Chennai, Mar 18 (IANS): Tamil Nadu Finance Minister Palanivel Thiaga Rajan on Friday said the global supply disruption owing to Russia-Ukraine war can affect the state's tax revenues for FY23.

Presenting the state budget for 2022-23 in the Assembly, he said: "The coming financial year is likely to be challenging and replete with uncertainties. The ongoing war in Ukraine can disrupt the global economic recovery."

According to him, the global supply disruptions and demand shocks, including those triggered by the war, can adversely impact the state's tax revenue.

He said economists believe that inflation and interest rates may rise.

Rajan also said that it is premature to conclude that Covid has been eliminated. The full impact of dearness allowance revision, and the phased impact of loan waiver will be experienced next year. In addition, the State will have to absorb the full losses of the state power utility TANGEDCO, he added.

He said now the economy bouncing back, the state is rebalancing the priorities and focus on social infrastructure and development without compromising on welfare schemes.