Tamil Nadu’s fiscal deficit is estimated to be 2.84% for 2020-21, well below the 3% fiscal norms while the State’s revenue deficit is likely to double to ₹21, 617.64 crore compared to the projection of ₹10,040.31 crore, Deputy Chief Minister and State Finance Minister O. Paneerselvam said.
Presenting the annual State budget for 2020-21 in the State Assembly on Friday, Mr. Panneerselvam said the State continues to see a sustained increase of its revenue deficit. The burden imposed on the State finances by the take-over of debt of Tangedco under the UDAY scheme, the lag effect of the implementation of the 7th Pay Commission, slower growth in tax revenue are causing rise in revenue deficit.
“In order to finance the fiscal deficit during 2020-21, it is estimated that ₹59,209.30 crore will be raised as net debt. Therefore, the net outstanding debt at the end of March 31, 2021, is expected at ₹4,56,660.99 crore,” he said.
The State’s Own Tax Revenue is estimated to increase to ₹1,33,530.30 crore for the year compared to the revised estimate of ₹1,20, 809.63 crore.
Mr. Panneerselvam said the ‘unprecedented’ drop in the share of Central taxes further burdened the State which is already severely affected by the devolution criteria adopted by the 14th Finance Commission.
“Tamil Nadu suffered a serious setback in the Revised Estimates 2019-20 due to the unprecedented reduction in the share of Central Taxes which stands at ₹26,392.40 crore as against ₹33,978.47 crore in the Budget Estimates 2019-20,” he said.
He also said the government will shortly launch a New Industrial Policy which will provide GST regime compatible incentives.
(With inputs from Dennis S. Jesudasan)