Finance Minister Thangam Thennarasu will present the State Budget for 2024-25 on Monday, ahead of the upcoming Lok Sabha election. Amid a tight financial situation, the Budget – to be presented with the theme ‘Crossing obstacles and marching towards growth’ – will be keenly watched to see whether the DMK government bats for fiscal prudence or populism.
On September 15, 2023, the government launched its flagship Kalaignar Magalir Urimai Thittam, which grants ₹1,000 per month to over 1.15 crore women heads of families, fulfilling its poll promise. A key aspect of this Budget would be revenue augmentation to meet the expenditure for various schemes. Fiscal 2023-24 has been challenging for the State’s finances, owing to the heavy floods in Chennai and southern districts.
Also read: Tamil Nadu Budget 2024 LIVE updates, Key Takeaways and Highlights.
According to the Governor’s Address, the State was grappling with a severe stress on its fiscal resources in the aftermath of the disasters, and its capacity for resource mobilisation was constrained following the implementation of GST.
The State’s Own Tax Revenue (SOTR), which accounts for 78.9% of Tamil Nadu’s total revenue, was projected to be ₹1,81,182 crore in 2023-24, a growth of 20.61% from 2022-23, according to the budget estimates.
So far in 2023-24 (till December), the SOTR has been ₹1,09,708.78 crore, as per the provisional figures from the Comptroller and Auditor-General (CAG), which constitutes about 60% of the budget estimates.
Key components of SOTR include collection from State Goods and Services Tax (SGST), taxes on vehicles, revenue from Stamps and Registration Fees, VAT on petrol and diesel and liquor, The State Excise Duties (which reflect liquor revenue).The State is likely to fall short of its SOTR target for 2023-24, owing to impact of the floods. The State government had hiked excise duty on liquor sold by the Tamil Nadu State Marketing Corporation Limited (Tasmac) from February 1, which might offset the impact to an extent. It has also made a slew of changes in registration charges for flats.
Revenue receipts
Including the Share of Central Taxes (which is 4.079%), Tamil Nadu has estimated its total revenue receipts to be ₹2,70,515 crore for 2023-24. Up to December, the total revenue receipts stood at ₹1,72,980.84 crore. In the interim Union Budget, the amount that Tamil Nadu would get as its Share of Central Taxes has been revised to ₹44,760.83 crore from the initial estimates of ₹41,664.86 crore for 2023-24.
The DMK government has been pointing out that it continues to get a much lower share of Central taxes due to the indiscriminate levy of cesses and surcharges by the Centre.
For 2023-24, the State has estimated the revenue expenditure to be ₹3,08,056 crore. Till December, the revenue expenditure was ₹1,96,781.57 crore. Tamil Nadu government has incurred an expenditure of ₹2,028 crore towards flood relief in Chennai and surrounding areas and Southern districts.
Factoring in the expenditure on account of the Kalaignar Magalir Urimai Thogai Thittam, the State has projected a revenue deficit (when revenue expenditure exceeds revenue receipts) of ₹37,540 crore for 2023-24. Till December, the revenue deficit stands at ₹23,800.73 crore.As of December 31, 2023, the fiscal deficit stood at ₹55,066.54 crore. The government will attempt to manage the revenue deficit at the budgeted level of ₹37,540 crore in 2023-24 and strive to stay within the fiscal deficit target of 3.25% of the Gross State Domestic Product and manage the Debt to GSDP ratio within the prescribed limits through revenue augmentation and effective fiscal consolidation, Finance Minister Thangam Thennarasu had said in the Assembly in October 2023.
So far, in fiscal 2023-24 (till December), the State government has borrowed ₹76,000 crore, according to the data available on the RBI website. It planned to borrow ₹37,000 crore in the fourth quarter of fiscal 2023-24. Measures towards achieving the $1-trillion economy target will also be keenly watched. The State has also undertaken some reforms in the power sector by announcing a plan for annual power tariff hikes and formation of Tamil Nadu Green Energy Corporation Limited, to pursue its green energy ambitions.
Published - February 19, 2024 12:35 am IST
