Finance Minister Palanivel Thiyaga Rajan at the 12th edition of the Annual Finance Conclave, organised by the Confederation of Indian Industry, Tamil Nadu, in Chennai on Wednesday
| Photo Credit: KARUNAKARAN M
Tamil Nadu Finance Minister Palanivel Thiaga Rajan on Wednesday said that with the improving financial position, the State is likely to increase its capital expenditure over three-fold in three years’ time.
“We are going to go to something like ₹90,000- 95,000 crore a year in capital expenditure from the current level of ₹25,000 crore a year,” he said in his inaugural address at the 12th edition of the Annual Finance Conclave, organised by the Confederation of Indian Industry, Tamil Nadu, in Chennai on Wednesday.
Mr. Thiaga Rajan said that at one point of time, Tamil Nadu used to have capital expenditure close to 3-4% of the Gross State Domestic product (GSDP), every year. However, he pointed out that it continuously dropped from 2014 onwards, and went down to about 1% of the GSDP when the COVID-19 pandemic hit. Last year (2021-22) the capital expenditure was 1.5% of the GSDP and we are likely to take it to 2.5-3% this year, Mr. Thiaga Rajan said.
The Minister said Tamil Nadu’s revenue deficit has been brought down by ₹16,000 crore in 2021-22. As a result, the fiscal deficit has been better than the revised estimates. The fiscal deficit is at 3.38% of the GSDP in 2021-22 as per the final accounts, which is lower than the 3.85% limit set by the Union government, Mr. Thiaga Rajan said.
As per the recommendations of the 15th Finance Commission accepted by the Union government, States can roll over the remaining borrowing capacity from last year, he said.
Mr. Thiaga Rajan also reiterated that the State is on course to repeat the good performance of last year, if the economic parameters remain as they are.
‘On course to achieve revenue netural targets’
The Minister pointed out that Tamil Nadu is on course to achieve its revenue neutral targets in the next few years, which will enable it to expand capital spending. However, he pointed out that one of the challenges is in terms of execution capability. “As per the Chief Minister’s instruction I am chairing a committee on infrastructure. I have expressed the concern to the Secretaries regarding the execution,” he said.
Mr. Thiaga Rajan said because the fiscal position of the State had deteriorated, the capital spending had also gone down, which in turn resulted in lack of execution capability. He said this can be overcome through public private partnership and sought for industry participation as it progressed.
‘Banks must widen client base’
The Finance Minister also said that while banks in the State have done well in terms of achieving their credit disbursement targets, one of the issues has been that they have done it through volumes and not through widening their client base.
“We have told the State Level Bankers Committee to look at increasing the client base by covering more industries. For that, we have insisted that they should use technology and improve their KYC and credit assessment and approval processes,” he said.
Mr. Thiaga Rajan also reiterated that measures are in place to ensure that Tamil Nadu is in a better position, if there is a global recession.
