Sanction for Phase II of the Chennai Metro Rail and a decision on the location of an All India Institute of Medical Sciences are big-ticket expectations from Tamil Nadu when the Union Budget is presented on Thursday.
The State government will keep a keen eye on the allocation of funds in the post-GST regime.
With no major announcements, last year’s budget was a disappointment for the State. Tamil Nadu had sought a financial package for deep-sea tuna fishing, sanction for setting up an AIIMS and a speedy release of dues for centrally sponsored schemes in the 2017-’18 Budget.
The budget will be watched by the Tamil Nadu government from a post-GST prism. “All States have been facing delays in the release of funds for GST compensation and other Central grants which affects liquidity,” said an analyst tracking State finances.
Various sectors are hoping that the Budget will address the pain caused by the GST. “We are expecting measures to boost exports, which are under stress post-GST. We also wants adequate fund allocation for existing schemes,” P. Nataraj, chairman of the Southern India Mills Association said.
At a pre-Budget meeting with the Union Finance Minister in New Delhi on January 18, deputy Chief Minister O. Panneerselvam, who handles the Finance portfoilio, sought the speedy release of funds and increased budget allocation for Centrally-sponsored schemes.
Given Tamil Nadu’s tight financial position, the timely release of funds will be critical. Under the GST, most of the State taxes have been subsumed except for those on petroleum products, liquor and stamp duty, in addition to local body taxes. The Centre has agreed to compensate the States for revenue losses.
The government has indicated that its revenue deficit would increase over and above the budgeted ₹15,930 crore for 2017-18. The State has received ₹632 crore so far as GST compensation.
Mr. Panneerselvam said on January 18 that the Government of India owes the State government ₹4,500 crore for the period between 1996 and 2015 for various Central schemes. The Deputy CM also requested that the Union government release the ₹2,420 crore owed to the State as Central Sales Tax compensation.
Given the concern over the industrial climate in Tamil Nadu, any industry incentives will be keenly watched. Incentives for electric vehicles will be a major boost for the State's automobile ecosystem.
“The State has big potential for electronics manufacturing, but has not picked up after the shutdown of the Nokia plant. Any incentives for electronic manufacturing would be welcome,” P. Ravichandran, chairman, CII, Tamil Nadu & president, Danfoss Industries Pvt Ltd, said.
The State unit of the BJP has lobbied for a Defence Manufacturing Corridor for Tamil Nadu. Minister of State for Finance Pon Radhakrishnan met Defence Minister Nirmala Sitharaman on January 24 in this regard.
As per Mr. Radhakrishan's proposal, the corridor will attract an estimated Rs. 1,25,000 crore in investments and create four lakh jobs. The plan envisages a corridor linking Bengaluru and Kattupalli and passing through Hosur, Coimbatore, Tiruchirappalli, Kalpakkam and Avadi.
