homeeconomy NewsTamil Nadu Budget Budget 2024: No change in fiscal deficit even as revenue deficit widens
Tamil Nadu Budget Budget 2024: No change in fiscal deficit even as revenue deficit widens
In his maiden budget speech, Tamil Nadu Finance Minister Thangam Thennarasu also announced big-ticket allocations towards renewable energy development, Metro Rail expansion, housing, and the construction of hostels for working women.
Tamil Nadu Finance Minister Thangam Thennarasu presented his maiden budget on the floor of the state assembly and revealed that the state's fiscal deficit had been reduced, albeit by negligible margins. He added that the revenue deficit too increased by 8.87%—from ₹44,907 crore in FY23 to ₹49,279 crore this fiscal.
The good news, however, is that the state expects revenue in FY25 to grow by 14.7% to about ₹1.95 crore, which it hopes will bring down the deficit number again. Later, in an exclusive chat with CNBC-TV18, the state's finance secretary, T Udhayachandran, admitted that while the state could have reduced its fiscal deficit more, there isn't a reason to worry.
"Tamil Nadu's fiscal deficit is within the norms prescribed by the FRBM (Financial Responsibility and Budget Management) Act," said Udhayachandran. "While the fiscal deficit has only slightly reduced, we are hopeful of pushing it down further in the years to come."
The finance secretary also said that the state's twin calamities in December—Cyclone Michaung and the Tuticorin Floods—had hampered revenue growth and played a key role in the widening revenue deficit. "The growth energies of Chennai and other southern districts have thus been impacted, but we are hopeful that the deficit number will improve next year."
That hope finds validation in Finance Minister Thennarasu's announcement that the state's revenue would increase by 14.7% to ₹1.95 crore in FY25. "We are banking on revenue from registrations and registration of motor vehicles in particular to be a key growth driver of revenue," said Udhayachandran.
The secretary added that the department was also using data analytics to plug leakages and improve revenue augmentation: "We are adopting modernisation and data analytics to improve our revenue growth—data is being used to prevent leakages and evasion." Moreover, a series of reforms introduced last fiscal could result in revenue growth over the next 12 months.
What will also be a source of relief to Tamil Nadu is a projected increase (7.4%) in Tamil Nadu's share of central revenues. However, the secretary was quick to clarify that this, in no way, changes the state's view that the Centre's revenue-sharing formula needs to change. "It is tax-buoyancy that has resulted in the sizable increase in tax share this year," said Udhayachandran.
Welfare Measures Continue
In keeping with the trend witnessed in state budgets in the past, Thennarasu announced a number of welfare measures for the state. Among the headlines was the 'Tamizh Pudhalvan' scheme, which aimed at providing a monthly allowance of ₹1,000 to male students pursuing higher education, after studying in a government-run school. In March 2022, then-FM Palanivel Thiaga Rajan announced a similar scheme for female students.
The finance minister also allocated ₹60,000 crore towards the setting up of hydroelectric power plants across the state, in order to help generate a self-set target of 100 billion units of renewable energy from Tamil Nadu.
A sum of ₹12,000 crore has also been set aside towards the expansion of Phase 2 of the Chennai Metro Rail, and another allocation of ₹3,500 crore has been set aside towards the construction of 8 lakh homes for the state's homeless. The state also allocated ₹1,000 crore towards the development of smart classrooms in existing government schools.
A sum of ₹26 crore has also been set aside towards the construction of hostels for working women, even as the state said it would help set up 10,000 women self-help groups, with financial assistance of ₹35,000 crore by way of working capital through loans. However, Udhayachandran said that in light of the widening fiscal deficit, the state would tread cautiously on the welfare front: "We will carefully tread the path between fiscal consolidation and investing in welfare schemes."
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