For a better experience, Read this story in our App
TO ENJOY ADDITIONAL BENEFITS
Connect With Us
Get BusinessLine apps on
Tamil Nadu government should mobilise its resources to minimise dependence on borrowings. The committed expenditure such as salaries, pension and interest payments, which are on an increasing trend, requires utmost attention of the State Government, according to the State Finances Audit Report of the Comptroller and Auditor General of India for the year ended March 2023 submitted in the Tamil Nadu Assembly on Tuesday.
The outstanding debt grew by 13.25 per cent over previous year - the State’s outstanding debt stood, as per budget estimates for 2022-23, at ₹7.54-lakh crore.
Considering the growth rate of capital expenditure by 6.81 per cent, compared with 11.92 per cent in the previous year.
The high fiscal deficit is indicative that the borrowing during the year was utilised for financing the revenue expenditure. To the extent of reduced capital formation, debt acts as ‘burden’ on future generations, the report said.
The debt/GSDP ratio (28.64 per cent) was within the target of 29.30 per cent as per MTFP and if outstanding Off-Budget borrowing of ₹2,298 crore is included to the total outstanding liabilities, the ratio of total outstanding debt to GSDP would increase to 28.73 per cent.
According to RBI data, Tamil Nadu’s gross market borrowings through State Development Loans stood at ₹87,000 crore.
The annual growth rate of own tax revenue during 2022-23 was 22.27 per cent. Own tax revenue as a percentage of GSDP of the State during 2022-23 was 6.35. The non-tax revenue of the State increased by ₹4,944 crore (40.80 per cent) in 2022-23 over the previous year.
During the year, State’s own tax revenue receipts fell short of the budget projections but exceeded the target fixed under The 15 th Finance Commission (XV FC) while non-tax revenue receipts fell short of the target fixed under XV FC but exceeded the Budget projections.
During 2022-23, the revenue expenditure increased to ₹25,934 crore (10.21 per cent) during the year as against an increase of 7.46 per cent during the previous year. As a percentage of GSDP the Revenue expenditure decreased from 12.26 per cent in 2021-22 to 11.84 per cent during the current year. There was short devolution of ₹461.26 crore to local bodies due to non-sharing of GST compensation.
Capital expenditure increased by 6.81 per cent during the year. As a percentage of total expenditure, capital expenditure decreased by 0.46 per cent during the current year, the report said.
The report also pointed out that the continuous mismatch between receipts and expenditure indicates rising fiscal stress.
The State has different sources of receipts such as State Own Tax Revenue, Non-tax Revenue, Devolution of States’ share in taxes, Grants in aid and transfers from the Union Government and non-debt capital receipts.
The State Government’s expenditure includes expenditure on revenue accounts as well as capital expenditure (assets creation, loans and advances and investments).
From 2018-19 to 2022-23, revenue receipts grew for Tamil Nadu from ₹1,73,741 crore to ₹2,43,749 crore, with an average annual growth rate of 11.13 per cent.
Capital receipts increased from ₹54,850 crore to ₹1,02,182 crore during this period. The share of Grants-in-aid in revenue receipts marginally rose from 13.45 per cent in 2018-19 to 15.48 per cent in 2022-23. The State Government received ₹15,270 crore as Central share for the Centrally Sponsored Schemes (CSSs) in the year.
Revenue expenditure is incurred to maintain the current level of services and payment for the past obligation. As such, it does not result in any addition to the State’s infrastructure and service network.
Between 2018-19 and 2022-23, revenue expenditure increased from ₹1,97,201 crore (12.10 per cent of GSDP) to ₹2,79,964 crore (11.84 per cent of GSDP). It consistently made up a significant portion (86.50 to 87.65 per cent) of the total expenditure during this period, growing at an average annual rate of 86.50 per cent, the report said.
On the financial performance of Public Sector Undertakings (PSUs), the State government may consider setting up an expert committee to identify and fix the operational inefficiencies and prepare a time bound action plan for revival of the loss making PSUs.
The State Government should analyse the business models of the loss making PSUs in order to address the root cause of the losses and further consider the sustainability of these business models employed as they are a drain on the public exchequer.
State Government may ensure timely submission of Financial Statements of PSUs, as in the absence of finalisation of accounts, Government investments in such PSUs remain outside the oversight of the State Legislature.
As on March 31, 2023, there were 102 PSUs including one Statutory Corporation. Of these PSUs, two were inactive. Out of the total profit of ₹2,560 crore earned by PSUs, 63.81 per cent was contributed by only three PSUs. Out of total loss of ₹16,047.99 crore incurred by 35 PSUs, three in the power sector and eight in transport accounted for ₹15,926 crore.
Analysis revealed that 39 PSUs had an aggregate accumulated losses of ₹2,26,542 crore and of these 39 PSUs, the net worth of 23 PSUs had been completely eroded by accumulated losses and their net worth was negative. The net worth of these 23 PSUs was (-)₹1,93,133 crore against equity investment of ₹33,263 crore.
Published on December 10, 2024
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.