Tamil Nadu’s “unsustainable” budget situation, minister says, accuses AIADMK government of mismanagement

Tamil Nadu’s Finance Minister Palanivel Thiaga Rajan on Monday said the state’s fiscal situation was “unsustainable” and accused the previous All India government Anna Dravida Munnetra Kazhagam of mismanaging the economy, reported The Hindu.

Publishing a white paper on the financial condition of the state, Thiaga Rajan said that Tamil Nadu’s income deficit situation since 2013-2014 “has become really alarming”. A white paper is a document intended to highlight certain information. An income deficit occurs when the realized net income is less than the projected net income.

Thiaga Rajan said that a “business as usual” approach cannot continue. “These problems can be fixed,” he said. “This is an opportunity to carry out reforms ‘once in a generation’. “

The finance minister attributed the state of financial affairs to a lack of political and administrative will from the AIADMK government over the past seven years. He claimed that the current government of Dravida Munnetra Kazhagam will correct the mismanagement over the next five years.

“The budget that I will present this Friday will be practically six months,” said the Minister of Finance. The time of India. “So we can’t say how many changes could be instilled in this exercise. But in the future, bitter medicine will rightly be dispensed to special interests who have exploited state revenues for their personal benefit. “

Thiaga Rajan said the state had a revenue surplus in 2006-’07 and 2008-’09 when the DMK government was in power, but recorded a revenue shortfall in 2009-’10 and 2010-’11 due to the global financial crisis and the implementation of the recommendations of the Sixth Wages Committee.

“The situation was reversed in 2011-’12 and 2012-’13 [during AIADMK’s regime] when revenue surpluses have been found again, ”he said. “However, this improvement was short-lived and since 2013-2014, the state has continually been in a revenue deficit. This worsening of the situation has become truly alarming.

Noting that there was a revenue surplus of Rs 1,760 crore in 2012-2013, he said that the budget balance had worsened and a revenue deficit of Rs 1,789 crore was recorded in 2013-2014 , which nearly quadrupled to reach Rs 6,408 crore in 2014. -’15. It got even worse to reach Rs 35,909 crore in 2019-2020 even before the coronavirus pandemic hit the country.

Thiaga Rajan also noted that the state revenue deficit as a percentage of state gross domestic product fell from 0.18% in 2013-14 to 3.16% in 2020-2021. He said this budget deficit was “unsustainable” because part of the budget deficit was used to finance the revenue deficit, he said.

The budget deficit is a shortfall of the central government compared to its overall expenditure.

“Since the year 2017-2018, the share of the revenue deficit in the budget deficit has seen a substantial jump to 50% or more,” he said. The Minister of Finance also recalled that since 2013-2014, the government has maintained the budget deficit of around 3% by postponing the execution of certain expenditure items.

The finance minister said total government guarantees increased to more than Rs 91,800 crore in 2020-2021 alone, indicating a liability and fiscal risk for the state. In 2019-2020, Tamil Nadu had the third highest guarantee of any state, just behind Telangana and Andhra Pradesh.

A public guarantee is an agreement by which a public entity undertakes to pay a debt or a benefit in the event of default by the creditor.

Highlights from the White Paper

  • The outstanding debt of approximately Rs. 5.7 lakh crore projected as of March 31, 2022, represents a burden of approximately Rs 70,000 for every citizen of the state. The public debt is Rs 2,63,976 per family, reports The week
  • The accumulated debt of the electricity and transport sector alone stood at Rs. 1.99 lakh crore as of March 31. During the same period, the cumulative losses of the two water sector boards amounted to Rs 5,282.57 crore
  • The Tamil Nadu Electricity Board suffers a loss of Rs. 2.36 per unit on every unit of power consumed
  • The operating cost of the Chennai Metropolitan Water Supply and Sanitation Authority is about Rs 36.58 per kilo liter. The recovery cost for them is Rs 14.08 per kilo liter.
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