Tamil Nadu ended fiscal 2022-23 with gross market borrowings of ₹87,000 crore and was the top borrowing State. However, analysts pointed out that the quality of borrowing improved as it was channelised towards capital assets.
As per the data from Reserve Bank of India (RBI), Tamil Nadu’s gross market borrowings were at the same level as 2021-22. Tamil Nadu was the top borrowing State in terms of gross borrowings in 2022-23, followed by Maharashtra (₹72,000 crore), West Bengal (₹63,000 crore), Andhra Pradesh (₹57,478 crore) and Uttar Pradesh (₹55,612 crore).
States, including Tamil Nadu, borrow from the market through auction of bonds known as State Development Loans (SDL). As per the preliminary unaudited provisional figures from the Comptroller and Auditor General of India (CAG), the State’s tax revenue increased nearly 18 per cent to ₹1,88,953.57 crore in 2022-23 from ₹1,60,324.66 crore in 2021-22.
The State’s total revenue receipts, which includes the State’s Own Tax Revenue (SOTR), share of Union Taxes, Non-Tax Revenue and Grants-in-aid and contributions, was ₹2,42,013.85 crore for 2022-23. Its total receipts (which included revenue receipts and capital receipts) stood at ₹2,43,133.76 crore in 2022-23 as per the preliminary figures. The total expenditure (revenue and capital expenditure, including net loans and advances) was ₹3,15,552.75 crore for 2022-23.
The revenue expenditure has come in at ₹2,69,562.94 crore for 2022-23, lower than the ₹2,47,5,79.99 crore in 2021-22. Revenue expenditure includes expenditure on salaries to government employees, pensions and other retirement benefits, operations and maintenance expenditure, interest on outstanding loans and subsidies and grants, scholarships and contributions, including the devolution to local bodies.
The revenue deficit, which indicates that expenditure exceeds receipts, came in at ₹27,549.09 crore for 2022-23. This was 34% lower than the ₹41,685.94 crore in 2021-22. Tamil Nadu’s fiscal deficit, the difference between total receipts and total expenditure, stood at ₹72,418.99 crore in fiscal 2022-23, which was lower than ₹76,293.44 crore in fiscal 2021-22, as per CAG.
The quality of deficit (defined as the ratio of revenue deficit and fiscal deficit) has seen a significant improvement, Paras Jasrai, Senior Analyst, India Ratings & Research said. The ratio was 38.02% in 2022-23 as per CAG numbers and it was a six-year high when compared to 22.52% in fiscal 2017, he pointed out.
Mr. Jasrai said since fiscal 2018 about 50% of the State’s market borrowings went towards financing revenue expenditure and about 38% has gone towards revenue expenditure in 2022-23. This means 62% of borrowing has gone towards capital expenditure in 2022-23. Higher borrowing is being channelised towards capital assets which is beneficial for the state from the long term economic growth perspective, he noted.
Capital expenditure includes capital outlay that leads to the creation of assets, such as schools, hospitals, and roads and bridges, and helps in improving economic activity and creating jobs. It also includes loan repayment.
The State’s capital expenditure (including net of loan and advances) increased 15% to ₹45,989.81 crore in fiscal 2022-23 from ₹39,962.27 crore in 2021-22.
A recent RBI study revealed a significant and positive association between States’ capital outlay and Gross State Domestic Product (GSDP). A one percent increase in capital outlay led to a 0.82-0.84 percent increase in GSDP, it said.
After adjusting for repayments, Tamil Nadu’s net borrowings was ₹65,722 crore in 2022-23, when compared to ₹72,500 crore in 2021-22.
