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Welfare measures in focus as DMK govt presents budget
The budget pushed the envelope on welfare measures, a hallmark of Dravidian politics, while seeking to improve rather than worsen the state’s public finances.
Tamil Nadu finance minister Palanivel Thiaga Rajan tried to achieve a balance between welfarism and fiscal prudence while presenting his third consecutive budget for the state on Monday
The budget pushed the envelope on welfare measures, a hallmark of Dravidian politics, while seeking to improve rather than worsen the state’s public finances. And its political messaging was focused on blaming the opposition AIADMK for allegedly presiding over economic mismanagement during its two consecutive terms in power ending 2021 and the central government for not giving the due share of the states and undermining fiscal federalism.
The DMK- led government has launched a cash transfer programme Magalir Urimai Thogai (MUT; women’s rights assistance) which will give ₹1000 per month to women in eligible households. With a budgetary allocation of ₹7000 crore in the budget, this means that 5.8 million women in the state could receive ₹12,000 per year. There were 18.5 million households in Tamil Nadu according to the 2011 census.
Rajan described MUT as the “biggest cash transfer schemes implemented by any state Government in the history of this country” and claimed that this would be “a game changer in the socio-economic life of women .”
“Women heads of families who have been affected adversely by the steep increase in cooking gas price by the Union Government and the overall price rise, will be greatly benefited by this scheme,” he added. The operational guidelines outlining the eligibility to avail this scheme will be released soon, the minister said.
For the finance minister, the biggest achievement has been in reducing the annual revenue deficit – it is the difference between revenue expenditure and revenue receipts – from around ₹62,000 crore in 2020-21 to around ₹30,000 crore in the Revised Estimates (RE) for 2022-23. Fiscal deficit – it is the difference between total receipts and total – as a share of GSDP for Tamil Nadu has come down from 4.6% in 2020-21 to 3% in the 2022-23 RE numbers. To be sure, the budget estimate for 2023-24 shows that the fiscal deficit is expected to increase to 3.25%.
Tamil Nadu is expected to have a nominal GSDP growth of 14% in 2022-23 which is lower than the 15.9% nominal growth for the Indian economy during the period. While the Budget speech compared real growth for All India GDP with nominal growth for Tamil Nadu, it did not give a real growth number for Tamil Nadu for 2022-23. Tamil Nadu’s GSDP is expected to grow at 14%, 13% and 12% in 2023-24, 2024-25 and 2025-26 respectively.
While the budget speech talks about making Tamil Nadu a trillion-dollar economy it also listed three key macroeconomic challenges for the state’s economy. They are, an elimination of the revenue deficit by raising the tax-GSDP ratio, targeting revenue spending to make sure that it does not lead to inflation and reducing the proportion of non-discretionary spending which is currently 85% of the state’s total spending.
“Despite multiple representations from the States, the Union Government has refused to extend the original GST Compensation period (of Guaranteed 14 per cent Year-over-Year growth) beyond the 5 years that expired on June 30th, 2022 and hence States will be deprived of a vital source of Revenue from now on”, Rajan said in his budget speech.
On the expenditure front, the total revenue expenditure is estimated to reduce to ₹276,135.68 crore, compared to ₹2,84,188.45 crore in the BE 2022-23. In the coming year, the total revenue expenditure is expected to be ₹308,055.68 crore.
The Tamil Nadu government plans to spend ₹365,321 crore in the fiscal year 2023-24, which is 13.7% from 2022-23 RE.
On the infrastructure front, in Chennai, a new four-lane flyover has been announced between Saidapet and Teynampet at a cost of ₹621 crore. And to ensure all-weather connectivity, particularly during monsoon and floods, construction of high-level bridges in lieu of 215 causeways has been taken up at a cost of ₹996 crore. A sum of ₹10,000 crore has been allotted towards Chennai Metro Rail Project in this Budget.
Tier-2 cities will also benefit from the budget’s scheme as the Government has decided to implement the Metro Rail project in Coimbatore (Avinashi Road- Sathyamangalam Road) and in Madurai at an estimated cost of ₹9,000 crore and ₹8000 crore respectively. The state also has a ‘Comprehensive Development Plan’ for the two cities.
Leader of opposition and AIADMK’s interim general secretary Edappadi Palaniswami said that the budget will not bring relief to the common people.
“After announcing that the ₹1,000 cash assistance will be given to all households, the DMK government has made a somersault to say that it is only for eligible households. What is their eligibility criteria? How will ₹7,000 crore be enough for this? Nobody knows the answers,” said Palaniswami.
BJP state president K Annamalai said that since the government plans to roll this out in September, they have to offset the amount to be paid during the months from when the DMK came to power.
