Tamil Nadu revenue deficit down 52%, says budget hailing welfare measures

Financial Minister increases commitment to programmes for women, students and health insurance

Tamil Nadu government on Monday trimmed its revenue deficit from nearly Rs 62,000 crore when the DMK government took charge to Rs 30,000 crore, according to the state budget for 2023-24, citing the 52 per cent reduction to government reforms.

“Notwithstanding the several welfare schemes that are being implemented during the last two years, owing to the unprecedented and difficult reforms undertaken, we have reduced the annual revenue deficit in the Revised Estimates of the current year,” said Finance Minister Palanivel Thiaga Rajan in his Budget speech. The deficit reduction is nearly Rs 5,000 crore lower than the level of the pre-pandemic year of 2019-20.

The fiscal deficit has been estimated at Rs 74,524.64 crore and the net borrowings in 2023-24 is projected at Rs 91,866.14 crore. The revenue expenditure is estimated at Rs 3.08 trillion. 

The total revenue receipts, including the Central transfers, are estimated to be Rs 2.7 trillion in 2023-24 compared to the Revised Estimates of Rs 2.4 trillion in 2022-23.

For 2023-24, the state’s tax revenue is expected to increase to more that Rs 1.5 trillion, up from around Rs 1.4 trillion during the current financial year. The budget announced Rs 1,000 per month for women family heads, allotting a total of Rs 7,000 crore for the scheme. The budget allotted Rs 77,000 crore for developing a project to generate 14,500 MW (mega watt) of power by 2030.

To meet the mandate of the Fiscal Responsibility Act of achieving zero-revenue deficit, the state will adopt a path that will not compromise on welfare initiatives and development, he said.

The main reason for the fiscal stress faced by the DMK government when it assumed office in 2021 was the fall in tax revenue in the previous years. Tax revenues were at a healthy 8 per cent of the Gross State Domestic Product (GSDP) during 2006-11 before falling in the last 10 years to reach 5.58 per cent in 2020-21. Tamil Nadu’s revenues are lower compared to other large states such as Maharashtra and Karnataka. “Though the Tax-GSDP ratio has increased to 6.11 per cent in the current year due to the efforts of this Government in the last two years, concerted action is needed to raise it further to find financial resources for welfare schemes,” Thiaga Rajan said.

Thiaga Rajan said the Makkalai Thedi Maruthuvam scheme, which offers door-to-door screening and drug delivery, will be expanded to 711 factories covering 835,000 workers in the first phase. The budget allocated Rs 500 crore to expand the Chief Minister’s Breakfast scheme for students to around 1.8 million people.

Under the Chief Minister's Comprehensive Health Insurance Scheme, insurance coverage of Rs.500,000 is being given per year per family. During the current year, so far, 1.18 million patients have availed treatment worth Rs 993 crore, which is the highest since the inception of the scheme.

The state government allocated Rs 40,299 crore for the school education department, out of which Rs 6,967 crore will be for the higher education department.