Deputy CM and Finance Minister of Tamil Nadu O Panneerselvam presenting the interim Budget – R Senthil Kumar
Enhanced spend on capital works helped, says Finance Minister
Tamil Nadu is set to buck the national trend and register a 2.02 per cent GSDP growth in 2020-21 even as the country’s GDP shrinks by 7.7 per cent.
“This significantly better-than-expected growth performance in 2020-21 is due to the expeditious and effective measures taken by the State government to tackle the pandemic. I have no doubt that in 2021-22, the growth performance will be even stronger,” he said.
The C Rangarajan committee, formed by the State government to advise the medium-term policy response for 2020-21, made 413 recommendations of which 273 have been implemented. The State government acted on the recommendation of incurring additional capital expenditure of at least ₹10,000 crore in 2020-21.
Fiscal deficit within limit
Additional sanctions, over and above the Budget Estimates for 2020-21, were granted for capital works — irrigation, construction of buildings, roads and highways, housing, water supply and sanitation — amounting to ₹20,013 crore. Due to these measures, Tamil Nadu is expected to register a positive growth rate in FY21, the Minister said.
The fiscal deficit in the Revised Estimates for FY21 is expected at 4.99 per cent of GSDP, and within the limit recommended by the 15th Finance Commission, he said. For FY22 it is pegged at 3.94 per cent of GSDP. The debt-GSDP ratio of Tamil Nadu as on March 31, 2021 will be 24.98 per cent, which is lower than its ceiling of 28.90 per cent.
Paneerselvam reiterated his demand to the Centre to merge cesses and surcharges with the basic tax rate so that the States can receive their legitimate share of the revenue.
No revenue measures
At a post-Budget press conference, Finance Secretary S Krishnan said that being an interim Budget, it does not have new revenue measures or new schemes. It has tried to manage the fiscal situation as effectively as possible, he added.
“We have ensured that all the welfare schemes are funded adequately. We have ensured that more capital expenditure is taken up so that the economy gets a boost,” he said.