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POVERTY REDUCTION STRATEGY TN

The chain from growth to

The chain from growth to human development can be traced as follows: with higher growth, government earns and spends more relative to GDP, the composition of its spending favour the human development priority sectors more; at the same time, with higher per capita incomes, household expenditure also increases in favour of health and education. The impact on poor households is higher when growth and fiscal policies are human development-oriented. Lipton and Ravallion (1995) note that undifferentiated subsidisation of human capital formation is unlikely to be inherently pro-poor. They observe: “Income elasticities of demand for education and health care of unity or higher are plausible for LDCs (Theil and Finke, 1985; Schieber and Poullier, 1989; and Gertler and van der Gaag, 1990). However, a consensus is emerging in favour of differentiated expansion in primary education and basic health care, as an instrument for poverty reduction (World Bank, 1990)”. Empirical studies on incidence of subsidies note that existing allocations to primary education and basic health care are generally pro-poor, as much of the subsidies per head received by the poor account for a relatively higher proportion of their income or expenditure. Also, the rich shift to private market for health and education in search of better quality of services. Allocations to education and health care above primary level, however, favour the non-poor as they have better access to higher education and specialty hospitals. 3.2 State Finance of Tamil Nadu: An Overview This section looks at Tamil Nadu’s state finances in a medium term perspective in the context of the growth and the changing structure of the Tamil Nadu economy. Tamil Nadu has historically been one of the fiscally better managed states, although like all other state governments, Tamil Nadu had also witnessed deterioration in various indicators of fiscal balance towards the end of the nineties and the early years of the current decade including large revenue deficits, and large fiscal deficits relative to GSDP. Tamil Nadu’s major strength emanates from its distinction of having the highest tax- GSDP ratio among all Indian states. The reasons for deterioration during the late nineties up to the first few years of the current decade are to be found in low growth rates in the first three years of the decade, the impact of salary increases in the wake of the recommendations of Fifth Central Pay Commission in combination with the fact that Tamil Nadu has a very high 52

atio of government employees to population, and high nominal interest rates in the late nineties. The situation has progressively improved in recent years. In order to examine the medium term prospects, it is useful to review the trends in state finances over a long period. Table 3.1 provides the time-profile of major fiscal aggregates relative to GSDP over the period 1993-94 to 2009-10 BE. Table 3.1: Tamil Nadu State Finances: Selected Fiscal Aggregates (Percent of GSDP 1999-00 base series) Indicators 1993-94 1994-95 1995-96 1996-97 1997-98 1998-99 Own Tax Revenues 7.85 8.00 8.61 8.42 7.90 7.66 Own Non-tax Revenues 1.14 1.04 1.01 0.92 1.00 0.89 State's Own Revenue 8.99 9.04 9.62 9.34 8.90 8.56 Total Central Transfers 4.19 3.58 3.12 3.26 3.44 2.77 Share in Taxes and Duties 2.56 2.39 2.20 2.31 2.50 1.94 Grants 1.63 1.19 0.91 0.95 0.93 0.83 Total Revenue Receipts 13.18 12.62 12.73 12.60 12.33 11.33 Revenue Expenditure 14.31 13.19 13.11 13.76 13.57 14.07 Revenue Surplus/Deficit(-) -1.13 -0.57 -0.37 -1.16 -1.24 -2.74 Fiscal Surplus/Deficit (-) -2.22 -2.05 -1.51 -2.58 -1.93 -3.80 Capital Outlay 0.90 0.93 0.71 0.97 1.33 0.92 Outstanding Liabilities 18.69 18.30 17.98 18.06 17.61 18.36 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05 Own Tax Revenues 8.14 8.36 8.73 9.06 9.06 9.64 Own Non-tax Revenues 0.94 1.12 0.99 1.17 1.19 1.10 State's Own Revenue 9.08 9.48 9.72 10.23 10.26 10.74 Total Central Transfers 3.02 2.94 2.85 2.93 2.90 3.43 Share in Taxes and Duties 2.01 1.90 1.93 1.92 2.01 2.11 Grants 1.01 1.04 0.93 1.00 1.21 1.32 Total Revenue Receipts 12.10 12.42 12.57 13.16 13.48 14.17 Revenue Expenditure 15.38 14.76 14.41 16.22 14.37 14.52 Revenue Surplus/Deficit (-) -3.28 -2.34 -1.84 -3.06 -0.89 -0.35 Fiscal Surplus/Deficit (-) -4.01 -3.46 -3.18 -4.26 -3.18 -2.77 Capital Outlay 0.48 1.05 1.19 1.03 2.04 2.27 Outstanding Liabilities 21.19 22.76 25.45 27.73 29.34 24.81 2005-06 2006-07 2007-082008-09 RE2009-10 BE Own Tax Revenues 10.44 10.57 9.80 9.89 9.76 Own Non-tax Revenues 1.16 1.30 1.09 1.62 0.86 State's Own Revenue 11.60 11.87 10.90 11.51 10.62 Total Central Transfers 3.59 3.70 4.83 4.37 4.12 Share in Taxes and Duties 2.24 2.43 2.67 2.44 2.30 Grants 1.35 1.27 2.16 1.93 1.82 Total Revenue Receipts 15.19 15.57 15.73 15.88 14.75 Revenue Expenditure 14.32 14.57 14.23 15.88 15.01 Revenue Surplus/Deficit (-) 0.87 1.01 1.50 0.00 -0.26 Fiscal Surplus/Deficit (-) -1.01 -1.51 -1.22 -2.65 -2.99 Capital Outlay 1.81 2.27 2.47 2.55 2.55 Outstanding Liabilities 25.70 22.91 21.40 21.42 21.61 Source (Basic Data): State Budget Documents of Tamil Nadu, various years. 53

World Comparative Economic And Social Data
Police Stations - Tamil Nadu Police
N u m b e r o f S c h o o l s - DISE
Census 2011 population of Latur district
PDF: 1.0MB - Population Reference Bureau