
Government of India incorrectly appropriated the entire unallocated portion of IGST to the tune of Rs 88,344.22 crore to the Consolidated Fund of India and distributed 42 per cent of this to the States as per the 14th Finance Commission's devolution formula. This resulted in a net loss of Rs 4,073 crore to Tamil Nadu.