Even as India gears up for the presentation of the Union Budget on February 1, experts say that Tamil Nadu could be the target of popular sops. Over the past year, Tamil Nadu has sought central funds for a number of pressing issues - from basic grant for local bodies to funds for dealing with devastation in the coastal and delta districts by Cyclone Gaja. With the 2019 General Elections also on the anvil in the coming months, the budget is expected to bring good news for the state.
However, the question remains whether it will be a full budget or an interim one on February 1. An interim budget, presented in the election year, is similar to a full budget with a complete report card of accounts, including both expenditure and receipts. It differs from the full budget in that it will address only basic expenses, and not make major policy changes ahead of the elections.
A full budget is likely to be better news for Tamil Nadu, says Rafeeq Ahmed, President of the Tamil Nadu of Leather Association. “If there is going to be a full budget, then Tamil Nadu will definitely be looking at support for obvious reasons, like the upcoming Lok Sabha elections. The BJP is likely to use the budget to woo and gain support in untapped areas of the state. If a full budget is presented, gains for Tamil Nadu may come from demands the state has put forth.” Further, Rafeeq says, the state’s IT industry, hardware sector, defense and textiles industry are also in need of government backing.
However, economist Prof Venkatesh Athreya points out that if an interim budget is presented as expected, it is not clear how much focus Tamil Nadu would be getting.
“Owing to many events since 2014, the general sentiment in Tamil Nadu is against the BJP,” Prof Venkatesh Athreya explains. “It is possible that the central government can announce some sops for the people. But big financial commitments are unlikely if they are to follow fiscal deficit norms.” He also cautions that the hype around the budget seems grandiose and more for optics than real financial implications at this point. He adds that the people of Tamil Nadu would likely not have great expectations from the central budget in the first place.
Venturing a guess into what the centre may announce for the state, Prof Venkatesh Athreya says, “There may be some more relief announced for Cyclone Gaja as well as further allocations for AIIMS. Tamil Nadu is a state with several micro, small and medium enterprises. There could be some plans for these industries as well."
However, the economist also points out that the Comptroller and Auditor General of India's report for 2016-2017 had already shown that the central government was borrowing via off-budget channels to fund capital and revenue expenditure, to try and 'dress up' the slipping fiscal deficit. This essentially means that the government's plan to lower the fiscal deficit for the year through the targets laid out in the budget i.e. the difference between total revenue and total expenditure of the government must be viewed with some caution.