Chennai: Analysis of brick rankings from the Tamil Nadu State Budget 2021-22 said it would be a big challenge for the newly chosen Dravida Munnetra (DMK) government.
The report said the new government has announced a number of welfare steps and the development promised in the election manifesto.
This requires additional expenses, which is only possible by increasing the country’s own tax collection.
It also emphasizes the transfer of the center has declined because the country’s part in the devolution of taxation has shown a steady decline in the recommendations of the consecutive financial commissions (from 5.305% on the twelve FC to 4.079% during the FFC).
Thus, the increase in state finances, after increasing expenditure will require a decrease in the decline in state revenue itself, and the transfer from the center.
The state needs to return to the pre-2014 revenue deficit of the fiscal deficit ratio by increasing the tax to the GSDP ratio, thus investing fully loans into capital expenditure.
The new government’s commitment to achieving inclusive growth by making a commendable role model.
The state has formed an economic advisory panel with leading economists to provide economic and social guidance.
The Minister of Finance has also convinced to carry out deeper reforms to improve overhang debt, immediately after overcoming the impact of the Covid-19 pandemic.
Critical reforms are in the electricity sector as subsidies to farmers and other consumer groups need to be removed to restore sustainability to state finances.
“We hope the state to achieve its budget target is set for current fiscal, so that it will help the state to put the strongest foundation for the full budget for the next fiscal,” he said.
The second wave of the Covid-19 pandemic, which began in March 2021, has disrupted economic activities throughout the country.
Tamil Nadu, like most other countries, must impose restrictions on economic activities to contain the spread of pandemic, and this substantially reverses the progress witnessed in economic recovery.
While presenting a revised budget estimate for FY22, on August 13, Minister of Finance Dr.
Palanivel Thiama Rajan, emphasized the magnitude of the second wave impact of Covid-19 concerning Health and Economics, and the consequences for the government’s fiscal situation.
A steady setback in finance, combined with a slowdown in economic growth, is a serious reason to be a concern.
Covid-19 further worsens the situation.