Jaya charge puts focus on Tamil Nadu's growing debt

CHENNAI: Opposition leader and AIADMK chief J Jayalalithaa’s charge that the DMK regime’s economic policies are dragging Tamil Nadu into a debt trap has raised concerns about the state’s fiscal health, even though the government has been maintaining that none of the components of its vast social safety net, including populist schemes, will have an adverse impact on its finances.
Going by data released by the government, its liabilities (largely comprising central dues, market borrowings and loans from financial institutions) are estimated to be Rs 85,395 crore at the end of the current fiscal. With some huge additional expenditure on the cards, borrowings are likely to go up even further.
However, economists say the figures are not alarming given the fact that an industrial slowdown had affected government revenues. Also, the state was forced to increase public spending, especially on food subsidies, due to recession and price rise.
Jayalalithaa had expressed fears on Monday that the state’s liabilities may spurt to over Rs 90,000 crore in view of, what she termed, the DMK government’s tendency to spend on resources that created no value, such as free television sets. The figure itself may not be far off the mark, as the trend over the last few years indicates that the state is returning to the era of revenue deficits, which it had eliminated a few years ago, and that its borrowings are getting higher.