E-Paper
Tamil Nadu presents ₹3.48L cr budget; focus on infra, ‘7 Tamil dreams’
Tamil Nadu finance minister Thangam Thennrasu on Monday presented the state budget for 2024-25 announcing a total outlay of ₹3.48 lakh crore
Tamil Nadu finance minister Thangam Thennrasu on Monday presented the state budget for 2024-25 announcing a total outlay of ₹3.48 lakh crore, along with a revenue deficit of over ₹49,000 crore as the government promised an increased focus on infrastructure and expanding welfare schemes encompassing “seven Tamil dreams” with no new populist announcement, aiming at fiscal prudence.
He blamed the Bharatiya Janata Party (BJP)-led central government for stifling the state’s finances. “We are driving our economy forward amidst several unanticipated challenges and constraints,” Thennrasu said while presenting his first budget after taking over the portfolio from Palanivel Thiaga Rajan in May 2023.
The nominal gross state domestic product, or GSDP, growth rate is projected to be 15.89% in 2024-25 through “investment, employment and policy initiatives for comprehensive and sustainable growth”, he said. The nominal GSDP growth for 2023-24 is pegged at 15.14%, he said, adding that GSDP will rise 16% per annum in subsequent years.
The 2023-24 fiscal was challenging for Tamil Nadu’s finances due to natural disaster-led flooding in Chennai and in the four southern districts, he said. “On the other hand... the state is being meted out step-motherly treatment by the Union government, which has completely forgotten the principles of cooperative federalism,” the finance minister said.
Thennarasu prepared the budget with seven major objectives, or pillars, of the government – social justice, welfare of marginalised, transforming young Tamils as global achievers, a knowledge-based economy, equality focused on welfare of women, sustainable green future, and Tamil language and culture.
Under the budget, ₹44,042 crore was allocated for school education, ₹20,198 crore for health, and ₹8,212 crore higher education.
The state’s revenue deficit, meanwhile, is pegged at ₹49,279 crore as per Budget Estimates (BE) 2024-25. The revenue deficit in 2023-24 Revised Estimates (RE) increased to ₹44,907 crore, as compared to ₹37,540 crore in BE. The revenue deficit as a share of GSDP has increased from 1.32 in 2023-24 (BE) to 1.64% in 2023-24 (RE) and was pegged at 1.56% in 2024-25 BE, an official in the finance department not wishing to be named told HT.
The state attributed the rise in revenue deficit to mandated funding of gross losses of state distribution companies under which it provided the Tamil Nadu Generation and Distribution Corporation (TANGEDCO) ₹17,111 crore in 2023-24 and has budgeted to pay another ₹14,442 crore in 2024-25. The state described this as an “unprecedented allocation”.
In 2024-25 BE, the capital expenditure is estimated at ₹47,681 crore – a growth of 12.11% over 2023-24 RE. The total revenue expenditure is estimated to be ₹3,17,484 crore in 2023-24 RE as compared to ₹3,08,056 crore in 2023-24 BE.
”Despite the increase in revenue expenditure on account of loss funding to TANGEDCO to the tune of ₹15,594 crore and disaster relief and restoration to the tune of ₹2,041 crore, the increase has been contained to ₹9,428 crore through prudent fiscal management,” the finance minister said.
The fiscal deficit for 2024-25 is pegged at ₹1,08,690 crore, which is 3.44% of the GSDP, he said.
By following the recommendations of the 15th Finance Commission, the DMK government said that it is following the glide path of fiscal consolidation and has reduced the fiscal deficit from 3.46% in 2022-23 (Actual), to 3.45% in 2023-24 RE, and finally to 3.44% in 2024-25 BE.
The fiscal deficit in 2023-24 RE went up to ₹94,060 crore as against ₹92,075 crore in 2023-24 BE – as a proportion of GSDP it went from 3.25% to 3.45% respectively – which the state attributed to a downward revision in GSDP estimates.
