STRAP: Revenue projections seem optimistic
The election-bound Tamil Nadu government on Tuesday presented the interim budget for 2021-2022, with no populist measures and big-ticket announcements, while revealing the Covid-19 battered finances of the state and pegging the fiscal deficit for the year at 3.94% of the gross state domestic product (GSDP).
The fiscal deficit for 2020-21 has been revised sharply to 4.99% as against 2.84% budgeted initially, an inevitable fallout of the pandemic. The deficit rose as a result of a sharp revenue shortfall, Covid-19-related additional spending and a thrust given to capex.
The state, however, chose to be fiscally responsible and announced a glide path for consolidation – the fiscal deficit to GSDP ratio is estimated to be 3.49% in 2022-23 and 2.99% in 2023-24.
The state’s 2021-22 Budget size (total expenditure) is projected to be Rs 3,03,580 crore, up just 6.7% from the Revised Estimate (RE) for 2020-21. Budgetary capital expenditure is seen to be Rs 43,171 crore in 2021-22 compared with Rs 37,734 crore in 2020-21 (Revised Estimate).
The total revenue receipts in the Interim Budget Estimate for 2021-22 are estimated at Rs 2,18,992 crore, which means an optimistic 21% growth over the 20120-21 RE. Revenue expenditure for the next fiscal year is pegged at Rs 2,60,409 crore, leaving a revenue deficit of Rs 41,417 crore.
O Panneerselvam, the deputy chief minister, who is also holding the finance portfolio presenting the interim budget, said the elevated level of the fiscal deficit in the current financial year was unavoidable and this deficit has to be brought down gradually to ensure there is no adverse impact on the economy. Even the 15th Finance Commission has recommended that a higher fiscal deficit of 4% of GSDP should be permitted to states in 2021-22. Accordingly the fiscal deficit in 2021-22 has been contained to `84,202 crore which is 3.94% of GSDP, he said.
A provision of Rs 5,000 crore has been made the crop loan waiver scheme announced by the state government recently and a provision of Rs 11,983 crore has been made for agriculture. The other major focus has been education, health care, infrastructure, public distribution system, industries and development of local bodies, among others.
The government, over the next few years, will procure 12,000 buses of which 2,000 would be electric buses. In the first instance, with KfW financial assistance, 2,200 BS VI buses and 500 electric buses at a cost of Rs 1,580 crore will be procured. An amount of Rs 624 crore has been provided for the implementation of the project.
The overall debt outstanding as on March 31, 2021, is estimated to be Rs 4,85,503 crore and as on March 31, 2022, it is estimated to be Rs 5,70,189 crore.
The debt-GSDP ratio of Tamil Nadu as on March 31, 2021, will be 24.98% and as on March 31, 2022, will be 26.69% of GSDP, which is well within the norms prescribed by the 15th Finance Commission, the state finance minister said.
The state’s own tax revenue is expected to be at Rs 1,09,969 crore in the revised estimates for 2020-21 which represents a drop of 17.64% against Budget Estimate.
The aggregate revenue receipts in the Revised Estimates 2020-21 are estimated to be Rs 1,80,701 crore which represents a decline of 17.63% from the Budget Estimate. The Covid-19 pandemic has necessitated additional expenditure on the revenue account of Rs 12,918-crore primarily for health- and relief-related expenditure.
Primarily as a result of the sharp deterioration of the revenue receipts and the increase in expenditure in the Revised Estimates 2020-21, the total revenue deficit in 2020-21 is estimated to be Rs 65,994 crore, much higher than Rs 21,618 crore projected in the Budget Estimates 2020-21.
In line with the recommendations of the high-level committee headed by C Rangarajan that an additional capital expenditure of Rs 10,000 crore should be undertaken, capital works worth Rs 20,013 crore have been accorded approval by the government in irrigation, flood control, water supply and sanitation, rural development, housing and other infrastructure sectors.
Despite the difficulties faced in implementing projects during the Covid-19 pandemic period, capital expenditure is expected to increase to Rs 37,734 crore in the Revised Estimate for 2020-21, substantially higher than the capital expenditure of Rs 25,632 crore in 2019-20.
The government plans to borrow a net amount of Rs 84,687 crore against the estimated net borrowing ceiling of Rs 85,454 crore in 2021-22. The outstanding debt will be Rs 5,70,189 crore after excluding Rs 7,608 crore to be released by Centre as back to back loan for GST compensation shortfall during 2020-21.