‘State Budget catered to aspirations of every segment, sector and region of Tamil Nadu’
The State’s Finance Minister, who also holds the electricity portfolio, talks about the planning process behind the Budget for 202425, debt level, and expectations from the 16th Finance Commission. He also says the government has announced new schemes wi
Amid financial constraints and ahead of the Lok Sabha election, Tamil Nadu Finance Minister Thangam Thennarasu presented the State Budget for 202425. He says that the Budget catered to aspirations of every segment, sector and region of Tamil Nadu, and spoke about various ambitious targets. Excerpts from his interview with The Hindu.
This was your first Budget. What are the thoughts that went into it during planning?
During discussions on Budget Estimates for 196768, then Finance Minister Perarignar Anna had said, “The lives of 3.5 crore people are determined by the 64 pages in this Budget. We have poured our heart and soul into it. It contains the aspirations and dreams of the people who elected us”.
These profound remarks of Anna have been the guiding principles for me in this Budget. With the constant support and guidance of Chief Minister M.K. Stalin, I have strived to fulfil the dreams and aspirations of millions of Tamil people, while treading on the path of fiscal prudence.
As this is an election year, was the focus on fiscal consolidation or populist measures? Was it a conscious decision not to make any big announcements...?
No. This is incorrect. We have introduced the Kalaignar Kanavu Illam to provide safe and permanent concrete houses to eight lakh poor families in rural areas, at a unit cost of ₹3.5 lakh. In its first phase, we have planned to take up one lakh houses with a financial implication of ₹3,500 crore. This is the largest rural housing programme undertaken by any State in the country, without the support of the Union government.
In this Budget Session, the Chief Minister had also announced the muchneeded Housing Repair Scheme, wherein we will provide ₹2 lakh per household for repairing dilapidated houses that were constructed with government assistance prior to 2001. This initiative will be implemented at a cost of ₹2,000 crore. For the first time in the country, we have introduced a scheme, Tamil Pudhalvan, to provide financial aid to boys. Under this scheme, approximately 3 lakh boys, who are currently pursuing higher education and have studied in government schools from Class VI to ◣II, will be provided ₹1,000 per month.
There are many more. I am proud to inform you
Finance Minister says the govt. is planning to commission three new power plants within the next two years to reduce dependence on power purchase from the market.
that this Budget has catered to the aspirations of every segment, sector and region of our State. At the same time, we have not deviated from the path of fiscal consolidation despite numerous challenges thrown at us by the Union government.
The floods have impacted the State’s Own Tax Revenue in 202324. You have forecast a 14.71% growth in 202425. Given that floods have been a common occurrence, and the existence of a global slowdown, don’t you think the estimates are on a higher side?
Considering that there has been a revision in taxes on motor vehicles, liquor and registration during the current year (202324), and several technological efforts are being undertaken to plug leakages, I believe that the growth rate is very reasonable.
You have cited unprecedented loss funding to Tangedco, and funding the metro rail project using own resources for the rise in revenue deficit to ₹44,907 crore in the revised estimates for 202324. In 202425,it is estimated to be ₹49,278.73 crore and expected to reduce to ₹18,098 crore in 202526? Given the constraints, don’t you think the 202526 target is ambitious?
The 202526 figure can be found in the MediumTerm Fiscal Plan, which is a statutory document mandated under the Act to lay down the plan and forecast for the coming years. The Total Revenue Receipts are estimated to grow at 14.33% in 202526, which is a fair assumption.
Committed liabilities, including salaries, pension and interest payments, have been projected to increase at 9.5%.
The major decrease can be seen in the expenditure on Subsidies and Transfers because of the reduction in Loss Funding to Tangedco. The condition of gross loss funding to Tangedco is tied to the additional borrowing space of 0.5% provided to State governments. This borrowing window will end in 202425, and it will be unfair on the part of the Centre to force us to provide the loss funding even after that.
The government is providing an unprecedented amount of loss funding to Tangedco in the current year. Excluding the loss funding, to Tangedco, the revenue deficit in the revised estimates for 202324 will be ₹27,790 crore. This would be a reduction of ₹8,227 crore compared with the Budget Estimates 202324, despite the onslaught of two disasters. In the Budget Estimates 202425, the Subsidies and Transfers (excluding loss funding to Tangedco) are estimated at ₹1.32 lakh crore. In 202526, this figure has been estimated at ₹1.40 lakh crore. Given these, the figure of ₹18,098 crore for revenue deficit is not unachievable.
One of the reasons for the State’s high debt level is Tangedco. You have kicked off reforms by unbundling and creating a green company. What are the other measures you are looking at?
We are making a concerted effort to contain our expenditure. We plan to commission three new power plants within the next two years so as to reduce our dependence on power purchase from the market. We are also working to improve the efficiency in operations through reduction in the use of imported coal and oil in power plants. We also plan to explore the possibility of debt restructuring so as to swap our highcost loans with cheaper debt.
What are your expectations from the 16th Finance Commission? Union Finance Minister Nirmala Sitharaman has said that the Centre was not discriminating against any southern State in sharing taxes and that the State can make its case to the 16th Finance Commission if it feels aggrieved ....
There has been a systematic attempt to deprive Tamil Nadu of its due share in Central Taxes. In the most recent release of devolution by the Union government, the sum total of the devolution received by all the five southern States is ₹22,455 crore. In comparison, the devolution to the State of Uttar Pradesh alone is ₹25,495 crore. The 16th Finance Commission has been constituted under the able leadership of Arvind Panagariya. We are hopeful that the injustice meted out to States such as Tamil Nadu will be addressed, and Tamil Nadu will get its legitimate share commensurate to its contribution.