Developmental expenditure*
Tamil Nadu had an amount of Rs. 33,670 crores allocated under this head, below that of Andhra Pradesh (Rs. 53,933 crores) and Maharashtra (Rs. 48,813 crores) and equal to that of Karnataka (Rs. 33,699 crores). (Table 6)

Table 6: Developmental expenditure

(Rs.crore)

State
2005-06
(Accounts)
2006-07
(RE)
2007-08
(BE)
Growth rate
(06-07 over 05-06)
Growth rate
(07-08 over 06-07)
Andhra Pradesh
29,553
40,424
53,933
36.78%
33.42%
Gujarat
21,569
25,299
25,159
17.29%
-0.55%
Karnataka
22,734
29,283
33,699
28.81%
15.08%
Kerala
10,697
14,174
14,549
32.50%
2.65%
Maharashtra
43,408
48,487
48,813
11.70%
0.67%
Tamil Nadu
22,042
30,743
33,670
39.47%
9.52%

Source: State finances; a study of budgets of 2007-08; RBI

*Since Plan expenditure estimates for all states, except Maharashtra are not available for 2008-09, comparison has been made using 2007-08 figures.

Capital expenditure
Tamil Nadu’s capital expenditure has improved to Rs. 8,876 crores (2008-09 BE) from Rs. 8,327 crores (2007-08 RE). However, Andhra Pradesh, Gujarat, Karnataka and Maharashtra have a better capital outlay (Table 7).

Table 7: Capital outlay

(Rs.crore)

State
2005-06
(Accounts)
2006-07
(RE)
2007-08
(BE)
Growth rate
(06-07 over 05-06)
Growth rate
(07-08 over 06-07)
Andhra Pradesh
9,904
12,912
17,852
30.37%
38.26%
Gujarat
9,990
9,502
11,229
-4.88%
18.18%
Karnataka
8,900
9,330
10,169
4.83%
8.99%
Kerala
903
1,499
1,562
66.00%
4.20%
Maharashtra
11,591
13,406
14,471
15.66%
7.94%
Tamil Nadu
6,604
8,327
9,876
26.09%
18.60%

Source: State finances; a study of budgets of 2007-08; RBI

Expenditure on education*
It is encouraging to note that Tamil Nadu has invested heavily in education. Of aggregate disbursement, the state has spent about 14.35 percent (average 2000-2008) on education. This is lower than Kerala’s 17.55 percent, but much higher than Andhra Pradesh’s 11.51 percent. However, over the years, education’s share in total disbursement in Tamil Nadu has fallen from 18 percent in 2000 to 15.1 percent in 2007-08. (Table 8)

Table 8: Education share in total disbursement

Percent

 State 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
(RE)
2007-08
(BE)
Average
Andhra Pradesh
13.3
12.5
11.7
11.6
9.8
11.1
11.7
10.4
11.51
Gujarat
13.6
12.7
13.5
11.2
11.5
12.6
12.2
12.2
12.44
Karnataka
17.7
16.0
14.8
12.9
12.7
14.0
13.5
14.5
14.51
Kerala
20.0
19.0
17.6
15.7
16.2
16.6
17.2
18.1
17.55
Maharashtra
22.3
22.1
18.9
15.5
14.0
15.7
16.2
15.0
17.46
Tamil Nadu
18.0
17.3
13.8
12.6
11.2
13.6
13.2
15.1
14.35

Source: State finances; a study of budgets of 2007-08; RBI

Public health and family welfare*
Tamil Nadu’s expenditure on public health and family welfare as percent of aggregate disbursement has fallen from 4.9 percent in 2000-01 to 4.2 percent (BE 2007-08). The average for the period 2000-2008 is 4.13 percent, better than the average for Andhra Pradesh (3.76 percent) and Karnataka (3.93 percent), but worse than Kerala’s (4.86 percent).

Table 9: Public health and family welfare expenditure as percent of aggregate disbursement

Percent

 State 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
(RE)
2007-08
(BE)
Average
Andhra Pradesh
4.7
4.4
4
3.7
3.2
3.4
3.4
3.3
3.76
Gujarat
3.4
2.8
3.2
2.7
2.8
3.1
2.9
3.1
3.00
Karnataka
5.1
4.9
4.2
3.4
3
3.3
3.6
3.9
3.93
Kerala
5.3
5.8
4.8
4.3
4.5
4.7
4.9
4.6
4.86
Maharashtra
3.9
4.3
3.7
3.2
2.7
3.2
3.3
3.3
3.45
Tamil Nadu
4.9
4.9
4.1
3.8
3.2
4.2
3.7
4.2
4.13

