Tamil Nadu government has indicated it will borrow ₹23,500 crore in the first quarter of fiscal 2022-23, as per the details released by the Reserve Bank of India.
The State governments/Union Territories are expected to borrow ₹1,90,375 crore in the April-June 2022 period through issue of bonds called the State Development Loans (SDLs) as per the data. In the comparable period during first quarter of 2021-22, the Tamil Nadu government had indicated it will borrow ₹23,450 crore, but the actual amount raised was slightly higher at ₹24,000 crore.
According to ratings firm ICRA Ltd, Maharashtra has indicated highest borrowing of ₹32,000 crore in the first quarter of FY2023. The indicated borrowing of Maharashtra, Tamil Nadu, Uttar Pradesh (₹27,000 crore) and Andhra Pradesh (₹17,000 crore) account for nearly half of the total quantum, it added. In fiscal 2022, the Tamil Nadu government borrowed ₹87,000 crore.
As per the Budget estimates for 2022-23, Tamil Nadu plans to borrow a net amount of ₹90,116.52 crore, excluding an amount of ₹6,500 crore expected from the Centre towards back-to-back loan for GST compensation shortfall.
In his Budget speech, State Finance Minister Palanivel Thiaga Rajan said the fiscal deficit was expected to be ₹90,114 crore (3.63% of Gross State Domestic Product), excluding the GST compensation.
Fiscal deficit is a situation when the total expenditure exceeds total revenue. Revenue deficit (implies that revenue expenditure is higher than revenue receipts) could reduce from ₹55,272.79 crore in the revised estimates for 2021-22 to ₹52,781.17 crore in 2022-23, he said.
India Ratings and Research expected the fiscal deficit of Tamil Nadu to be lower than estimated. Conservative assumptions for tax devolution and optimistic assumptions regarding capital expenditure in the Budget estimates for 2022-23 could result in a better performance on the fiscal deficit front, it added.
As per 2022-23 Budget estimates, Tamil Nadu was likely to receive ₹33,311 crore as its share of Central taxes, which was 1% lower than the revised estimates for 2021-22. India Ratings said Tamil Nadu’s expectations on its share of Central taxes were conservative, given the budgeted growth of 9.6% projected by the Union government in FY23 for tax devolution to States. As a result, it expected the State’s revenue receipts to be higher in FY2023 than the budgeted amount of ₹2,31,407.28 crore.
ICRA said it was unclear what level of tax devolution the States had assumed while preparing the borrowing calendar for Q1, FY2023. The actual amount of devolution released in Q1, FY2023 may alter the size of the actual SDL issuance from the indicated amount.
Additionally, the front loading of the pending GST compensation for FY2022 and the timely release of the GST compensation for Feb-Jun 2022 could lead to some States issuing lower than indicated amounts, it added.
