The revised estimates of TN budget for FY 2016-17 show revenue at Rs 143,000 crore. Total expenditure amounted to Rs. 205,142 crore leaving a fiscal deficit of a huge Rs 61,341 crore. At 4.58 per cent of the state’s GDP, this substantially exceeds the limit of three per cent laid in the Tamil Nadu Fiscal Responsibility and Budget Management Act. Finance Minister D Jayakumar explained this arising due to the government taking Rs. 22,815 crore of the debt of TANGEDCO by availing the restructuring of the Corporation’s finances under the UDAI scheme.
Salaries, freebies and interest costs higher than revenues
Look at the components of the huge expenditure incurred:
1. Topping the list is the amount spent on subsidies and transfers of Rs. 68,351 crore.
2. Salaries, pensions and retirement benefits amount to Rs. 59,729 crore. The state has been providing for an increasingly large number of employments that is now estimated at 18 lakh. This is much larger than employees under state payroll in even the largest state of UP. DMK supremo Karunanidhi can take credit for the unrestrained profligacy: starting with the state electricity board in the initial years of his administration in the 1970s, he allowed massive expansion of government employment; at one stroke he brought teachers and the support staff in the aided colleges and schools under government payroll. With massive increases in salaries and pensions from the recent pay commissions recommendations and the larger expectancy of life, expenditure under this head has been ballooning.
Just look at the increase over the last 10 years: in 2006-07 the expenditure under this head stood at Rs.16,137 crore. The government’s projection for 2018-19, anticipating upward revisions, indicates expenditure under this head at Rs.88,614 crore. This means an increase of around Rs.29,000 crore or a near 50 per cent increase in expenditure over 2016-17.
3. During 2016-17, the state raised Rs 75,659 crore as fresh debts and repaid Rs 14,324 crore of post debts. Public debts that were at Rs 99,180 crore as at 31 March 2010 have ballooned to Rs 272,401 crore at the end of March 2017 and are estimated to increase further to Rs 314,366 crore at the end of March 2018.
This means increasing provision for interest payment. For 2016-17 this amounted to Rs. 21,397 crore. Over the next three years, this is projected to increase to Rs. 35,592 crore.
These three items of expenditure amount to Rs. 149,477 crore. This is in excess of total revenue receipts of Rs. 143,800 crore! In this the repayment of a part of the public debt is not even included.