The state lost ₹6,000 crore in borrowing space in the current year as a consequence of the Union government fixing GSDP growth for calculating the net borrowing ceiling at 8% while the state has achieved nominal growth of 15% in the last two years.
The state’s own tax revenue is pegged at ₹1,95,173 crore in 2024-25 BE, which saw a growth of 14.7% over 2023-24 RE. The collections in 2023-24 RE are estimated at ₹1,70,147 crore as against ₹1,81,182 crore estimated in the previous budget.
“This reflects a reduction from the anticipated growth levels of 20.61% in budget estimates to 13.26% in RE, owing to the severe impact caused by natural calamities,” the finance minister said.
He added that the state’s non-tax revenue is estimated to be ₹30,381 crore in 2023-24 RE, which is a substantial increase over budget estimates. “This is a result of the revenue augmentation measures taken by this government including rationalisation of rates and improvement in collection efficiency,” he said.
In 2024-25 BE, capital expenditure is estimated at ₹47,681 crore, which is a growth of 12.11% over 2023-24 RE. The government said that net loans and advances are estimated at ₹11,733 crore, owing to an increase in expenditure for the Chennai Metro Rail project from ₹9,000 core in the current year to ₹12,000 crore in the upcoming fiscal this year.
“This government is investing heavily in infrastructure projects and is committed to increasing capital expenditure in the state,” Thennarasu said.
The alleged “inordinate delay” by the Union government in approving the Chennai Metro Rail Project has “forced the state to incur the entire project expenditure from its budgetary resources” and the termination of Goods and Services Tax (GST) compensation regime since July 2022 has caused a revenue shortfall of approximately ₹20,000 crore per annum, he said.
“This constrains the state from utilising the funds for other welfare measures and development activities,” said finance secretary T Udhayachandran in a post-budget press conference. However, the state expanded its welfare programs such as the cheif minister’s breakfast scheme, free bus travel to women, cash assistance for those enrolling in higher education including transgender.
As the GST compensation dues will completely end from the coming year, there is a reduction in Grants-in-Aid in the Budget Estimates 2024-25 as compared to the Revised Estimates 2023-24 to ₹23,354 crore and share in central taxes at ₹49,755 crore this year.
“...the Union Government continues to stifle our state by exercising arbitrary and discriminatory control over our finances. The imposition of stringent conditions on the borrowing ceiling by the Union Government has unduly restricted the ability of the State to raise resources to fund its development initiatives,” the finance minister said.
The revenue deficit is huge. It has gone up by ₹15,000 crore,” said former union finance secretary who is also part of an independent economic advisory council for the Tamil Nadu chief minister. “The revenue generation is also not what was expected. But it is a safe budget and has some good announcements for the utterly poor.”
Proactive initiatives to improve industrialization and foster a favourable business climate will translate to larger revenues to the state and place its finances in a far more comfortable situation and important to maintain a sustainable debt,” said Vijay P Chordia, president, Hindustan Chamber of Commerce. “Industry specific technology measures such as establishment of 10 mini textile parks for Handlooms and Textiles to improve quality of products is most welcome given the remarkable potential of the industry in generating employment and foreign exchange,” he said.
Tamil Nadu BJP’s vice president Narayanan Thirupathy said that the union budget has allocated 11.11 lakh crore for the state for 2024-25 but unlike other states like Gujarat which has increased its capex by 29%, Tamil Nadu has only increased it by 12%. “They only to know blame the Centre. This year there has been more devolution of funds compared to last year so on what basis are they finding fault with the GST compensation not being expended?” asked Thirupathy. “The cabinet has not yet cleared the Metrol rail project. Only after due approvals can funds be released. This budget has copy pasted last year’s budget.” Leader of opposition, AIADMK’s Edappadi Palaniswami said, “This is the fourth budget of the DMK regime, it is mere jugglery of words, there are no schemes for the people, there is no big development plan.”
