Rising Deficits, Wasteful Spending: CAG Reveals Alarming Fiscal Missteps In Tamil Nadu

India’s Comptroller and Auditor General (CAG) has raised concerns about the growing fiscal stress in Tamil Nadu, pointing to a persistent mismatch between the state’s receipts and expenditures. The CAG’s audit report on state finances for the year ending March 2023, tabled in the Tamil Nadu Legislative Assembly on Tuesday, highlights a significant rise in the state’s revenue deficit and fiscal deficit.

According to the report, Tamil Nadu’s revenue deficit increased to ₹36,215 crore in 2022-23, up from ₹23,459 crore in 2018-19. While the deficit had decreased from ₹46,538 crore in 2021-22, primarily due to a 17% increase in revenue receipts, it remains a significant fiscal challenge.

The report also noted that the state government spent ₹39,530 crore on the capital account in 2022-23, accounting for just 12.1% of the total expenditure. Capital expenditure made up 39% of the total borrowings, meaning that borrowed funds were predominantly used for current consumption and repaying existing loans rather than investing in capital creation or development activities.

The fiscal deficit for the state rose to ₹81,886 crore in 2022-23, representing 3.46% of the Gross State Domestic Product (GSDP), compared to ₹47,335 crore (2.9% of GSDP) in 2018-19. However, the outstanding liability to GSDP stood at 28.64%, which is within the permissible limit of 29.3%. While the state met all targets set under the Tamil Nadu Fiscal Responsibility Act (TNFR Act), except for the revenue deficit, the overall financial situation remains concerning.

Principal Accountant General (Audit I) for Tamil Nadu, D. Jaisankar, emphasized that the state government must prioritize expenditure reduction and eliminate wasteful spending. He stressed that controlling revenue expenditure and reducing the revenue deficit cannot be achieved immediately and will require careful planning over the next three to five years.

The report also pointed out large unspent provisions in several key departments during 2022-23, including Adi Dravidar and tribal welfare, housing and urban development, municipal administration and water supply, and rural development and panchayat raj, with unspent amounts exceeding ₹1,000 crore. Jaisankar noted that these provisions remained unutilized, further contributing to the fiscal challenges.

The CAG’s report underscores the need for urgent fiscal reforms to address the state’s growing deficits and ensure sustainable financial management in the coming years.

(With inputs from Times Of India)

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