Updated: August 10, 2021 7:10:59 am
Tamil Nadu’s fiscal deficit, built up in large part by a swelling revenue deficit, is “unsustainable” and “alarming”, Finance Minister Palanivel Thiaga Rajan said Monday as he promised major structural changes to drag the state out of the financial sinkhole.
Releasing a white paper that also flagged the state’s massive debt, Thiaga Rajan blamed the previous AIADMK government for the shaky finances and said: “Revenue generation has come down. A government without revenue cannot address problems.”
The white paper showed that the state had a revenue deficit of Rs 61,320 crore in 2020-21 — which made up more than half of the fiscal deficit in that year, Rs 92,305 crore.
“The current fiscal deficit is unsustainable because a portion of it is funding the revenue deficit… Since 2017-18, the share of revenue deficit in the fiscal deficit had a substantial increase of up to 50% or more, which means the borrowings of the government is not for the capital expenditure but for the current expenditure,” Rajan said.
The state Finance Minister said quick fixes would not suffice and vowed that the DMK government would implement systemic changes to address the issue. The revenue deficit “is at an alarming stage now”, he said.
According to the white paper, the state’s current debt of about Rs. 5.7 lakh crore translates to a debt burden of around Rs 70,000 on each citizen. This is besides Rs 1.10 lakh debt per person generated from operational losses of the transport corporation, electricity department and interest payment.
Thiaga Rajan also said the state has the third highest guarantees outstanding among all states after Telangana and Andhra Pradesh and this was mostly fuelled by guarantees to the power sector.
In 2020-21, the white paper said, the guarantees have been rising to adverse levels in the power and transport sectors, which stands at Rs 91,818.44 crore including Rs 82,916.90 crore due to the power sector alone.
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