Introduction

In the Governor’s Address to start the term of the 16 ^th Legislative Assembly of Tamil Nadu on 21.6.2021, it was indicated that the Government would place a White Paper detailing the fiscal situation of Tamil Nadu in the public domain to enable the Members of the Legislative Assembly and the people to understand the true status of their Government’s finances.

Every Government is elected with the mandate to accelerate economic development to ensure that more jobs and livelihood opportunities are created for the people, to provide public goods-including maintenance of law and order, and for the provision of justice, education, health care, transport and other basic infrastructure and environmental protection. The economic core of governance is the process of raising resources to pay for the provision of public goods and services and the creation of such vital infrastructure, and to provide a safety net for the most under-privileged and unfortunate victims of circumstance. When adequate resources are fairly raised, properly managed, and efficiently utilized, the Government can fulfill the promises made to the people. Taxation must be fair and targeted, and at a level where it is not oppressive but adequate to cover essential expenditure. Resources should be utilized minimizing wastage and corruption.

Tamil Nadu is a State with enormous potential. The people of our State aspire to be at the forefront of economic growth and prosperity. They have a legitimate expectation that they should receive high quality infrastructure and public goods and services like good roads and the supply of clean water, from the Governments they elect. Hence, the yardsticks to be applied for Tamil Nadu whether developmental indicators or fiscal parameters are aspirational yardsticks, and progress must be calibrated with reference to the full potential of our State.

Through this White Paper we seek to place before the elected representatives and the electorate, an accurate and detailed statement of the present fiscal position of Tamil Nadu, the challenges posed, and the fiscal risks and vulnerabilities we face. We hope this report will provide a common understanding of the variables that both direct and constrain the Government’s actions and policies, as we work to ensure that we fulfill our commitments to the people. Such a common understanding is in keeping with the Hon’ble Chief Minister’s vision of a transparent Government that functions with continuous engagement with the electorate.

This report is structured in sections starting with an assessment of the State’s fiscal position, which was the primary objective stated in the Governor’s Address. It details the state of the core finances of Tamil Nadu, with an examination of the path that led to this situation. It further deepens the analysis to review the status of major Public Sector Enterprises and agencies that provide essential services such as water, power, transportation, and local administration to the people of the state.

The next section covers the economic scenario for the period covering the 13th (2006 – 2011), 14th (2011-2016), and 15th (2016 – 2020) Legislative Assemblies of Tamil Nadu. It examines the economic outcomes that Tamil Nadu has experienced, taking into consideration factors both within and beyond the control of the Government of Tamil Nadu.

The final section is a conclusion which encapsulates the findings, and highlights some of the immediate and longer-term implications for Government policy and planning. It also states some of the specific actions that will be undertaken in an ongoing effort to bring greater transparency to the functioning of the Government, in keeping with the Hon’ble Chief Minster’s policy vision.