The Finance Minister of Tamil Nadu, Mr. Thangam Thenarasu, presented the Budget for the state for the financial year 2024-25 on February 19, 2024.
Budget Highlights
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The Gross State Domestic Product (GSDP) of Tamil Nadu for 2024-25 (at current prices) is projected to be Rs 31,55,096 crore, amounting to growth of 16% over 2023-24.
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Expenditure (excluding debt repayment) in 2024-25 is estimated to be Rs 4,12,504 crore, an increase of 12% over the revised estimates of 2023-24. In addition, debt of Rs 41,178 crore will be repaid by the state.
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Receipts (excluding borrowings) for 2024-25 are estimated to be Rs 3,03,814 crore, an increase of 10% as compared to the revised estimate of 2023-24.
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Revenue deficit in 2024-25 is estimated to be 1.6% of GSDP (Rs 49,279 crore), similar to the revised estimates for 2023-24 (1.6% of GSDP). However, in absolute terms revenue deficit is estimated to be higher by Rs 4,372 crore in 2024-25 over revised estimate of 2023-24. In 2023-24, revenue deficit at the revised estimates stage is expected to be 20% higher than the budget estimate.
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Fiscal deficit for 2024-25 is targeted at 3.4% of GSDP (Rs 1,08,690 crore). In 2023-24, as per the revised estimates, fiscal deficit is expected to be 3.5% of GSDP.
Policy Highlights
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Education: Under the Tamizh Pudhalvan scheme, boys who have studied in government schools from 6th to 12th standard will be provided financial assistance of Rs 1,000 per month to help them purchase learning materials for their higher education. The scheme will cover around three lakh students with a cost of Rs 360 crore in 2024-25. The state government will also ensure that education loans worth Rs 2,500 crore are disbursed by banks to one lakh college students in 2024-25.
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Housing: Eight lakh concrete houses will be constructed in rural areas by 2030. In the first phase, one lakh new houses will be built in 2024-25 at a unit cost of Rs 3.5 lakh per house. Under Kalaignarin Kanavu Illam scheme, funds will be provided to selected beneficiaries for constructing houses. It will be implemented at a cost of Rs 3,500 crore in 2024-25.
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Roads: 2,000 km of rural roads will be developed at a cost of Rs 1,000 crore and 4,457 km of urban roads will be upgraded at a cost of Rs 2,500 crore in 2024-25.
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Tamil Nadu’s Economy
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Figure 1: Growth in GSDP and sectors in Tamil Nadu at constant prices (2011-12)
Note: Agriculture includes mining and quarrying; manufacturing includes construction, and electricity, gas, water, and other utility services. These numbers are as per constant prices (2011-12) which implies that the growth rate is adjusted for inflation. |
Budget Estimates for 2024-25
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Total expenditure (excluding debt repayment) in 2024-25 is targeted at Rs 4,12,504 crore. This is an increase of 12% over the revised estimate of 2023-24. This expenditure is proposed to be met through receipts (excluding borrowings) of Rs 3,03,814 crore and net borrowings of Rs 1,04,319 crore. Total receipts for 2024-25 (other than borrowings) are expected to register an increase of 10% over the revised estimate of 2023-24.
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Revenue deficit in 2024-25 is estimated to be 1.6% of GSDP (Rs 49,279 crore), similar to the revised estimates for 2023-24 (1.6 % of GSDP). Fiscal deficit for 2024-25 is targeted at 3.4% of GSDP (Rs 1,08,690 crore), marginally lower than the revised estimates for 2023-24 (3.5% of GSDP). In absolute terms, both revenue deficit and fiscal deficit in 2024-25 are higher than the revised estimates for 2023-24.
