Tamil Nadu's debt to cross Rs 5 lakh crore in 2022: Budget

Tamil Nadu's overall outstanding debt is expected to be at Rs 5.70 lakh crore by March 2022 even as the state is expected to register a “positive growth” rate of 2.02 per cent. However, the fiscal deficit in the Revised Estimates for 2020-21 is expected to widen to Rs 96,889.97 crore which is 4.99 per cent of the GSDP and the government attributed it to various reasons, including increased spending due to the Covid-19 pandemic.

Presenting the interim budget of the AIADMK government as the state heads to polls in April-May, Deputy Chief Minister O Panneerselvam, who holds the Finance portfolio, made several announcements like including computer science subjects from Class 6 to Class 10, while making a strong pitch to the Centre to merge all cesses and surcharges with the basic rate of taxes.

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The budget speech was boycotted by Opposition parties – DMK, Congress, and IUML.

Panneerselvam said the state's tax revenue is expected to be around Rs 1.09 lakh crore, registering a drop of 17.64 per cent in FY21. On the overall debt of the state, he said the borrowings is estimated to be Rs 4,85,502.54 crore and it is likely to go up to Rs 5,70,189.29 crore by March 2022.

“The 15th Finance Commission has reset the Debt-GSDP norms recognising that increased borrowings will be required in 2020-21 and 2021-22 to sustain the levels of expenditure,” he said in his speech.

The Opposition parties latched on to the overall debt of the state government, accusing it of “spending recklessly.” Leader of Opposition and DMK President M K Stalin said the state government's debt increased in the past ten years due to “rampant corruption.”

Panneerselvam also said Tamil Nadu is expected to register a positive growth rate of 2.02 per cent at 2011-12 constant prices in 2020-21. “This is against an All India negative growth rate of 7.7 per cent in 2020-21. The strongest performance is of the primary sector at 5.23 per cent, with the livestock and fisheries sectors registering even stronger growth. The growth in the Secondary sector is 1.25 per cent and in the Services sector is 1.64 per cent,” he added.

Although revenue to the Centre on account of various levies on petrol and diesel saw a growth of 48 per cent in the period from April-November, 2020 over the same period in 2019, Tamil Nadu has received 39.40 per cent less in the corresponding period as a share of Union Excise Duties on petrol and diesel, Panneerselvam complained.

He also said several measures by the Centre has shrunk the divisible pool of taxes. Noting that the share of Central taxes for Tamil Nadu which had been indicated in the Union Budget at Rs 32,849.34 crore in their Budget Estimates 2020-21, has been reduced to Rs 23,039.46 crore in the Revised Estimates 2020-21, he asked the government to merges and surcharges “with the basic rate of tax so that the States receive their legitimate share of the revenue.”

In his speech, the Deputy CM said the government has decided to launch a Comprehensive Accident cum Life Insurance Scheme with full funding under which families will be eligible for insurance coverage of Rs.2 lakh in case of natural death of the breadwinner, and Rs.4 lakh in case of accidental death and up to Rs 2 lakh in case of permanent incapacitation of the breadwinner.