Tamil Nadu Finance Minister Palanivel Thiaga Rajan on Friday presented the State Budget for 2022-23, which focused on fiscal consolidation path, sans any populist measures. For the first time in seven years, the revenue deficit (which implies the revenue expenditure exceeds revenue receipts) will be brought down by over ₹7,000 crore in 2021-22 and is expected to further reduce in the next financial year.
In his Budget speech, Mr. Thiaga Rajan said the ruling DMK’s major poll promise of giving ₹1,000 a month to the woman head of the family would be implemented once the financial position improved. However, in a significant step recognising that the enrolment ratio of girl students from government schools in higher education is very low, the Budget announced ₹1,000 per month to girl students to pursue higher education. The scheme, for which ₹698 crore was allocated, will benefit girls — throughout their degree, diploma or ITI course duration — who studied in government schools from classes 6 to 12, and joined higher education institutions.
GSDP growth
As per the Budget, Tamil Nadu’s Gross State Domestic Product growth has been projected at 7.85% in 2021-22 at constant prices, indicating that the economy has bounced back after the COVID-19 pandemic.
“We expect better growth in the ensuing years compared to the current year projections. The nominal GSDP growth of Tamil Nadu is estimated to be 14% in 2022-23 and 14% in 2023-24” Mr. Thiaga Rajan said.
“Last year [2021-22], amidst the resurgence of the pandemic, we consciously tilted the scales towards social welfare, with the goal of alleviating the pain among the weaker sections of society. Now, as we see the economy bouncing back, we must rebalance our priorities and focus on social infrastructure and development without compromising on welfare schemes,” he added.
The Budget made major allocations to sectors such as industries and MSME, transport, water resources, Police department and urban development, while the health sector understandably saw reduction in allocation.
Ukraine crisis
Mr. Thiaga Rajan warned that the State’s tax revenue could see an adverse impact from the inflationary pressures caused by the Russia-Ukraine crisis and said the coming financial year was likely to be challenging and replete with uncertainties.
He said Tamil Nadu would face a revenue loss of about ₹20,000 crore if the GST compensation period was not extended beyond June 30, 2022 and hoped the Centre would heed to the State’s request of extending it by two years.
The Minister said that on account of prudent fiscal management, the overall revenue deficit would be reduced to ₹55,272.79 crore in the revised estimate for 2021-22 from ₹62,326 crore in 2020-21 and further brought down to ₹52,781.17 crore in 2022-23.
He noted that the fiscal deficit (the difference between total revenue and total expenditure) would be brought down to 3.8% of GSDP in 2021-22 from 4.6% in 2020-21 and further down to 3.6% in 2022-23, within the norms prescribed by the Finance Commission.
