At pre-Budget meet, T.N. sought extension of GST compensation period
As far as Tamil Nadu’s finances are concerned, the Union Budget 2022-23 to be presented by Finance Minister Nirmala Sitharaman on Tuesday would be keenly watched for announcements on the extension of the GST compensation period (which comes to an end in June this year) and relaxation in the borrowing limit. At the pre-budget meeting, Tamil Nadu Finance Minister Palanivel Thiaga Rajan urged the Union government to extend the GST compensation period by at least two years, arguing that the States’ revenues were yet to recover. He had also urged the Centre to permit the States to borrow 5% of the GSDP without any condition, besides seeking payment of pending dues under various heads. Tamil Nadu has seen a recovery in revenue collection, but expenditure has remained higher, putting stress on the State’s finances. The total revenue receipts stood at ₹1,18,992.48 crore so far in 2021-22 (till November 2021), up 22% from last year, while the total expenditure was ₹1,49,044.19 crore, resulting in a fiscal deficit of ₹30,051.71 crore. Revenue deficit (which implies revenue expenditure is higher than revenue receipts) stood at ₹7,869.87 crore.According to the Union Budget 2021-22, Tamil Nadu was projected to get ₹27,148.31 crore as a share of the Central taxes. Driven by higher tax collections, The Union government has devolved ₹7,756.76 crore to Tamil Nadu (including the second advance instalment paid last month) and released ₹1,836.67 crore in Post-Devolution Revenue Deficit Grant so far this fiscal. The State also got ₹8,095 crore in back-to-back GST compensation loan for 2021-22.Tamil Nadu needs aspirational, high value-added jobs for its rising population of educated youths in services and manufacturing such as tele-healthcare, online education, data centres, high-end electronics, biotech, and industrial design and research and development. The Budget announcements should focus on boosting domestic and foreign investments in these areas, said Vidya Mahambare, professor of economics, Great Lakes Institute of Management. Ms. Mahambare, who is also member of the Expert Committee on Employability and Skilling in Transitioning Economy of the Tamil Nadu Planning Commission, said the Budget should avoid raising import tariffs any further and make a move towards reversing the earlier upward movement, especially in intermediate inputs, to reduce production cost for all firms, including those in Tamil Nadu.Last year’s Budget, presented ahead of the Tamil Nadu Assembly election, had State-specific announcements. The key among them were road projects covering 3,500 km of National Highways with an investment of ₹1.03 lakh crore and Central funding for Chennai Metro Rail Phase-II. With the Assembly election to be held in Uttarakhand, Uttar Pradesh, Punjab, Manipur and Goa, it has to be seen how many Tamil Nadu-specific announcements are made in the Budget.