Tamil Nadu has so far borrowed ₹4,400 crore in the fourth quarter of FY 2022 through issue of bonds, known as State Development Loans, which is lesser than the indicated borrowing of ₹9,000 crore from January 4 to Feburary 1, as per data from the Reserve Bank of India (RBI).
The borrowing may have been lower, due to improved cash position. In addition to improving revenue collection from its own sources, Tamil Nadu has also got a boost from advance tax devolution by the Centre to the States.
Last month, the Centre released tax devolution of ₹3,878.38 crore to Tamil Nadu, including an advance instalment. So far in this fiscal, the Centre has devolved ₹7,756.76 crore to the State.
As per the revised Union Budget estimates for 2021-22, Tamil Nadu will get ₹30,355.63 crore as tax devolution, higher than the ₹27,148.31 crore projected in the earlier estimates.
Reflecting the upward revision in the Centre’s gross tax revenue in the revised budget estimates for FY2022, the tax devolution to the States has been increased to ₹7,44,784.62 crore from ₹6,655,62.74 crore. The revision is mildly higher than our expectations, Aditi Nayar, the chief economist at the rating agency ICRA said in a report.
The Centre has also released GST compensation grant and ad-hoc settlement of Integrated GST revenue to the State governments last month, she noted.
Tamil Nadu has indicated that it will borrow ₹25,800 crore in the January-March 2022. From April to December 2021, the State had borrowed ₹52,000 crore, Ms. Nayar said if the Centre transfers the balance tax devolution in two equal instalments in February and March, it may lead to some States borrowing a lower amount than indicated for Q4. The exact financial position of Tamil Nadu would be known when the State Budget is presented. Finance Minister Palanivel Thiaga Rajan has indicated that the State will reduce revenue deficit.
