The Hindu : Tamil Nadu News : Savings show marked decline

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Saturday, Mar 24, 2007
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Tamil Nadu

Tamil Nadu

Savings show marked decline

Special Correspondent

CHENNAI: Health, school education and higher education have together cornered about Rs.10,000 crore outlay in the "inclusive budget" presented by Finance Minister K. Anbazhagan in the Assembly on Friday. "You cannot ask for a more caring government," said Finance Secretary K. Gnanadesikan.

"The total capital expenditure of the Government, including loans and advances [net] in 2007-08 is projected at Rs.7,699.18 crore. This coupled with the revenue deficit, will result in a total fiscal deficit [FD] of Rs.7,800.56 crore. The projected fiscal deficit constitutes only 2.84 per cent of the Gross State Domestic Product [GSDP]," Mr. Anbazhagan told the Assembly. The FD should not exceed 3 per cent of the GSDP, keeping in line with the Fiscal Responsibility Act, 2003.

Worrisome signals

The considerable revenue deficit, the increase in salaries and pensions, huge addition to the government workforce and the declining small savings are worrisome signals.

An additional one lakh employees would mean a recurring expenditure of about Rs.1,000 crore, said an official. Mr. Gnandesikan defended the recruitment drive contending that the government needed to fill up a certain number of vacancies to ensure efficient functioning.

In recent times, it was only in 2005-06 that there was no Revenue Deficit (RD); in fact there was a surplus of Rs.1,951 crore. But this has been used up in 2006-07 and in the revised estimates, the RD stood at Rs.247 crore. The budget estimate for 2007-08 shows a RD of Rs.101crore.

The FD over GSDP has increased over the past two years to 2.84 per cent from a healthy 1.06 per cent in 2005-06 and 2.74 per cent in 2006-07 (revised estimates).

Savings (special securities issued to the national savings fund of the Centre) has shown a marked decline from Rs.6,144 crore (2005-06 accounts) to Rs.4,200 crore (revised estimates 2006-07). The budget estimates for 2007-08 has projected a further decline to Rs.3,700 crore.

An increase in savings means a ready availability of cash to finance capital expenditure.

The increase in State taxes too projected for 2007-08 is a conservative Rs.30,988 crore, about Rs.3,000 crore over that of the 2006-07 revised estimates (Rs.28,046 crore).

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