Table 1: Budget 2024-25 - Key figures (in Rs crore)
|
Items |
2022-23 Actuals |
2023-24 Budgeted |
2023-24 Revised |
% change from BE 23-24 to RE 23-24 |
2024-25 Budgeted |
% change from RE 23-24 to BE 24-25 |
|
Total Expenditure |
3,53,860 |
4,09,147 |
4,12,977 |
1% |
4,53,682 |
10% |
|
(-) Repayment of debt |
27,104 |
43,826 |
43,725 |
-0.2% |
41,178 |
-6% |
|
Net Expenditure (E) |
3,26,755 |
3,65,321 |
3,69,251 |
1% |
4,12,504 |
12% |
|
Total Receipts |
3,45,931 |
4,07,192 |
4,09,287 |
1% |
4,49,311 |
10% |
|
(-) Borrowings |
1,01,062 |
1,33,945 |
1,34,095 |
0.1% |
1,45,497 |
9% |
|
Net Receipts (R) |
2,44,869 |
2,73,246 |
2,75,195 |
1% |
3,03,814 |
10% |
|
Fiscal Deficit (E-R) |
81,886 |
92,075 |
94,060 |
2% |
1,08,690 |
16% |
|
as % of GSDP |
3.5% |
3.3% |
3.5% |
|
3.4% |
|
|
Revenue Deficit |
36,215 |
37,540 |
44,907 |
20% |
49,279 |
10% |
|
as % of GSDP |
1.5% |
1.3% |
1.6% |
|
1.6% |
|
|
Primary Deficit |
34,975 |
37,399 |
39,391 |
5% |
46,234 |
17% |
|
as % of GSDP |
1.5% |
1.3% |
1.5% |
|
1.5% |
|
|
GSDP |
23,64,514 |
28,32,680 |
27,22,502 |
-4% |
31,55,096 |
16% |
Note: BE is Budget Estimates; RE is Revised Estimates. Primary Deficit may not match with budget documents due to difference in interest payment figures in annual financial statement and MTFP statement.
Sources: Annual Financial Statement, Tamil Nadu Budget 2024-25; PRS.
Expenditure in 2024-25
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Grants to TANGEDCO Between, 2019-20 and 2024-25 the state government is estimated to provide Rs 73,821 crore as grants to Tamil Nadu Electricity Generation and Distribution Company (TANGEDCO). This includes UDAY grants and grants for funding its losses. However, TANGEDCO has continued to incur substantial losses due to a gap between its per unit cost of supply of electricity and per unit revenue realised. In 2022-23, this gap was Rs 1.05 per kWh as compared to the national average of Rs 0.74 per kWh for state-owned discoms. The White Paper released by the state government had noted that TANGEDCO’s losses are caused by both high costs and low recoveries. It called for a complete restructuring of TANGEDCO. |
Table 2: Expenditure budget 2024-25 (in Rs crore)
|
Items |
2022-23 Actuals |
2023-24 Budgeted |
2023-24 Revised |
% change from BE 23-24 to RE 23-24 |
2024-25 Budgeted |
% change from RE 23-24 to BE 24-25 |
|
Revenue Expenditure |
2,79,964 |
3,08,056 |
3,17,484 |
3% |
3,48,289 |
10% |
|
Capital Outlay |
39,530 |
44,366 |
42,532 |
-4% |
47,681 |
12% |
|
Loans given by the state |
7,261 |
12,900 |
9,236 |
-28% |
16,534 |
79% |
|
Net Expenditure |
3,26,755 |
3,65,321 |
3,69,251 |
1% |
4,12,504 |
12% |
Sources: Annual Financial Statement, Tamil Nadu Budget 2024-25; PRS.
Committed expenditure: Committed expenditure of a state typically includes expenditure on payment of salaries, pensions, and interest. A larger proportion of budget allocated for committed expenditure items limits the state’s flexibility to decide on other expenditure priorities such as capital outlay. In 2024-25, Tamil Nadu is estimated to spend Rs 1,89,897 crore on committed expenditure, which is 64% of its estimated revenue receipts. This comprises spending on salaries (28% of revenue receipts), interest payments (21%), and pension (14%). In 2023-24, expenditure towards pensions is estimated to be 9% lower than the budget estimate. In 2022-23, as per actuals, 61% of the revenue receipts were spent towards committed expenditure.
Table 3: Committed Expenditure in 2024-25 (in Rs crore)
|
Committed Expenditure |
2022-23 Actuals |
2023-24 Budgeted |
2023-24 Revised |
% change from BE 23-24 to RE 23-24 |
2024-25 Budgeted |
% change from RE 23-24 to BE 24-25 |
|
Salaries |
68,588 |
77,240 |
75,546 |
-2% |
84,932 |
12% |
|
Pension |
32,177 |
41,232 |
37,542 |
-9% |
42,509 |
13% |
|
Interest payment |
46,911 |
54,676 |
54,669 |
-0.01% |
62,456 |
14% |
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Total Committed Expenditure |
1,47,676 |
1,73,148 |
1,67,756 |
-3% |
1,89,897 |
13% |
Sources: Annual Financial Statement, Tamil Nadu Budget 2024-25; PRS.
