Tamil Nadu will be able to achieve public debt sustainability only if its fiscal deficit is brought down to 2% of the Gross State Domestic Product (GSDP) from 2023-24, according to a recent working paper published by the Madras School of Economics (MSE).
This can be achieved through revenue augmentation or expenditure containment, or both. “Revenue augmentation within the limited scope of the State is possible through better tax compliance, revision of tax on transport (motor vehicle), and by augmenting non-tax revenues. On the expenditure side, it is inevitable to cut down on unproductive subsidies and expenses, besides better targeting of welfare schemes through efficient data management,” says the paper authored by K. R. Shanmugam, Director and Professor, MSE, and K. Shanmugam, former Chief Secretary, who was the State’s Finance Secretary for over nine years.
