With Tamil Nadu’s fiscal deficit (FD) likely to exceed ₹1 lakh crore during 2024-25, the question arises whether the State will be able to bring down FD in terms of absolute value.
There is a view that a reduction in FD [the difference between total expenditure and total revenue receipts and non-debt capital receipts] is unlikely as the deficit is measured in relation to, or in proportion to, the Gross State Domestic Product (GSDP), the value of which goes up every year. What is more important than a mere reduction in the value of FD is that norms of fiscal responsibility have to be implemented in letter and in spirit.
