Tamil Nadu’s economic growth for 2019-20 is projected to be 7.27%, a fall from 8.17% in 2018-19, Deputy Chief Minister and Finance Minister O. Panneerselvam said in his budget speech on Friday.
He said global and national economic headwinds are faced by Tamil Nadu as well at this time. “At the all-India level, the growth estimates for 2019-20 have been revised downwards and projected at 5% in constant price terms. The 7.27% projected by Tamil Nadu is significantly higher than the projected all India growth rate of 5% and we expect an even stronger growth performance in 2020-21,” Mr. Panneerselvam said.
The economic slowdown has also hit the State’s tax collection in 2019-20. For instance, collections from taxes on motor vehicles has dipped to ₹6,018.63 crore in revised estimates for 2019-20 when compared to previous projections.
“Since motor vehicle tax is primarily levied on registration of vehicles, the tax collections in the coming years is expected to be in accordance with improved economic growth prospects,” he said. The impact of the exemption for electric vehicles, more of which are expected to be registered have also been factored in.
The State’s net outstanding debt at the end of March 31, 2021 is expected to rise significantly to over ₹4.50 lakh crore in 2020-21. In 2019-20, the net outstanding debt of the State was projected at ₹3.97 lakh crore.
The rise is mainly on account of the State raising ₹59,209. 30 crore as net debt to finance the fiscal deficit during the year 2020-21 against the permissible borrowing limit of ₹62,757.80 crore. The debt to GSDP ratio will be 21.83% , within the norm of 25%.
(With inputs from Dennis S. Jesudasan)