Tamil Nadu hit by debt, freebies: State records highest revenue deficit in India

The state's revenue deficit has soared 885% in the last five years, thanks to the freebie culture coupled with poor tax collections. This, despite the state having a high gross domestic product and tax revenues. But, what is alarming is the fact that the state has doubled its gross deficit to 40,500 crore in 2016-2017.

It's high time that the ministers of Tamil Nadu reconsider their populism tactics. Offering freebies like free electricity, television, cycle etc has dug a deep hole in the pockets of the state exchequer. Consider this for a clear picture - The state has recorded the highest revenue deficit of 15,850 crore in India in 2016-17.

Also the state's revenue deficit has soared 885% in the last five years, thanks to the freebie culture coupled with poor tax collections due from real estate. Needless to say, both circumstances continue to drain the treasury out.

The state was revenue surplus in 2012-2013 with a record 1,760 crore. Incidentally, the deficit also went down by 1,790 crore in the same year. However, things started falling down as the deficit percentage increased to 258% in 2014-15; 47% in 2015-16 and 67% in 2016-17. Speaking to the Times of India,  P Ravi Chandran, Chairman, Southern region, CII opined, "It is time that political parties start taking tough decisions. For instance, freebies like free power have made state-owned power-distribution entity TNEB bleed. From a high revenue-generating company it is now heavily debt-ridden. Populism should not be at the cost of pragmatism."

But what is alarming is the fact that the state has doubled its gross deficit to 40,500 crore in 2016-2017 in the last two years. The state ranked third in terms of gross fiscal deficit, after Uttar Pradesh and Rajasthan. Although the first two states have managed to lower their fiscal deficit to a considerable extent, Tamil Nadu has increased its fiscal deficit percent by 54% from 32,300 crore in 2014-15. 

Expressing his concern over the economic condition of the state, Ravichandran further added,"The state's finances are in disarray. They need to do a rethink; one's expenditure cannot always be higher than one's income. We cannot infinitely keep borrowing."

To top it all, Tamil Nadu's debt has also soared by 68% in the last five years.