Tamil Nadu is one of the very few states in the country which is financially sound, and the state government’s freebies would not have any impact on the exchequer, said the Union finance minister Pranab Mukherjee.
After launching the Congress party's manifesto for the April 13 Tamil Nadu Assembly election here on Saturday, the Finance Minister said the 13th Finance Commission recommendation was that the states must cap their net borrowings between 3 per cent and 3.5 per cent of GSDP in 2011-12, whereas the Tamil Nadu government's borrowings were much less than the recommendation.
It was 1.01 per cent in 2005-06, 1.61 per cent in 2006-07, 1.34 per cent in 2007-08 and 3.01 per cent in 2008-09, which was due to financial crisis. “In the coming years, it is expected the state will not go beyond 3.44 per cent,” Mukherjee said.
“Tamil Nadu is one of the very few states in the country, which has exercised financial discipline and consolidation is satisfactory”.
He noted that as on March 24, 2011, the state government’s cash balance was Rs 13,537 crore. Tamil Nadu did not take overdraft from the Reserve Bank of India for a single day, unlike many other states, he said.
The 13th Finance Commission recommendation (Union government financial support to state government) to Tamil Nadu has increased by 127 per cent to Rs 83,437 crore from Rs 36,688 crore, between 2005 and 2010. The development expenditure has also increased to Rs 17,500 crore from Rs 9,113 crore in six years.
On freebies that successive governments have doled out over the years, the Finance Minister said that many successful governments have followed the policy and it had helped the people who are living below the poverty line (BPL).
The various schemes implemented by the ruling DMK-government has increased the state’s debt to the tune of over Rs 1.75 lakh crore from Rs 80,000 crore, a year ago, according to reports.
