Once upon a time in a land not far from home, the DMK government decided to play Santa Claus all year round and throw a never-ending party, showering its citizens with freebies galore. Fast forward to 2024, and the hangover has hit hard.
For the fourth consecutive year, Tamil Nadu has clinched the title of “Top Borrower,” with a jaw-dropping ₹1,55,584.48 crore (one lakh fifty-five thousand five hundred and eighty-four crores and 48 lakhs) in borrowings planned for 2024-25. The state’s outstanding debt is set to balloon to a staggering ₹8,33,361.80 crore (eight lakh thirty-three thousand three hundred and sixty-one crores and 8 lakhs) by March 31, 2025. Talk about a financial fiesta gone wrong! Bravo, MK Stalin, Bravo!
The Borrowing Bonanza
But why stop at being the top borrower for just one year? Tamil Nadu’s love affair with debt is a tale for the ages. With gross market borrowings of ₹1,13,000 crore in 2023-24, the state out-borrowed its peers, leaving Maharashtra, Uttar Pradesh, and others eating its fiscal dust. It’s like Tamil Nadu is on a borrowing binge, and it’s the undisputed champion of the debt derby.
Enter Thangam Thenarasu, the state’s Finance Minister, who insists that all this debt is just a walk in the park, well within the norms prescribed by the Finance Commission. Of course, he glosses over the inconvenient truth that the state is sinking in losses from Tamil Nadu Generation and Distribution Corporation (Tangedco) and is being forced to take loans for the Chennai Metro’s Phase II project. But hey, who’s keeping track?
Image source: DALL-E
List of known sources Tamil Nadu government is borrowing from
According to a TOI report, Tangedco is considering obtaining loans from public sector banks to reduce interest payments on its regulatory asset of ₹1.59 crore. Central finance institutions such as Power Finance Corporation (PFC) and Rural Electrification Corporation Limited (REC) currently charge around 11% interest. Tangedo pays ₹13,500 crore in year interest on loans from PFC, REC, Tamil Nadu Power Finance and Infrastructure Development Corporation Limited (TNPFC), and banks.
The Debt Debacle
With the highest outstanding debt in the country at a jaw-dropping ₹7.54-lakh crore, Tamil Nadu is flirting with financial disaster. And with plans to borrow a whopping ₹1.43-lakh crore in 2023-24, it’s clear that the DMK’s freebie fiesta has plunged the state into a deeper economic abyss.
AIADMK expresses concern over rising debt in Tamil Nadu
Tamil Nadu assembly on Wednesday witnessed heated exchanges between AIADMK, the main opposition and state’s treasury benches over rising debt in the state. According to a TOI report, AIADMK general secretary EPS said, he was afraid of that the debt of the DMK govt “will rise to 5 lakh crore during your five-year term.”
His criticism was in response to the state budget being presented by finance minister Thangam Thennarasu last week, who admitted that the outstanding debt as on March 31, 2025, would be 8.33 lakh crore.
“The concern here is the reasons for the debt. Instead of spending it for capital infrastructure, the state govt is spending on revenue expenditures,” EPS added.
The AIADMK, isn’t going to miss this golden opportunity to point fingers. They’re having a field day in the Tamil Nadu assembly, expressing concerns over the skyrocketing debt. And who can blame them? The state’s debt is expected to soar to an eye-watering ₹8.33 lakh crore by 2025, all thanks to the DMK’s reckless spending spree.
The Freebie Fiasco
So, what’s the deal with all these freebies? From free TVs to mixer-grinders, bicycles to sarees, the DMK government has been doling out goodies like there’s no tomorrow. But as the saying goes, there’s no such thing as a free lunch. These giveaways might have won the DMK some brownie points with the voters, but they’ve also dug a massive hole in the state’s finances.
As Tamil Nadu teeters on the brink of a fiscal cliff, it’s time for some serious soul-searching. Was all that free stuff really worth it? With the state grappling with its debt dilemma, it’s a wake-up call for the DMK to get its act together. After all, you can’t party your way out of a financial crisis.
Tamil Nadu’s debt drama is a cautionary tale of how a freebie fiesta can turn into a financial fiasco. As the state navigates its way through this economic quagmire, it’s a reminder that fiscal responsibility should never take a backseat to populist politics. Here’s hoping that Tamil Nadu finds a way to balance its books and emerge stronger from this debt debacle.
