Tamil Nadu govt projects Rs 174.90 billion revenue deficit in 2018-19

Tamil Nadu's revenue deficit in 2018-19 is expected to be around Rs 174.90 billion as against the deficit of Rs 183.70 billion in 2017-18. The two major reasons for the deficit are implementation of UDAY scheme and pay panel recommendations, said Deputy Chief Minister and Finance Minister O Panneerselvam.

He presented Budget for 2018-19, first budget after his faction was merged with Chief Minister E Palaniswami, amidst protest and walk out by the opposition party members wearing black shirts to condemn the laxity of state government in pushing the centre to setup Cauvery Management Board.

Total Revenue Receipts (TRR) has been projected at Rs 1,558.24 billion in the Revised Estimates (RE) 2017-2018, the revenue expenditure is estimated to be Rs 1741.94 billion, leaving the revenue deficit at Rs.183.70 billion.

Taking the pay revision into account, salaries and allowances are estimated to be Rs 521.71 billion and pension and other retirement benefits are estimated to be Rs 253.62 billion in the as against Rs 451.59 billion and Rs 215.68 billion respectively in 2017-18.

Thus the total revenue receipts are projected to be Rs 1762.51 billion and the total revenue expenditure is projected to be Rs 1937.42 billion during 2018-2019, leaving a revenue deficit of Rs 174.90 billion.

Capex has been estimated at Rs 282.82 billion, and the fiscal deficit has been projected to be at Rs 444.80 billion, which is about 2.79 percent of GSDP.

State estimates to borrow Rs 439.62 billion in 2018-2019, as against the permissible limit of Rs 478.87 billion.

"The net outstanding debt at the end of March 31, 2019 will be Rs 3558 billion and the Debt-GSDP ratio will be 22.29 percent which is well below the Debt-GSDP norm of 25 percent," said Paneerselvam.

The silver lining in the dark cloud is that there are signs of economic revival. This is expected to improve our resources and the present revenue deficit, which is largely due to the additional expenditures arising out of UDAY scheme and pay panel implementation, is expected to narrow down in the coming years.

"This implies that our borrowing is expected to be brought under control and more resources will be made available for welfare schemes and development expenditure. This will enable us to accelerate economic development and ensure that the State continues in the path leading to prosperity", he said.

The Gross State Domestic Product (GSDP) of Tamil Nadu is expected to grow at 8.03 per cent in 2017-18.

As the economic outlook is favourable, the sustained investments made by the Government in the primary sector and the measures taken for inviograting the industrial investment in the state could drive the economic growth further to surpass nine per cent in 2018-19, said Paneerselvam.

He alleged that Tamil Nadu has been facing an unfair treatment on central funding, in terms of devolution from the centre under the recommendations of 14th Finance Commission as compared to the national average and even the devolutionary grant received by other States, alleges the State government.

The 14th Finance Commission recommended a devolution of Rs 1590 billion to Tamil Nadu for the five year period commencing from 2015-16 to 2019-20, as against the devolution of Rs 720.70 crore recommended duringh the 13th Finance Commission period from 2010-11 to 2014-15.

This is an increase of only 121 per cent as against the average increase of 173 per cent at the All India level. Similarly placed States like Karnataka, Maharashtra, Odisha and Rajasthan, which had received devolution comparable to Tamil Nadu during the 13th Finance Commission period, have now got an increase in devolution to the tune of 198 per cent, 191 per cent, 166 per cent and 157 per cent respectively.

While the government would continue to offer incentives to industrial investments in the State, the package of assistance will be decided on a case by case basis depending upon the investment level, generation of employment opportunities and the potential to create ancilliary and down-stream industries. While earlier the criteria was the size of investment and the employment generated, the government is bringing in changes as the existing model became unviable post GST, said Finance Secretary K Shanmugam.

On GST

Panneerselvam said that from July 2017 to February 2018, the State has received Rs 632 crore as GST compensation from the Centre.

"I am confident that our State will stand to gain from GST in due course, since the gap between the projected revenue with 14 percent growth rate and actual revenue has been shrinking considerably over these eight months," he said.

The Grants-in-Aid, including GST compensation have been estimated at Rs.192.64 billion in the Revised Estimates 2017-2018 and Rs 206.26 billion in the Budget Estimates 2018-2019.