'Tsunami has no revenue impact on affected States'
Thursday, March 17 2005 14:41 Hrs (IST) - World Time - 
New Delhi:
The tsunami will have no impact on the revenues of the affected States but there could be strain on the expenditure and consequently on fiscal deficit, according to a joint report of Asian Development Bank (ADB), UN and World Bank.
The report submitted recently to Government, however, said that the impact of higher spending on fiscal deficit could be mitigated by other sources of funds including more assistance from Centre, external agencies and the market borrowings.
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Though it found no impact on revenues of Tamil Nadu, Kerala and Andhra Pradesh, the report said that it was difficult to assess the fiscal impact for Pondicherry, since it was a
Union Territory.
Observing that Tamil Nadu's growth remained intact though economic activities were affected in coastal belt, it said that the tsunami will have no impact on the revenues of the State, as those worst hit by the disaster fishermen, vendors, small entrepreneurs and agriculturists belong to informal sector.
Their (informal sector's) contribution to the consumption tax was also relatively "insignificant", it said. How you can help Tsunami Victims
However, the tsunami would have an impact on expenditure side given that reconstruction cost was over 2.0 per cent of the Gross State Domestic Product (GSDP).
Tamil Nadu, whose fiscal deficit was projected at 3.3 per cent of GSDP in 2005-06, was expected to soar to 3.9 per cent after factoring in the additional expenses of Rs 350 crore for relief and the Rs 3,772 crore for reconstruction costs.
The State cannot spend the entire amount in one single year and much depends on "fiscal headroom" available to it after meeting its committed expenditure as salaries, wages, pension and interest, it said.
PTI
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