Amount of subsidies provided by T.N. government rise between 2019-20 and 2023-24

Subsidies being provided by the Tamil Nadu government, both in absolute terms and as a proportion of revenue receipts and revenue expenditure, are on the rise and are expected to go up.

A perusal of the report of the Comptroller and Auditor General of India (CAG) on State Finances for 2023-24 reveals that the amount of subsidies rose from ₹20,114 crore during 2019-20 (COVID-19 pandemic year) to ₹37,749 crore during 2023-24. On a year-to-year basis, the subsidies saw a growth of about 27%, which was attributed to the introduction of the Kalaignar Magalir Urimai Thogai (KMUT) scheme. Tabled on the floor of the Assembly on Friday, the report dealt with finances of the State for five years from 2019-20 to 2023-24.

As a proportion of revenue receipts (RR) and revenue expenditure (RE), the subsidies increased from 11.54% to 14.27% for RR and 9.57% to 12.19% for RE over the five years in question. In respect of non-committed expenditure, which forms a part of RE and excludes items such as salaries, pension, and interest payment, the share of subsidies grew from 35.12% to 38.91%.

The report divides subsidies into two broad categories — explicit and implicit. Under the former, whatever is booked under the head ‘subsidies’ is considered. Among the items of ‘explicit subsidies’ are the KMUT, public distribution system (PDS), subsidised power supply to the domestic category, free bus travel for women, and students’ concession in bus fare.

Implicit subsidies arise when the government provides social and economic goods/services at a price lesser than its cost. It can be direct or in kind or as concessions, according to the CAG. Free supply of bicycles and production and distribution of quality seeds are some of the examples for ‘implicit subsidies’, which cost ₹801.77 crore to the exchequer during 2023-24. The CAG has advised the State government “to initiate measures to earn adequate returns on its investments and recover its cost of borrowed funds rather than bearing the same on its budget in the form of implicit subsidies.”