The DMK government, which steps into its second year in office on Saturday, appears focussed on ensuring that fiscal consolidation gains momentum in the coming months.
Indicating this, a senior official says the government has taken several measures in a quiet way. For example, the Tamil Nadu Urban Habitat Development Board, earlier known as the Slum Clearance Board, has been advised to give up projects for construction of homes where there is no demand. Likewise, the Tamil Nadu Generation and Distribution Corporation (Tangedco) and the Tamil Nadu Civil Supplies Corporation have been told to take cost-saving measures. “We are particular that there should be no profligacy in spending,” the official points out.
A “continuous review” of the government schemes is under way. As part of this exercise, the government decided to scrap a marriage assistance scheme because of there were discrepancies. The review, coupled with the data purity project and the data-centric governance, is bound to yield fruits. “It may take some more time to witness tangible results,” the official explains.
An independent financial analyst says the government has shown signs of fiscal prudence, as seen in the way it has tightened norms for the cooperative loan waiver and its studied approach towards the ruling party’s electoral promise of giving ₹1,000 a month to every woman head of household.
Pointing out that Tamil Nadu’s lower growth rate in the gross monthly revenue collection of the Goods and Services Tax (GST) than those of many other States is an “area of concern,” the official says efforts are on to zero in on the factors responsible for the situation.
K.R. Shanmugam, Director, Madras School of Economics, says the State’s economy in the last one year was adversely affected by the second wave of COVID-19 and the impact of the northeast monsoon. Yet, it did better, perhaps because of a lower base in the previous year.
Calling upon the State to pay more attention to the reduction of outstanding debt and fiscal deficit than what it did in the last one year, he wants the government to make efforts to keep the debt level sustainable.
