The Tamil Nadu Finance Minister Palanivel Thiaga Rajan said the State is managing its economy well by containing the inflation and the deficit and growing the revenue. He said FY23 will prove to be a much better year for the State’s finances.

The State’s inflation is lower than all of India and the lower inflation in Tamil Nadu is attributed to the slow rise of food prices in the State. At the same time, the State’s spending on PDS (public distribution system) has gone up significantly in the past two years. Tamil Nadu has spent more than ₹13,000 crore each in FY21 and FY22 on PDS in view of the pandemic period. These were much higher compared to the spending of about ₹6,800 crore in FY19 and ₹7,444 crore in FY20.

Rajan said FY23 would see a historic reduction in revenue deficit. The State has projected a reduction in revenue deficit of ₹7,000 crore for this year stating that it will be a reversal of the alarming trend of increasing deficits since 2014. But the reduction in revenue deficit will be much more than projected and it is pegged at about ₹15,000 crore as against ₹7,000 crore, based on the current indications.

Also, the State’s fiscal deficit, which is projected at 3.80 per cent, down from 4.61 per cent, will see a further reduction in the range of 3.25-3.3 per cent for FY23.

SOTR up

Meanwhile, the State’s own tax revenue (SOTR) and non-tax revenue have also grown significantly during this year. Tamil Nadu’s Own Tax Revenue grew about 56 per cent to ₹45,374 crore in April-July 2022 period as compared to ₹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 – contains inflation, controls the deficit, and yet has growth in revenue. This year looks even brighter,” he added.

Discussing the measures that led to improvements in finances, Rajan said it was done purely on 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 the Chief Minister has called me and said ‘for the political reason 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 further 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.

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