Sector-wise expenditure: The sectors listed below account for 55% of the total expenditure on sectors by the state in 2024-25. A comparison of Tamil Nadu’s expenditure on key sectors with that by other states is shown in Annexure 1.
Table 4: Sector-wise expenditure under Tamil Nadu’s Budget 2024-25 (in Rs crore)
|
Sectors |
2022-23 Actuals |
2023-24 |
2023-24 |
2024-25 |
% change from RE 23-24 to BE 24-25 |
Budget Provisions 2024-25 |
|
Education, Sports, Arts, and Culture |
45,147 |
49,700 |
48,596 |
54,327 |
12% |
|
|
Social Welfare and Nutrition |
18,219 |
26,614 |
30,233 |
34,548 |
14% |
|
|
Agriculture and Allied Activities |
23,648 |
22,971 |
21,108 |
24,232 |
15% |
|
|
Transport |
19,807 |
22,306 |
21,250 |
23,828 |
12% |
|
|
Energy |
17,642 |
8,426 |
24,176 |
21,606 |
-11% |
|
|
Health and Family Welfare |
17,621 |
18,545 |
18,796 |
19,730 |
5% |
|
|
Rural Development |
10,527 |
9,413 |
9,614 |
12,043 |
25% |
|
|
Police |
9,683 |
10,368 |
10,731 |
11,965 |
11% |
|
|
Irrigation and Flood Control |
6,297 |
7,755 |
7,146 |
7,763 |
9% |
|
|
Water Supply and Sanitation |
2,951 |
6,418 |
4,432 |
6,993 |
58% |
|
|
% of total expenditure on all sectors |
54% |
52% |
54% |
55% |
|
|
Sources: Annual Financial Statement, Tamil Nadu Budget 2024-25; PRS.
Receipts in 2024-25
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Total revenue receipts for 2024-25 are estimated to be Rs 2,99,010 crore, an increase of 10% over the revised estimate of 2023-24. Of this, Rs 2,25,901 crore (76%) will be raised by the state through its own resources, and Rs 73,109 crore (24%) will come from the centre. Resources from the centre will be in the form of state’s share in central taxes (17% of revenue receipts) and grants (8% of revenue receipts).
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Devolution: In 2024-25, state’s share in central taxes is estimated at Rs 49,755 crore, an increase of 10% over the revised estimate of 2023-24.
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Grants from the centre in 2024-25 are estimated at Rs 23,354 crore, a decrease of 13% from the revised estimates for 2023-24.
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State’s own tax revenue: Tamil Nadu’s total own tax revenue is estimated to be Rs 1,95,173 crore in 2024-25, an increase of 15% over the revised estimate of 2023-24. Own tax revenue as a percentage of GSDP is estimated at 6.2% in 2024-25, same as the revised estimates for 2023-24. As per the actual figures for 2022-23, own tax revenue as a percentage of GSDP was 6.4%.
Table 5: Break-up of the state government’s receipts (in Rs crore)
|
Items |
2022-23 Actuals |
2023-24 Budgeted |
2023-24 Revised |
% change from BE 2023-24 to RE 2023-24 |
2024-25 Budgeted |
% change from RE 2023-24 to BE 2024-25 |
|
State's Own Tax |
1,50,223 |
1,81,182 |
1,70,147 |
-6% |
1,95,173 |
15% |
|
State's Own Non-Tax |
17,061 |
20,224 |
30,381 |
50% |
30,728 |
1% |
|
Share in Central Taxes |
38,731 |
41,665 |
45,053 |
8% |
49,755 |
10% |
|
Grants-in-aid from Centre |
37,734 |
27,445 |
26,996 |
-2% |
23,354 |
-13% |
|
Revenue Receipts |
2,43,749 |
2,70,515 |
2,72,577 |
1% |
2,99,010 |
10% |
|
Non-debt Capital Receipts |
1,120 |
2,731 |
2,615 |
-4% |
4,804 |
84% |
|
Net Receipts |
2,44,869 |
2,73,246 |
2,75,192 |
0.7% |
3,03,814 |
10% |
BE is Budget Estimates; RE is Revised Estimates.
Sources: Annual Financial Statement, Tamil Nadu Budget 2024-25; PRS.
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In 2024-25, State GST is estimated to be the largest source of own tax revenue (38% share). State GST revenue is estimated to increase by 17% over the revised estimates of 2023-24.
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Revenue from sales tax/ VAT in 2024-25 is expected to be Rs 69,588 crore, an increase of 12% as compared to the revised estimates for 2023-24.
