Tamil Nadu’s fiscal deficit for 2021-22 is poised to see a significant reduction from 4.61% down to 3.80% and the State will see a reduction in the absolute level of the revenue deficit by over ₹7,000 crore, “reversing an alarming trend of increasing deficits every year since 2014,” Finance Minister Palanivel Thiaga Rajan said in the Assembly on Friday. After this seven-year slump, the reduction in Revenue Deficit, even in such a challenging year is a testimony to this government’s prudent fiscal management, he said.
Presenting the Budget for 2022-23, he said the State’s Revenue Deficit has decreased to ₹55,272.79 crore in the revised estimates as against the Budgeted amount of ₹58,692.68 crore. The State aims to further bring down the fiscal deficit within 3.5% in 2022-23 and to 3% from 2023-24 onwards, adhering to the fiscal norms outlined by the 15 th Finance Commission.
The Net Public Debt for 2022-23 has been projected at ₹90,116.52, taking the total outstanding debt to ₹6,53, 348.73 crore on March 31, 2023, while the Debt-GSDP ratio will be 26.29%, within the limits set by the Finance Commission, he said.
Mr. Thiaga Rajan said the government was laying a fiscal path to reduce the Revenue Deficit in a phased manner and thereby enhancing the allocation for creation of productive assets.
‘End of GST compensation could mean revenue shortfall’
The GST compensation regime was coming to an end on June 30, 2022 and the State was expected to face a potential revenue shortfall of around ₹20,000 crore. “The State finances have just started to recover after the Covid pandemic and if the compensation is not extended, significant strain will be caused on the finances of the State. We expect that the Union government will settle the arrears pertaining to GST in time,” the Minister said.
In 2022-23, the government aims to see an increase in the State’s Own Revenue at ₹1,42,799.93 crore with Commercial Taxes estimated to contribute ₹1,06,765.22 crore, State Excise ₹10,589.12 crore, Stamps and Registration Fees ₹16,322.73 crore and Motor Vehicles Tax ₹7,149.25 crore. The State’s Own Non-Tax Revenue has been projected to be ₹15,537.24 crore.
In 2021-22, the State’s Total Revenue Receipts saw a marginal increase at ₹2,03,878.17 crore compared to the Budget Estimate of ₹2,02,495.89 crore on account of release of arrears from the Union government of the State’s share in Central Taxes and the Grants-in-Aid from the Union government.
However, the State’s Own Tax Revenue declined to ₹1,21,857.55 crore in 2021-22 from the estimated ₹1,26,644.15 owing to the pandemic and unprecedented floods, he said. This resulted in Commercial Taxes, State Excise and Motor Vehicles Tax falling short of the Budgetary Estimates. The State’s Own Non-Tax Revenue too fell short by ₹14,139.01 crore compared to the estimates, he said.
“Despite the current economic downturn, Tamil Nadu’s growth is higher than that of national GDP, which is a positive sign. This growth is expected to further strengthen in the coming years,” Mr. Thiaga Rajan said.
