Tamil Nadu’s Off-Budget Borrowings Surge

Overview of Off-Budget Borrowings

Tamil Nadu’s Off-Budget Borrowings Surge: Tamil Nadu’s off-budget borrowings reached ₹3,919.10 crore as of March 31, 2024, marking a significant increase from ₹2,298.54 crore recorded in March 2023. These borrowings are primarily raised by State public sector entities and are repaid through the State Budget, indirectly contributing to the overall fiscal liabilities of the state.

Static GK fact: Tamil Nadu is the second most populous state in India with a population exceeding 7.5 crore, which influences its fiscal planning and budget allocations.

Major Contributors

Among the key contributors, the Water Resources Conservation department accounted for ₹1,591.53 crore, while the Water and Sanitation Pooled Fund contributed ₹380.14 crore. These entities undertake essential infrastructure and water management projects, necessitating additional borrowings beyond the regular budget.

Fiscal Implications

Off-budget borrowings increase the state’s contingent liabilities, as the repayment burden ultimately falls on the State Budget. This requires careful monitoring to ensure sustainable debt management and maintain fiscal health.

Static GK Tip: Tamil Nadu has historically maintained a fiscal deficit within the 3% limit set by the Fiscal Responsibility and Budget Management (FRBM) Act.

Future Borrowing Plan

For the 2025-26 financial year, Tamil Nadu plans to borrow ₹1,62,096.76 crore while repaying ₹55,844.53 crore. Consequently, the outstanding borrowings are projected to reach ₹9,29,959.3 crore by March 31, 2026. This highlights the increasing reliance on both budgeted and off-budget loans for funding development projects.

Static GK fact: Tamil Nadu contributes approximately 8% of India’s GDP, making its fiscal management critical for overall economic stability.

Conclusion

Tamil Nadu’s rising off-budget borrowings reflect both the state’s development needs and the growing financial pressures on its budget. Effective monitoring, transparent reporting, and strategic repayment plans are essential to balance infrastructure growth with fiscal responsibility.

Static Usthadian Current Affairs Table

Tamil Nadu’s Off-Budget Borrowings Surge: