The Tamil Nadu Finance Minister, Palanivel Thiaga Rajan, said the State will see a historic reduction in revenue deficit of about ₹15,000 crore, more than double that projected for this year. Tamil Nadu is managing its economy well by containing inflation and deficit while growing revenue. He said FY23 will prove to be a much better year for the State’s finances.

Inflation is lower than in all of India due to the slow rise of food prices in the State. At the same time, the State’s spending on the public distribution system has gone up significantly in the past two years. In FY21 and FY22, Tamil Nadu spent about ₹13,000 crore each year on PDS due to the Covid pandemic, compared with ₹6,800 crore in FY19 and ₹7,444 crore in FY20.

The State had projected a reduction of ₹7,000 crore for this year, reversing the alarming trend of increasing deficits since 2014. Also, the State’s fiscal deficit, which is projected at 3.80%, down from 4.61%, will see a further reduction in the range of 3.25-3.3% for FY23.

SOTR UP

Meanwhile, the State’s own tax revenue (SOTR) and non-tax revenue have also grown significantly by about 56% to ₹45,374 crore in April-July 2022, compared with ₹29,159 crore in the same period last year, according to the provisional figures from the Comptroller and Auditor-General (CAG).

“We are able to balance all these three things—contain inflation, control deficit, and yet grow revenue. This year looks even brighter,” he added. Rajan attributed the turnaround to “purely administrative skills. There are no magic bullets. I can consciously tell that I have processed almost 5,000 files. At least a few hundred of them have come back for various corrections and not even once has the Chief Minister called me and said ‘for political reasons, you approve it anyway.’”

“So, there is no secret. If proper supervision is ensured for each and every scheme and the spending, this will be the outcome. I still don’t understand how the State’s revenue and growth declined during 2014-2019, which was the worst period for the State’s finances,” he added.

He explained that he managed to address some gaps pertaining to SOTR that were highlighted in the White Paper on State’s Finances. “It is still a work in progress and a lot of corrections have to be done, and I am confident of addressing those and showing better results,” he added.