Despite the current stress on the State finances and the lingering impact of the Covid-19 pandemic, at the macro level, Tamil Nadu is still in a very enviable position as compared to other States of this scale, said the State Finance Minister P Thiaga Rajan said.

“We have the luxury of a century-old Dravidian focus on social justice, education-for-all and women empowerment. So the Gini coefficient is much lower in Tamil Nadu than other developed States like Karnataka, Maharashtra or Gujarat which are in a separate league by themselves by per capita economic development,” Rajan said.

He was delivering an address under the topic ‘Tamil Nadu : The Road ahead’ organised by IIM Bangalore Alumni Association (IIMBAA) Chennai Chapter on Friday.

“Despite being a large State, Tamil Nadu is almost ranked the same as the north-eastern States which are leaders in those (social justice and education) dimensions,” Thiaga Rajan said, adding, “Geographically also we are in an enviable position since we have ports, coastal lands and historical rail links. So, at the macro level and from a long-term perspective, we are in a very good space since our fundamentals are great.”

He, however, noted that the last seven years prior to Covid saw a dramatic decline in the State’s fiscal position with debt-GDP ratio going up from 16-17 per cent to the range of 27 per cent, share of interest payments in revenue going up from 11 per cent to nearly 20 per cent and Tamil Nadu moving from a revenue neutral State till 2014 to revenue deficit since then with a cumulative revenue deficit of about ₹1.5-lakh crore in the pre-Covid period.

‘Tinkering of edges’

Later responding to a question on how different the upcoming State budget will be, the former banker-turned-politician said that for the first time in many many years the budget speech will come from somebody who had written it as he plans to write it by himself instead of relying on speeches prepared by bureaucrats.

“Even if we present the budget by August or September, it will only be for six months before we go to the next year's full budget. So, this year's budget will only be tinkering of edges,” he added.

“There is a need to make fundamental changes right from the nature of revenue management, expenditure management, contingency risk, litigation management to asset management, accountability and audit etc. You will see a lot of clarity and huge swing in the approach to the management of finances or the human resources,” Rajan said.

‘No to disinvestment’

On being asked about the government’s political will for disinvestment of assets, Rajan said, “Do we have any intent to sell right away? The answer is absolutely no.

“I am not even interested in asking the Chief Minister if we can sell anything because the system is broken. For me to sell something and bring cash into a system that is already broken would not be logical. When the system is fixed then I know that every rupee I put in I can actually get a rupee worth of benefit. Right now, If we spend a rupee, we are getting 60-70 paise benefits. Why would I put more money into a system that leaks like that? It don't even make any sense.”

From a timing perspective, while nothing is off the table, it is not the right time to do an asset sale because the system is broken, and we need to fix that before we think about selling.

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