Tamil Nadu’s revenue deficit has been soaring. For 2024-25, it has been pegged at ₹49,279 crore, compared with revised estimates for 2023-24 of ₹44,907 crore. The revised estimate for 2023-24 has also turned out to be higher than the budget estimates for the year, of ₹37,540 crore, according to the Budget papers presented to the Tamil Nadu assembly today by the State’s finance minister, Thangam Thennarasu.  

The state’s revenue deficit and fiscal deficit have been estimated to increase in 2024-25 over the revised figures for 2023-24, by 9.7 per cent and 15.55 per cent, respectively. 

One significant reason for the increase in revenue deficit is the additional expenditure due to the government compensating for the State’s electricity utility, TANGEDCO. The government had to provide TANGEDCO ₹17,117 crore in 2023-24 and has budgeted to give another ₹14,442 in 2024-25. (As per the recommendations of the 15th Finance Commission, a State may borrow upto 3.5 per cent of its gross domestic product. The government of India had communicated to the states in March 2022 that borrowings of State-owned enterprises and special purpose vehicles (such as TANGEDCO) shall be counted as the State’s borrowings.)  

Thennarasu said that while the Government is committed to undertaking power sector reforms, this condition creates a huge financial burden on the State, constraining its ability to fund development initiatives. Therefore, along the lines of the Ujwal Discom Assurance Yojana (UDAY) Scheme, this Government has addressed the Union Government to exclude this amount from the Fiscal Deficit and Borrowing Ceiling of the State. 

Presenting the budget for 2024-25 today, Thennarasu blamed the central government for its step-motherly treatment of states, “completely forgetting the philosophy of federalism.” Despite multiple requests, the Union Government has not provided any support to the State from the National Disaster Response Fund. 

TN’s own tax revenue is estimated at ₹1,70,147 crore in the Revised Estimates 2023-24 as against ₹1,81,182 crore in the Budget Estimates for the previous year — a lower growth of 13.26 per cent against the budgeted growth of 20.61 per cent. The government attributes this to “natural calamities”.

Despite multiple requests, the Union Government has not provided the State any support from the National Disaster Response Fund, Minister Thennarasu said. 

Tamil Nadu’s fiscal deficit is estimated at ₹1,08,690 crore in the Budget Estimates 2024-25, which is 3.44 per cent of the GSDP. In line with the recommendations of the 15th Finance Commission, the Government is following the glide path of fiscal consolidation and has reduced it from 3.46 per cent in 2022-23 to 3.45 per cent in 2023-24 to 3.44 per cent in 2024-25. 

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