The Hindu : Fiscal discipline pays

Online edition of India's National Newspaper
Wednesday, Mar 31, 2004

Tamil Nadu

Tamil Nadu

Fiscal discipline pays

By R.K. Radhakrishnan

CHENNAI, MARCH 30. As the financial year is drawing to a close, the State Government is poised to exceed the approved Rs. 7,000-crore Plan allocation for the current year. It has also set apart enough for the ballooning financial demands necessitated by natural calamities.

For the first time since fiscal reforms were introduced, the Government will comfortably use up earmarked resources and, possibly, exceed the Planning Commission outlay. The Plan size is fixed based on the State's capacity to raise resources from its budget and special purpose vehicles and spend the finances raised.

Financial experts point out that after the All-India Anna Dravida Munnetra Kazhagam Government took over in 2001, the Plan size for 2001-2002 was fixed at Rs. 6,200 crores. But it had to be scaled down by about Rs. 1,000 crores because of a bad financial position. The next year the Plan size was revised upward by Rs. 550 crores to Rs. 5,750 crores — which was lower than the original Plan allocation for 2001-02. The budget papers show that this target has been achieved.

According to available statistics, till January-end more than 85 per cent of the allocations were utilised.

The main reason was presentation of the final supplementary estimates in January, a clear three months ahead of the closure of the financial year. This was also a departure from the practice of the earlier years when the final supplementary estimates were presented at the very end of the financial year.

Attracting foreign investments

Tamil Nadu is also inching towards the top slot in foreign direct approvals. With many incentives and single-window schemes in operation, officials expect Tamil Nadu to become the top State in attracting investments from abroad.

The only worry for the Government is the looming drought. This comes after successive years of monsoon failure and Karnataka's reluctance to release water in the Cauvery. The State has earmarked adequate resources for calamity relief but the growing unavailability of water and fodder means their being transported over long distances at considerable cost.

In the budget estimates for the current year, an allocation of just over Rs. 276 crores was made for calamity relief. But in the revised estimates — as seen in budget documents — it has been doubled and now stands at Rs. 567 crores.

Officials are not sure whether even this quantum of relief will be adequate in the face of yet another drought. But a redeeming feature is that the State will be in a position to release finances for drought relief on a war-footing, largely because of its fiscal discipline over the past few years, according to an official.

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