TN is likely to borrow 25,800 crore in Q4 2022


This is slightly higher than the 25,000 crore borrowed in the same period last year

The government of Tamil Nadu has said it will borrow 25,800 crore yen in the fourth quarter (January-March) of fiscal year 2021-22 by auctioning bonds, known as state development loans, according to the schedule. Reserve Bank of India loan. This is slightly higher than the roughly 25,000 crore borrowed during the same period last year.

From April to December 2021, the state had borrowed 52,000 crore, slightly above the 51,950 crore reported for the period. However, it was 17% lower than the 63,000 crore borrowed between April and December 2020.

State development loans are the primary source of borrowing for states to finance their budget deficit that arises when total expenditure exceeds total revenue.

A senior state government official said Tamil Nadu’s borrowing plan was in line with what was stated in the revised budget estimate for 2021-2022.

Excluding the 8,095 crore GST compensation received as a back-to-back loan, Tamil Nadu’s budget deficit is estimated at 92,529.43 crore in 2021-2022, which represents 4.33% of domestic product. State gross (GSDP). Accepting the recommendations of the 15th Finance Committee, the Union government authorized states to borrow up to 4% of the GSDP for 2021-2022, with an additional limit of 0.5% for those undertaking critical reforms of the electrical sector. And one of the reforms is the introduction of direct transfer of profits to all farmers.

In his budget speech, Tamil Nadu Finance Minister Palanivel Thiaga Rajan said the state is confident it will avail itself of 0.35% of the additional 0.5% of the GSDP allowed, without compromising the core principle state to maintain the free supply of electricity to the agricultural sector. .

So far in fiscal year 2021-2022, government revenue has improved, but spending has remained higher. Total revenue stood at 1,18,992.48 yen in April-November 2021, up 22 percent from last year, while total expenditure stood at 1,49,044.19 yen. This resulted in a budget deficit of 30,051.71 crore as in November 2021. The revenue deficit (implying that expenditure from revenue is greater than revenue) stood at around ₹ 7,869.87 crore.

According to the RBI, the total amount of borrowing in the State and Union Territories market for January-March 2022 is expected to be 3,09,971.74 crore.

According to the ICRA rating agency, states such as Karnataka and Maharashtra reported significantly higher borrowing in the fourth quarter of 2022. This may be due to fears that GST clearing could be halted beyond June 2022. and the fear that the borrowing limit will be reduced in 2023.

The Tamil Nadu government has urged the Union government to maintain GST compensation until at least June 30, 2024, arguing that its revenues have yet to recover from the blow from the COVID-19 pandemic. During a pre-budget meeting with Union Finance Minister Nirmala Sitharaman, Rajan urged the Center to authorize the 5% loan from GSDP for the 2022-2023 fiscal year, without any conditions. His argument was that states had incurred huge expenses to fight COVID-19 and suffered a substantial reduction in their income.

Any severe impact from the third wave of the pandemic would further strain Tamil Nadu’s finances.

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