Tamil Nadu Budget 2023: Revenue deficit down 50 percent in two years

In only his third budget speech since the DMK Government came to power in 2021, Tamil Nadu Finance Minister P Thiagarajan on Monday delivered the good news — “The annual revenue deficit of Rs 62,000 crore, which our government inherited when we assumed office in 2021 has reduced to around Rs 30,000 in the revised estimates of the current year,” said the state FM, speaking in Tamil.

The announcement was significant given Tamil Nadu’s recent track record of widening fiscal and revenue deficit. Several experts had pointed to the state’s focus on social spending — an element of its finances that has been referred to as ‘freebies’ by critics and observers alike.

A year ago, revenue deficit stood at just under Rs 53,000 crore, which although significant was still a marked reduction from Rs 62,000 crore, which the DMK “inherited” when it assumed power in 2021. Thiagarajan had hinted that some tough decisions, including property tax hikes, would have to be taken, to tide over the fiscal situation.

Incidentally, social spending received renewed focus in the Tamil Nadu budget. For a start, the DMK has made good on its election promise in 2021. Starting September 15, 2023, women heads of family in the state will receive a promised sum of Rs 1,000 per month — a budgetary outlay of Rs 7,000 crore has been set aside for the scheme, Thiagarajan said.

In a move to increase school attendance, Chief Minister MK Stalin had announced the start of a breakfast scheme in select government schools last year. Thiagarajan said free breakfast would be provided to students at all government schools in Tamil Nadu starting next fiscal.

“The Chief Minister’s Breakfast Scheme will be extended to primary school students at all of the 30,122 government schools in the state from the coming academic year,” said Thiagarajan, adding, “Rs 500 crore has been allotted for this scheme, which will benefit 18 lakh students.”

The move to spend big on social schemes in schools in order to increase attendance, has been a tried-and-tested approach of the DMK that has proven to be successful.

Thiagarajan pointed out that ever since he announced financial assistance of Rs 1,000 per month for every girl student in classes 6 to 12, female enrollments at government schools went up by 29 percent, which translated to 20,477 students.

“To transform the ever lively and vibrant Madurai as an engine of development for the Southern Region, the Metro Rail project will be implemented in the city at an estimated cost of Rs 8,500 crore,” Thiagarajan said. The Coimbatore Metro Rail project would also receive a near-identical allotment of Rs 9,000 crore, he added.

While industrial parks are to be built in Coimbatore, Vellore, Kallakurichi and Virudhunagar at an outlay of Rs 410 crore, Salem is expected to see a textile park built thanks to a budgetary outlay of Rs 880 crore.

The Tamil Nadu Government has decided to reinstate real estate guideline values prevalent as of June 8, 2017. For context, the state decided to slash property guideline values by 33 percent in a government order dated June 9, 2017, while increasing registration fee on sale deeds from 1 percent to 4 percent.

“There have been constant requests from stakeholders to revise guideline value in tune with market prices, and to reduce registration fee,” said Thiagarajan, adding, “Since the market has risen sharply, as an interim measure, the government has decided to revise the guideline value to the rates prevailing till June 8, 2017 and reduce the registration fee to 2 percent.”

The decision comes roughly a year after the state finance minister announced property tax hikes across Tamil Nadu. However, Thiagarajan added the slash in registration fee would “greatly benefit the poor and middle-class, especially those who avail of bank loans to buy homes.”