Tamil Nadu

Tamil Nadu’s capital spending healthy so far in 2021

 State’s capital expenditure for the current fiscal is around 14% of its total expenditure.

State’s capital expenditure for the current fiscal is around 14% of its total expenditure.

Tamil Nadu has spent ₹16,493.37 crore till October 2021 towards capital expenditure, which is about 39.1% of ₹42,180.96 crore, budgeted for 2021-22, according to provisional figures of Comptroller and Auditor General (CAG). Capital expenditure includes capital outlay which leads to the creation of assets such as schools, hospitals, and roads and bridges and helps in improving economic activity and creating jobs.

Capital expenditure also includes repayment of loans. Analysts said while the current trend is healthy, sustaining the level of capital expenditure would be challenging going ahead.

The State’s capital expenditure for the current fiscal is budgeted to be around 14% of its total expenditure. The capex spending so far is better than previous year, wherein 29% of the budgeted amount was incurred, Kavita Chacko, senior economist, CareEdge pointed out.

“Spending on capital outlay is not very evenly distributed across months in a year. There are two methods to understand whether the expenditure level is adequate or not- how it compares with the same month in previous years, whether the State catches up on spending by end of year and how it compares to other States, Mr. Saket Surya, senior analyst at PRS Legislative Research said.

“If we see past year trends on average, Tamil Nadu spends 29% of the budgeted capital outlay by October of that year. In comparison to this, it has fared better this year,” he pointed out. Mr. Surya said Tamil Nadu usually spends less on capital outlay than what it budgets. For instance, during 2015-20 it had spent 18% less. In comparison, Karnataka fares much better as its spending was only 3% less than the budgeted capital outlay during 2015-20.

Karnataka is among the States that observe the least variance in budget estimates and actual figures, he added, and pointed out that even Karnataka had spent 39% of its budgeted capital outlay till October 2021. Going by these trends, at the moment, Tamil Nadu seems very well poised to meet its capital outlay target by March 2022, he added. Mr. Surya said the Centre had released the entire back-to-back GST compensation loan for the financial year 2021-22, which had helped in capital spending. Tamil Nadu got ₹8,095 crore on this account, which is about 19% of its budgeted capital outlay.

According to him, sustaining the capital outlay would be challenging for Tamil Nadu due to issues like high interest payment, in case of discontinuation of GST compensation grants after June 2022 and high level of expenditure towards salaries, interest and pension and revenue deficit. Tamil Nadu is estimated to spend about 66% of its revenue receipts on payment of salaries, interest, and pension in 2021-22.

In comparison, average of all States is about 55% in 2021-22, Mr. Surya said.


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Printable version | May 27, 2022 1:49:22 pm | https://www.thehindu.com/news/national/tamil-nadu/states-capital-spending-healthy-so-far-in-2021/article37993141.ece