Ahead of the assembly elections likely in April, the AIADMK government in Tamil Nadu on Tuesday presented an interim budget for 2021-22 with the COVID-19 pandemic contributing to a higher fiscal deficit of over Rs 84,000 crore.
The budget, presented amid a boycott by DMK and its allies, projected a positive growth rate of 2.02 percent in 2020-21 as it expressed hopes of the economy rebounding due to various sustainable policy decisions of the government.
While the main opposition DMK and its allies, including the Congress and the Indian Union Muslim League, boycotted the budget presentation by staging a walkout, leader of the opposition M K Stalin, in a statement, condemned the government for Rs ‘5.70’ lakh crore debt.
As Deputy Chief Minister O Panneerselvam, who holds the Finance portfolio, started his budget speech, DMK deputy leader Duraimurugan urged Speaker P Dhanapal to allow him to express a ‘view,’ which was disallowed.
While there was a din for a while, the opposition members eventually staged a walkout, boycotting the presentation of the interim budget, the last by the present AIADMK government before the polls.
Stalin, who did not participate in the House proceedings, assured ‘growth’ for the state after assuming power by winning the coming polls.
With the pandemic casting a shadow, the budget estimated the revenue deficit to be Rs 41,417.30 crore and fiscal deficit at Rs 84,202.39 crore, 3.94 percent of the Gross State Domestic Product (GSDP). The revenue expenditure has been projected at an aggregate level of Rs 2,60,409.26 crore.
Noting that the budget carried the ‘imprint’ of the unprecedented challenges posed by the pandemic, the Deputy CM said Tamil Nadu was being hailed as a model state in tackling COVID-19.
In sync with the recommendation of a high-level panel, additional sanctions were granted -towards more capital expenditure including irrigation, housing and highways- to the tune of Rs 20,013 crore.
As against Rs 37,734.42 crore in the revised estimates for 2020-21 towards capital expenditure, Rs 43,170.61 crore has been provided in the budget estimates for 2021-22 for further economic development, Panneerselvam said.
Due to the pandemic, the State’s Own Tax Revenue (STOR) collapsed in the first four months of the current financial year and the collection of state GST and Value Added Tax started to pick up from August last year.
The collection of stamp duty and registration fee has also revived but motor vehicle tax collection is yet to fully recover.
Hence, ”it is completely unavoidable that the government had to resort to borrowings resulting in a higher fiscal deficit,” he noted.
In his two-and-a-half hour-plus address, he said the government intended borrowing Rs 84,686.75 crore and the outstanding debt as a percentage of GSDP is expected to be 27.44 percent in 2022-23 and 27.50 percent in 2023-24 well within the norms outlined by the 15th Finance Commission.
The overall debt outstanding as on March 31, 2021 is estimated to be Rs 4,85,502.54 crore and as on March 31, 2022, Rs 5,70,189.29 crore.
The budget, the last in the AIADMK’s 2016-21 term pegged State GST revenue to be Rs 45,395.50 crore, receipts from excise duty at Rs 9,613.91 crore and VAT at Rs 56,413.19 crore and overall commercial taxes over Rs 1.02 lakh crore.
The government made allocations to other departments, including a hefty subsidy of Rs 8,834.68 crore, for the state-run electricity generation and distribution entity, Tamil Nadu Generation and Distribution Corporation.
In aggregate, the SOTR is expected to be Rs 1.09,968.97 crore in the revised estimates (2020-21) which represents a drop of 17.64 percent against Rs 1,33,530.30 crore anticipated as revenue in the budget estimates for 2020-21.
”I reiterate my call to the Government of India to merge cesses and surcharges with the basic rate of tax so that the states receive their legitimate share of the revenue.” Also, the share of central taxes for the state indicated in the union budget at Rs 32,849.34 crore (2020-21) has been cut to Rs.23,039.46 crore in the revised estimates, the Deputy CM said.