Chennai: Tamil Nadu’s fiscal situation is dire. Presenting the grim scenario of a State that has been on a borrowing spree in black and white on a “white paper”, finance minister P.T.R. Palanivel Rajan said that a “business as usual” attitude cannot continue.
There is no fiscal head room left as TN, thanks to increasing debt and interest costs, is in the grip of a vicious cycle of debt, he said.
The finance minister pointed to a worsening fiscal deficit situation over the last 10 years (read AIADMK rule) because of an over-reliance on borrowing to make ends meet.
Each of more than two crore families of Tamil Nadu is in debt to the tune of Rs.2,63,973 and there can be no delay to recasting the financial planning and management, he said. His Budget, to be presented on Aug. 13, should have plenty of moves and hints on reorientation of financial management.
“Political will and administrative skill are needed,” Thiagarajan said while revealing that the revenue deficit has been deteriorating for the last 8 years and is 3.16 as a percentage of GSDP for FY 2020-21.
The fiscal deficit has been increasing due to increase in government borrowing. “The current levels of fiscal deficit (4.43% of GSDP) are unsustainable primarily because a substantial portion of the fiscal deficit is simply to fund the revenue deficit.”
