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Vol. XXXIII No. 3, May 16-31, 2023
Focus on Welfare Schemes and Infrastructure
Budgets these days are more of a political statement of the ruling party. In the previous budget, state’s thrust was on social welfare and inclusive economic development, even as the government worked towards fiscal consolidation, and administrative reforms. The present budget has its focus on women, children, youth, sports, Tamil language and culture along with infrastructure push.
The state’s own tax revenues have witnessed a precipitous fall in the last 10 years and reached 5.58 percent of the Gross State Domestic Product (GSDP) in 2020-21. It was at a healthy 8 per cent during 2006-11.
Resources and their utilisation
The tax-GSDP ratio has increased to 6.11 per cent in the current year due to intensified efforts. State’s Own Tax Revenue (SOTR) accounts for 70 per cent of total revenue. In order to arrest the declining trend, the government has been undertaking several resource mobilisation measures including rationalisation of rates and improvement in collection efficiency. As a result, SOTR had increased to Rs.151,870.61 crore in the revised estimates, as compared to Rs.142,799.93 crore in the budget estimates of 2022-23. It is expected to increase further by 19.30 per cent to Rs.181,182.22 crore in 2023-24. The State’s Own Non-Tax Revenue at Rs.15,309.40 crore in the revised estimates, is estimated to go up to Rs.20,223.51 crore, an increase of 32.10 per cent. The total revenue receipts are projected at Rs.270,515.23 crore in 2023-24, which is an increase of 10.12 per cent over the revised estimates of Rs.245,659.67 crore for 2022-23.
Reduced revenue deficit
The total revenue expenditure is estimated to come down to Rs 276,135.68 crore in the revised estimates as compared to Rs 284,188.45 crore in the budget estimates 2022-23, on account of prudent fiscal management. In 2023-24, the total revenue expenditure is expected to be Rs 308,055.68 crore. The revenue deficit is estimated to be Rs 30,476.01 crore in the revised estimates for 2022-23, compared to Rs 52,781.17 crore in the budget estimates. This is a reduction of around Rs 31,850 crore over the past two years. This is a superlative performance and needs to be appreciated. The revenue deficit in 2023-24 is estimated at Rs 37,540.45 crore.
Fiscal deficit has been estimated at Rs 74,524.64 crore in the revised estimates, which is 300 per cent of the GSDP. This is a reduction of around Rs 15,589.07 crore as compared to the budget estimates 2022-23. The fiscal deficit is estimated at Rs 92,074.91 crore, in 2023-24 which is 3.25 per cent of the GSDP. On March 31, 2024, the state’s total outstanding debt will be Rs. 726,028.83 crore and the debt-GSDP ratio will be 25.63 per cent. This is well within the 29.1 per cent limit for 2023-24 set by the fifteenth finance Commission.
Out of total revenues raised, 44 per cent is SOTR, 33 per cent is public debt, 10 per cent share in Central taxes, 7 per cent grants-in-aid from the Centre, 5 per cent non-tax revenue and 1 per cent recovery of loan. In the SOTR, which is the largest revenue source, commercial taxes forms 73.3 per cent while stamps and registration fees account for 14.1 per cent, state excise 6.5 per cent, motor vehicles at 4.9 per cent and other taxes form 1.2 per cent.
Expenditure expands
In the expenditure side, 30 per cent would go to subsidies and grants while another 28 per cent towards salary, pension and retirement benefits; 13 per cent interest payments and 11 per cent repayment of debt, loan disbursals 3 per cent and operations and maintenance 4 per cent. That will leave only 11 per cent for capital expenditure. Nearly 25 per cent of expenditure goes to debt servicing and thus there is need to curtail the outstanding debt. The state budget has several welcoming features and proposals. A few, however, have seemingly unpopular overtones.
A much awaited announcement of this budget was Magalir Urimai Thogai of Rs.1,000 p.m. for women family heads. The DMK, in its poll manifesto, promised this amount to all women ration card holders. Out of 2.20 crore ration card holders, less than one crore women may become eligible to avail this benefit. Eligibility criteria is yet to be clarified. There is likely to be widespread disappointment over this move. The scheme is to be formally launched on 15 September 2023. Initial allocation of Rs 7000 crore is made. All in the state cannot be satisfied with the budget measures, particularly when there are several poll promises yet to be honoured! – (Courtesy: Industrial Economist, April 2023.)
