Chennai: The Tamil Nadu government led by E.K. Palaniswami presented its maiden budget on Thursday, increasing allocations for the welfare schemes announced by late chief minister J. Jayalalithaa and leaving tax rates unchanged even as the state’s debt ballooned.
The net outstanding debt of the state government would rise to Rs3.14 trillion by 31 March 2018, said finance minister D. Jayakumar. Revenue deficit would stand at Rs15,930 crore for the financial year 2017-18.
The budget which pegs economic growth at 9% against the current 7.5% has projected a fiscal deficit of Rs41,977 crore.
The fiscal deficit stood at 4.58% for the year 2016-17, breaching the 3% limit of the Fiscal Responsibility Budget Management (FRBM) norms of the gross state domestic product (GSDP). Jayakumar claimed that this could be temporary as it is a reflection of the Tamil Nadu Generation and Distribution Corp. Ltd’s (TANGEDCO) debt takeover by the state government. The government took over Tangedco’s debt of Rs22,815 crore in 2016-17.
While the government increased budgetary allocations for existing schemes, there were no new major announcements.
Jayakumar allocated Rs116 crore for the information technology department and Rs2,192 crore for the transport department. He also added that Rs75 crore has been allocated for the Global Investors Meet, which will be held in 2017-18.
While a Rs3,042 crore loan from the World Bank will be used for conservation of various water bodies, the budget allocated Rs625 crore for providing drinking water across the state.
A sum of Rs116 crore has been allocated for the Sri Lankan refugee welfare fund.
The government would also replace the State Planning Commission with the State Development Policy Council, said the finance minister.
School education, with the maximum allocation, received about Rs26,932 crore for 2017-18, followed by the electricity sector, which has been allocated Rs16,998 crore. Of this, Rs8,538 crore will be subsidy to the Tangedco for providing 100 units free power to domestic consumers, which was part of AIADMK poll promise and free power to farmers. However, there have been no benefits provided for the renewable energy sector.
The government has allocated Rs522 crore for crop insurance.
While there were neither new taxes nor tax concessions, as the state gears up for GST implementation in July, analysts have raised concern over a slew of announcements from the previous budget that are yet to take off.
“While the budget figures are definitely important, what is more important are clear cut action plans and well defined timelines, if the state has to maintain its pole position in terms of economic and social development”, said Gayathri Sriram, the Madras Chamber of Commerce & Industry (MCCI).
The apprehension about the huge fiscal deficit seems to looming large across all quarters. How the government would overcome this deficit and reverse the economic downtrend, is the common question that experts and people from the industry raise.
“The fiscal deficit has overshot the Fiscal Responsibility Budget Management (FRBM) norms by over 3% and it is a bad sign for the state,” said M. Sathya Kumar, a Chennai-based charted accountant.
Adding that the budget is a populist one, Kumar said that there are no tangible measures for tapping the tax revenues and expenditures have increased from Rs1.67 trillion to Rs1.83 trillion.
“The expenditure increase should be compensated by revenue generation and they haven’t accounted it in the budget as the GST roll out would happen soon,” he said.