Table 6: Major sources of state’s own-tax revenue (in Rs crore)
|
Head |
2022-23 Actuals |
2023-24 Budgeted |
2023-24 Revised |
% change from BE 23-24 to RE 23-24 |
2024-25 Budgeted |
% change from RE 23-24 to BE 24-25 |
|
State GST |
53,823 |
66,967 |
63,338 |
-5% |
73,788 |
17% |
|
Sales Tax/ VAT |
59,144 |
65,860 |
61,876 |
-6% |
69,588 |
12% |
|
Stamps Duty and Registration Fees |
17,560 |
25,567 |
19,841 |
-22% |
23,370 |
18% |
|
State Excise |
10,423 |
11,819 |
10,898 |
-8% |
12,247 |
12% |
|
Taxes on Vehicles |
7,513 |
8,783 |
9,229 |
5% |
11,560 |
25% |
|
Taxes and Duties on Electricity |
1,506 |
1,890 |
4,594 |
143% |
4,231 |
-8% |
|
Land Revenue |
248 |
296 |
354 |
20% |
370 |
4% |
|
GST Compensation Grants |
16,215 |
4,573 |
4,575 |
0.04% |
0 |
-100% |
Sources: Annual Financial Statement, Revenue Budget, Tamil Nadu Budget 2024-25; PRS.
Deficits, Debt, and FRBM Targets for 2024-25
The Tamil Nadu Fiscal Responsibility Act, 2003 provides annual targets to progressively reduce the outstanding liabilities, revenue deficit, and fiscal deficit of the state government.
Revenue deficit: It is the difference of revenue expenditure and revenue receipts. A revenue deficit implies that the government needs to borrow to finance those expenses which do not increase its assets or reduces its liabilities. The budget estimates a revenue deficit of Rs 49,279 crore (or 1.6% of the GSDP) in 2024-25.
Fiscal deficit: It is the excess of total expenditure over total receipts. This gap is filled by borrowings by the government and leads to an increase in total liabilities. In 2024-25, the fiscal deficit is estimated to be 3.4% of GSDP. For 2024-25, the central government has permitted fiscal deficit of up to 3.5% of GSDP to states, of which 0.5% of GSDP will be available only upon carrying out certain power sector reforms.
As per the revised estimates, in 2023-24, the fiscal deficit of the state is expected to be 3.5% of GSDP. This is higher than the budget estimate of 3.3%. Fiscal deficit is projected to be lowered to 2.9% of GSDP by 2026-27.
Outstanding liabilities: Outstanding liabilities is the accumulation of total borrowings at the end of a financial year, it also includes any liabilities on public account. At the end of 2024-25, the outstanding liabilities (excluding ways and means advance, reserve funds, and deposits) are estimated to be 26.4% of GSDP, lower than the revised estimate for 2023-24 (26.7% of GSDP).
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Figure 2: Revenue and Fiscal Balance (% of GSDP) Note: *Figures for 2025-26 and 2026-27 are projections; RE is Revised Estimates; BE is budget estimates. |
Figure 3: Outstanding Liabilities (% of GSDP) Note: *Figures for 2025-26 and 2026-27 are projections. RE is Revised Estimates; BE is budget estimates. Outstanding liabilities exclude ways and means advance, reserve funds and deposits. |
Annexure 1: Comparison of states’ expenditure on key sectors
The graphs below compare Tamil Nadu’s expenditure in 2024-25 on six key sectors as a proportion of its total expenditure on all sectors. The average for a sector indicates the average expenditure in that sector by 31 states (including Tamil Nadu) as per their budget estimates of 2023-24.[1]
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Education: Tamil Nadu has allocated 13.7% of its expenditure on education in 2024-25. This is lower than the average allocation for education by states in 2023-24 (14.7%).
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Health: Tamil Nadu has allocated 5% of its total expenditure towards health, which is lower than the average allocation for health by states (6.2%).
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Rural development: Tamil Nadu has allocated 3% of its expenditure on rural development. This is lower than the average allocation for rural development by states (5%).
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Roads and bridges: Tamil Nadu has allocated 4.9% of its expenditure towards roads and bridges. This is higher than the average allocation towards roads and bridges by states (4.6%).
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Agriculture: Tamil Nadu has allocated 6.1% of its total expenditure towards agriculture, which is higher than the average expenditure on agriculture by states (5.9%).
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Energy: Tamil Nadu has allocated 5.5% of its total expenditure towards energy, which is higher than the average allocation by states (4.7%).
