Chennai, March 23: Tamil Nadu will have to devise concrete strategies to maintain its fiscal plans within limits if its gross state domestic product (GSDP) fails to grow at the expected 4.61 percent, rating agency India Ratings and Research said Saturday.
The rating agency in its report “Tamil Nadu’s Weak Growth Suggests Fiscal Slippages” said the state’s GSDP growth as per advance estimates could be 4.61 percent in fiscal 2012-13 mirroring its expectation of a fall in growth.
India Ratings said: “If the state GSDP growth underperforms expectations, concrete strategies would be required to keep its fiscal plans on track.”
Presenting the budget Thursday, state Finance Minister O.Panneerselvam said that the the severe drought and crop failure has hit the state badly in the primary sector, which has ultimately affected service sector growth as well.
“The general economic slowdown in the national economy and shortage of power has hampered growth in the manufacturing sector,” he said.
According to India Ratings, the current economic climate and power crisis have impacted the industrial production outside the capital (Chennai).
“The global links of the textile and auto sectors in the past have fatally affected the state’s economic performance,” the rating agency said.
It said the government has the financial strength to shoulder additional liability and debt dynamics towards the financial restructuring of its power distribution company.
The state debt-GSDP ratio will be at 18.98 percent this fiscal and likely to be 19.97 percent next fiscal, the rating agency said.
Terming the state’s revenue projections as optimistic, India Ratings said it may result in low revenue realisations in 2013-14.