AIADMK bids to insure poll win with free cover for 55 lakh families

CHENNAI: Battling a pandemic and an empty treasury, the AIAIDMK government sought to give a booster shot to its poll prospects by presenting an interim budget that pegged the state’s economic growth at 2.02%, though the debt increased by Rs 85,000 crore to Rs 5.7 lakh crore.

The budget presented by deputy chief minister O Panneerselvam gave a state-funded free life cover to 55.67 lakh families living below the poverty line, allotted Rs 5,000 crore for Rs 12,110.74-crore crop loan waiver scheme, but showed a 17.64% fall in revenue amid a widening fiscal deficit.

While TN’s economic growth dazzled against the estimated 7.7% dip in India’s GDP growth, the state’s debt at Rs 5.7 lakh crore was up by Rs 85,000 crore over the past year. Revenue deficit — where expenditure outgrows income — shot up Rs 65,944 crore in the current year and will remain heightened at Rs 41,417 crore in the coming year.

Though the impact of the pandemic left little fiscal room for finance minister O Panneerselvam, he unveiled the Puratchi Thalaivi Amma Comprehensive Accident-cum-Life Insurance scheme in association with LIC and United India Insurance Company and said a Rs 6,683 crore first-phase plan for a 44km metro rail in Coimbatore was under consideration.

Subsidies and transfers will remain elevated at Rs 1,01,180 crore next fiscal as against Rs 1,11,229 crore in the pandemic year. Interest payments as a percentage of revenue will remain high at 19.67% next year against the revised estimates of current year at 20.8%, clearly showing the state has been living beyond its means and the word thrift is missing in the corridors of power.

The brighter side of the state’s resilience was the 5.23% growth of the primary sector, followed by secondary sector at 1.25% and services by 1.64%. The state spent Rs 13,353 crore for Covid-related expenditure, the FM said. “This significantly better than expected growth performance in 2020-21 is due to the expeditious and effective measures taken by the government of Tamil Nadu to tackle the pandemic. I have no doubt that in 2021-22, the growth performance will be even stronger,” the minister said.

The spiralling effect of Covid pandemic ravaged the already fragile state finances when its own tax revenues declined sharply by 17.64%, as against the anticipated Rs 1.33 lakh crore in the budget estimates. Even the share of Central taxes indicated in the Union budget eventually reduced by Rs 23,039.46 crore. The deputy CM said it has been estimated that Rs 84,686 crore will be raised as net debt to finance the overall fiscal deficit in the next fiscal. The state’s overall debt outstanding is estimated to be Rs 5.7 lakh crore by March 31, 2022.

Panneerselvam expects the return of normal growth trends soon and there would be automatic improvement in the next fiscal, he said the reform agenda which the government had taken up to improve the Tax: GSDP ratio, to find ways to raise additional revenues to contain losses of large PSUs and to find adequate resources for growth enhancing expenditure would need to continue. “I am confident that we will return (to power) to complete the task,” OPS said, amid loud thumping of desks.

Source: The Times of India