Ahead of Lok Sabha polls, Finance Minister Thangam Thenarasu on Monday presented Tamil Nadu’s budget for 2024-25, which focused on inclusive growth, pro-poor measures, infrastructure development and allocation for various ongoing welfare schemes, amid a tight financial situation and took a glide path of fiscal consolidation.
The budget has been prepared on 7 pillars — Social Justice, Welfare of the marginalized, Transforming young Tamils as global achievers, Knowledge based economy, Equality focused on welfare of women, Sustainable Green Future and Tamil Language and Culture — Mr. Thenarasu said in his budget speech.
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He announced that the State government will launch Chief Minister’s Thayumanavar scheme to rescue around five lakh of the poorest families from poverty and Kalaignarin Kanavu Illam scheme to create a ‘Hut-Free Tamil Nadu’ by 2030, besides Tholkudi scheme to upgrade the basic amenities in tribal habitations and improve their living standards.
On the education front, the Minister announced “Tamizh Pudhalvan” scheme which would provide a monthly assistance of ₹1,000 to boys who have studied in Government schools from 6 th to 12th standard and said the government will cover all educational expenses including tuition and hostel fees for transgender individuals who want to pursue higher education.
On the infrastructure front, Mr Thenarasu said the state government has decided to create a statutory body to implement iconic world-class road infrastructure projects in the State and a bill to establish ‘Tamil Nadu State Highways Authority’ will be introduced in the current session.
The budget also focused on schemes to tackle Climate Change, North Chennai Development, restoration of irrigation tanks and ponds in Panchayat Unions, besides allocation for ongoing flagship schemes like Magalir Urimai Thogai (for which ₹13,720 crore has been allocated), Chief Minister’s Breakfast scheme (for which ₹600 crore is allocated), among others.
Tough 2023-24
The floods in Chennai and Southern districts impacted the State’s Own Tax Revenue (SOTR) in 2023-24. SOTR is estimated at ₹1,70,147 crore in the revised estimates for 2023-24 as against ₹1,81,182 crore in the initial budget estimates. The Revenue Deficit (when revenue expenditure exceeds revenue receipts) is now expected to increase to ₹44,907 crore in 2023-24 compared to ₹37,540 crore in budget estimates. The higher revenue deficit was due to floods impacting the State Own Tax Revenue and State providing an unprecedented loss funding to Tangedco, due to the norms imposed by Centre, as per the budget speech.
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Tamil Nadu has been mandated to provide ₹17,117 crore for loss funding to Tangedco in 2023-24, failing which an equivalent amount will be deducted from the borrowing ceiling fixed by the Union government, it noted.
The fiscal deficit as a percentage of Gross State Domestic Product (GSDP) has increased to 3.45% in the revised estimates for 2023-24, when compared to 3.25% in the budget estimates.
Buoyant forecast
Despite a challenging 2023-24, the State has estimated SOTR to grow 14.71% to ₹1,95,173 crore in 2024-25. The budget estimates the State’s nominal GSDP growth at 15.89% for 2024-25, when compared to 15.14% in 2023-24. The revenue deficit is estimated at ₹49,278.73 crore for 2024-25. The fiscal deficit is estimated at 3.44% of GSDP, which is within the norms prescribed by the Fifteenth Finance Commission, Mr. Thenarasu said.
The state government plans to borrow a total amount of ₹1,55,584.48 crore during 2024-25 and make repayment of ₹49,638.82 crore. As a result, the outstanding debt as on 31st March 2025 will be ₹8,33,361.80 crore.
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In a post-budget press conference, Finance Secretary T. Udhayachandran said there are two aspects to the revenue deficit. One is the loss funding to Tangedco, which would be ₹14,442 crore in 2024-25. Excluding this, the revenue deficit would be ₹34,837 crore in 2024-25 and ₹27,790 crore in revised estimate for 2023-24, he said. “We have requested the Centre to exclude the amount from the fiscal deficit and borrowing ceiling of the State, on lines of the Ujwal Discom Assurance Yojana (UDAY) Scheme,”Mr. Udhayachandran said.
He also said the state government is incurring the entire project expenditure on Chennai Metro Rail Project Phase II from its budgetary resources, as there is delay in funding by the Union government. “If these two aspects are not there, we would have been in a better position and borrowed less or used that funds for some other developmental measures,” Mr. Udhayachandran said.
The state is being meted out step-motherly treatment by the Union Government, which has completely forgotten the principles of co-operative federalism, Thenarasu said.
The 16th Finance Commission has been constituted by the Union Government recently. Under the able leadership of Dr. Arvind Panagariya, we hope that the historical injustice meted out to progressive states like Tamil Nadu by successive Commissions in the devolution of Union taxes will be remedied. We look forward to a fair mechanism wherein Tamil Nadu will receive its due share commensurate its role in nation building, without being penalized for its development, he said.
Highlights of the Tamil Nadu Budget 2024-25
Published - February 20, 2024 01:41 am IST
