TN suffers slow growth, high deficit, says report

Published On: 09, Dec 2017 | Source:

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Tamil Nadu has fallen behind in financial prudence in the last three years, with its fiscal deficit breaching targets and economic growth rates subdued.

While is a laggard in this regard, Tamil Nadu and are vulnerable in their fiscal position even as Karnataka and continue to have high growth and low deficits, according to a research by credit rating agency Crisil.

During 2012-13 and 2013-14, Tamil Nadu reported growth at around 6.9 per cent while its fiscal deficit was below 3 per cent. However, from 2014-15 to 2016-17, the state's fiscal deficit exceeded the 3 per cent threshold.

Tamil Nadu’s debt to GDP ratio is below the average for all states put together. It has a fiscal deficit 30 basis points above the Fiscal Responsibility and Budget Management (FRBM) target.

"Given that the state is yet to issue Rs 7,605 crore of UDAY bonds, its fiscal position remains vulnerable," the report said. "For Rajasthan, Tamil Nadu and Uttar Pradesh, which breached their FRBM targets, growth rates have been subdued, indicating that the increase in development expenditure is not manifest as higher growth," it added.

The contribution of labour-intensive sectors to Tamil Nadu’s gross state domestic product (GSDP) has grown slower than the national average. The average annual inflation based on the consumer price index (CPI) in the state during the period 2012-13 to 2016-17 was at 7.2 per cent against the all-India average of 6.8 per cent.