Thangam Thennarasu. File
| Photo Credit: The Hindu
Tamil Nadu Finance Minister Thangam Thennarasu on Sunday (January 19, 2025) rejected as unfounded the claims made by Leader of Opposition and AIADMK general secretary Edappadi K. Palaniswami that the State’s financial condition was in crisis. The Minister contended that Mr. Palaniswami had made baseless allegations on the financial position of Tamil Nadu without any basic understanding of economics and financial management.
The former Chief Minister had at a public meeting in Chennai on Saturday (January 18,2025) alleged that Tamil Nadu was on the verge of an economic collapse owing to increasing burden of debts. Rejecting this, Mr. Thennarasu told journalists in Virudhunagar that the State Government’s borrowings was well within the limits prescribed by the Union Finance Commission.
According to him, Mr. Palaniswami had made wrong comparison between the quantum of borrowings made during the erstwhile AIADMK regime and that of the current DMK regime in terms of absolute numbers, whereas the borrowing limit is determined by the Gross State Domestic Product (GSDP) and the repaying capacity of the State Government.
Mr. Palaniswami had complained that the borrowings under the four-year rule of DMK was much higher than the total debts during the 10-long years of AIADMK government.
“It is regretable that the former Chief Minister has spoken on this without the basic understanding on State borrowings,” the Finance Minister said.
Recalling that he had explained it in detail in the State Assembly, Mr. Thennarasu said, despite that Mr. Palaniswami had been repeatedly making this allegation. The annual Budget outlay was ₹1.20 lakh crore in 2011 while it has grown to ₹4.12 lakh crore in 2024. Similarly, the GSDP which was ₹7.51 lakh crore in 2011 has increased to ₹31.55 lakh crore.
“A comparison between the Budget outlay and GSDP (in the last 14 years), the basis of quantum of borrowings could be understood … the growth of the State’s economy would increase the loan repaying capacity of the Government,” he added. Besides, the borrowings of Tamil Nadu Government was well below the prescription of the Union Finance Commission.
He noted the borrowings in 2021-22 was 27.01% of the GSDP of the year which was less than the borrowing capacity stipulated for Tamil Nadu by the Finance Commission. The borrowings in subsequent years have been 26.87% as against 29.3% in 2022-23; 26.72% as against 29.1% in 2023-24 and 26.4% as against 28.9% in 2024-25.
“Even the biggest State economy of the country, Maharashtra is borrowing. What should be noted is whether Tamil Nadu’s borrowings is within its repayment capacity. Tamil Nadu’s financial position is within the control,” he said.
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“That Mr. Palaniswami himself has pointed out that the State’s tax has increased by ₹1.10 lakh crore only reflected the technological initiatives taken by the State Government in effective financial management. The economy of Tamil Nadu has grown 14% owing to the new initiatives,” Mr. Thennarasu said.
Fund tracking system has helped the Government in release of funds for various projects on right time avoid payment of additional interest on loan.
“Tamil Nadu Government had to spend ₹26,000 crore from its coffer for Chennai Metro Rail project as the Centre had denied funds. Similarly, the State Government was faced with ₹50,000 crore loss funding due to the mismanagement of TANGEDCO during the AIADMK Government,” he added.
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Tamil Nadu Government had to spend for the damages caused by natural calamities also as Centre was yet to give any relief to the State. Around ₹2,000 crore under Samagra Shiksha Abhiyan due to Tamil Nadu from Centre was not disbursed. For the Prime Minister’s Housing Scheme, Tamil Nadu was spending additional cost.
“Despite the financial crunches caused by the “step-motherly treatment” of the Centre, Tamil Nadu Government was very well managing the State’s finances,” he added. He appealed to the Centre to allocate more funds to developing States such as Tamil Nadu so that its benefits could reach other economically-weaker States.
Published – January 19, 2025 03:54 pm IST