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|
|
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Note: 2022-23, 2023-24 (BE), 2023-24 (RE), and 2024-25 (BE) figures are for Tamil Nadu.
Sources: Annual Financial Statement, Tamil Nadu Budget 2024-25; various state budgets; PRS.
[1] The 31 states include the Union Territories of Delhi, Jammu and Kashmir, and Puducherry.
Annexure 2: Comparison of 2022-23 Budget Estimates and Actuals
The following tables compare the actuals of 2022-23 with budget estimates for that year.
Table 7:Overview of Receipts and Expenditure (in Rs crore)
|
Particular |
2022-23 BE |
2022-23 Actuals |
% change from BE to Actuals |
|
Net Receipts (1+2) |
2,36,638 |
2,44,869 |
3% |
|
1. Revenue Receipts (a+b+c+d) |
2,31,407 |
2,43,749 |
5% |
|
a. Own Tax Revenue |
1,42,800 |
1,50,223 |
5% |
|
b. Own Non-Tax Revenue |
15,537 |
17,061 |
10% |
|
c. Share in central taxes |
33,311 |
38,731 |
16% |
|
d. Grants-in-aid from the Centre |
39,759 |
37,734 |
-5% |
|
Of which GST compensation grants |
11,972 |
16,215 |
35% |
|
2. Non-Debt Capital Receipts |
5,230 |
1,120 |
-79% |
|
3. Borrowings |
1,20,979 |
1,01,062 |
-16% |
|
Of which GST compensation loan |
6,500 |
0 |
-100% |
|
Net Expenditure (4+5+6) |
3,33,251 |
3,26,755 |
-2% |
|
4. Revenue Expenditure |
2,84,188 |
2,79,964 |
-1% |
|
5. Capital Outlay |
43,043 |
39,530 |
-8% |
|
6. Loans and Advances |
6,020 |
7,261 |
21% |
|
7. Debt Repayment |
27,128 |
27,104 |
-0.09% |
|
Revenue Deficit |
52,781 |
36,215 |
-31% |
|
Revenue Deficit (as % of GSDP) |
2.1% |
1.5% |
-28% |
|
Fiscal Deficit |
90,114 |
81,886 |
-15% |
|
Fiscal Deficit (as % of GSDP) |
3.6% |
3.5% |
-11% |
Note: Fiscal deficit for 2022-23 BE has been adjusted for GST compensation loans.
Source: Tamil Nadu Budget Documents of various years; PRS.
Table 8: Key Components of State's Own Tax Revenue
|
Tax Source/Head |
2022-23 BE |
2022-23 Actuals |
% change from BE to Actuals |
|
Land Revenue |
326 |
248 |
-24% |
|
Taxes and Duties on Electricity |
1,633 |
1,506 |
-8% |
|
State Excise |
10,589 |
10,423 |
-2% |
|
Sales Tax/ VAT |
57,203 |
59,144 |
3% |
|
Taxes on Vehicles |
7,149 |
7,513 |
5% |
|
Stamps Duty and Registration Fees |
16,323 |
17,560 |
8% |
|
State GST |
49,565 |
53,823 |
9% |
Source: Tamil Nadu Budget Documents of various years; PRS.
Table 9: Allocation towards Key Sectors
|
Sector |
2022-23 BE |
2022-23 Actuals |
% change from BE to Actuals |
|
Housing |
7,218 |
2,588 |
-64% |
|
Water Supply and Sanitation |
5,764 |
2,951 |
-49% |
|
Welfare of SC, ST, OBC, and Minorities |
5,559 |
4,378 |
-21% |
|
Irrigation and Flood Control |
6,785 |
6,297 |
-7% |
|
Police |
9,857 |
9,683 |
-2% |
|
Transport |
20,059 |
19,807 |
-1% |
|
of which Roads and Bridges |
17,652 |
15,785 |
-11% |
|
Health and Family Welfare |
17,733 |
17,621 |
-1% |
|
Urban Development |
10,396 |
10,355 |
-0.4% |
|
Energy |
17,433 |
17,642 |
1% |
|
Education, Sports, Arts, and Culture |
43,799 |
45,147 |
3% |
|
Social Welfare and Nutrition |
16,674 |
18,219 |
9% |
|
Rural Development |
9,562 |
10,527 |
10% |
|
Agriculture and Allied Activities |
21,363 |
23,648 |
11% |
Source: Tamil Nadu Budget Documents of various years; PRS.
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