TN’s capex push boltsters growth expected

India’s ratings and research have said in a report that high-budget capital expenditure incurred in Tamil Nadu in 2020-21 is an ‘astonishing’ positive, which will boost the state’s medium to long-term growth prospects. Generally, state governments curb capital expenditure when revenue is emphasized.

Prior to the assembly elections, the Tamil Nadu government presented a vote for FY 2012 and a full budget is expected to be presented by the newly elected government.

The revised estimates for capital expenditure this year are 8.72% higher than the original budget estimates and 58.65% more than those done in 2019-20, Ind-Ra, a research firm owned by Fitch Group, reported. “India Ratings (Ind-Ra) believes that an increase in capex will increase the state’s productive capacity and may therefore support the medium to long-term growth prospects of the state’s economy.”

Although Tamil Nadu (TN) is expected to record the highest fiscal deficit in this millennium, as per revised estimates for FY 2011 presented to the Legislative Assembly, Ind-Ra has insisted that about two-thirds of this slippery epidemic. And is driven by lockdown — the lack of revenue driven without a reduction in revenue expenditure. This, it said, was in line with trends at other states and national levels.

The fiscal deficit widened to 2.6% in FY 2011 as against 2.6% of Gross Domestic Product (GSDP), as against the budget estimate of 2.7% in the previous year (3.2% in the previous year). . The significant decrease in revenue receipts compared to FY21 (BE) contributed to about 66% of the fiscal deficit reduction.

Since 2013-14, the incessant loss-making revenue account has seen a drastic decrease of 3.4% this year as compared to 0.5% of GSDP budget (from 1.9% a year ago), noted in the Ind-Ra report is.

The state has budgeted a revenue deficit of 1.9% of GSDP and a fiscal deficit of 3.9% of GSDP in 2021-22, but these numbers may change after the formation of the next government.

‘Lower for the state’

The report also reflected a marginally lower share of the state’s divisible pool of taxes affecting revenue flow, with the state’s own tax revenue accounting for about 40% of the fiscal deficit reduction, followed by central taxes. The state share is also included: 16.63% slippery.

“TN is one of the eight states which has a lower share in the divisible pool of central taxes as per the 15th Finance Commission (FC) award. The state’s share in central taxes decreased from 4.10% to 4.08% in the period of the 15th FC Award in the period of the 14th FC Award for 2015-16, ”it explained.