Source: State finances; a study of budgets of 2007-08; RBI


Social expenditure*
Tamil Nadu’s social expenditure moved up from Rs. 9,618 crores in 2000-01 to Rs. 21,221 crores (BE 2007-08), registering a CAGR of 11.97 percent, lesser than that for Andhra Pradesh (15.98 percent) and Karnataka (14.30 percent) (Table 10). In terms of social expenditure to total expenditure, Tamil Nadu (35.68 percent, average 2000-2008) compares favourably with Kerala (35.60 percent), Karnataka (33.60 percent) and Andhra Pradesh (33.43 percent). (Table 11)

Table 10: Expenditure on social welfare

(Rs. Crore)

 State 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
(RE)
2007-08
(BE)
Average
Andhra Pradesh
10,006
10,876
11,179
13,367
13,821
14,900
21,119
28,247
15.98%
Gujarat
9,681
9,029
8,177
8,992
10,127
10,995
13,055
13,378
4.73%
Karnataka
7,541
7,642
7,570
8,315
9,764
11,675
15,479
19,225
14.30%
Kerala
5,242
4,932
6,338
5,924
7,344
7,524
9,768
10,472
10.39%
Maharashtra
15,429
15,452
15,704
18,877
20,433
24,268
29,928
31,307
10.64%
Tamil Nadu
9,618
9,190
9,662
11,586
13,617
14,297
18,778
21,221
11.97%

Source: State finances; a study of budgets of 2007-08; RBI


Table 11: Social expenditure to total expenditure

Percent

 State 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
(RE)
2007-08
(BE)
Average
Andhra Pradesh
35.6
35
32.5
33.3
29.3
30.8
34.8
36.1
33.43
Gujarat
35.6
35.2
30.4
27.3
29
32.1
33.6
32.1
31.91
Karnataka
38.3
34.8
31.4
28.4
28.5
33.4
34.9
39.1
33.60
Kerala
39.9
37.6
37.4
30
36.2
35.6
34
34.1
35.60
Maharashtra
36.6
36.4
33.3
30.9
28.1
35.3
38.2
37.9
34.59
Tamil Nadu
39.4
37
32
34.3
32.6
36.9
35.3
37.9
35.68

Source: State finances; a study of budgets of 2007-08; RBI

Interest payments

Analysis of interest payments reveals that Tamil Nadu has the least burden of interest payment vis-à-vis total revenue expenditure (Table 12)

Table 12: Interest payments vis-à-vis revenue expenditure (2008-09 BE)


State
Interest payment
(2008-09 BE)
Interest payment as percent of total revenue expenditure
Andhra Pradesh
8,985
12.80%
Gujarat
7,384
19.32%
Karnataka
5,278
16.60%
Kerala
5,144
18.17%
Maharashtra
12,389
15.69%
Tamil Nadu
5,957
10.82%

Source: State Budget documents

Fiscal indicators*

Tamil Nadu has been consistently a better fiscal performer among key states. Both in terms of gross fiscal deficit and revenue deficit as percentage of GSDP, the ratios are far superior to that of other states. Moreover, own tax revenue as percentage of GSDP is also high. However, both Andhra Pradesh and Karnataka have better development expenditure/GSDP ratios. In terms of social sector spending, there is little to choose between Andhra Pradesh, Karnataka and Tamil Nadu. However, Andhra Pradesh and Karnakata have better capital outlay ratios in relation to the respective GSDP. Table 13 gives a snapshot picture of the key fiscal indicators.

Table 13: Key fiscal indicators (2008-09 BE)


 State
GFD/GSDP
RD/GSDP
OTR/GSDP
*DEV/GSDP
*SSE/GSDP
CO/GSDP
Andhra Pradesh
(2.92)
0.21
11.44
15.3
8.0
5.39
Gujarat
(0.15)
0.15
9.17
10.3
5.3
3.47
Karnataka
(2.31)
(1.22)
12.89
15.1
8.0
4.17
Kerala
4.26
(2.07)
9.70
10.4
7.2
0.96
Maharashtra
(2.19)
0.16
10.14
9.8
6.0
2.41
Tamil Nadu
(2.98)
0.03
10.10
12.7
7.8
3.01

Source: *State finances; a study of budgets of 2007-08; RBI

GFD-Gross Fiscal Deficit DEV-Development Expenditure RD-Revenue Deficit
OTR-Own Tax Revenue SSE-Social Sector Expenditure CO-Capital Outlay

*Since estimates for all the states are not available for 2008-09, comparison has been made using 2007-08 figures.


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