POVERTY REDUCTION STRATEGY TN

for the five-year period Tamil Nadu has been given a total grant of Rs. 4135 crore by the
TFC. A grant of comparable magnitude has never been given to Tamil Nadu by earlier
FCs.
f. Structure of Expenditure
Revenue expenditure constitutes by far the largest share of total expenditure. Of which,
interest payments and pensions constitute important components of committed
expenditures. Revenue expenditures as a whole have been rising since 1995-96 when it
was about 13.1 percent of GSDP. It rose to a peak of about 15.4 percent in 1999-00, fell
marginally and rose to 16.2 percent of GSDP in 2002-03, and fell there after and rose to
15.8 percent of GSDP in 2008-09 RE. In 2009-10 BE, these are slated to be 15.0 percent
of GSDP (Table 3.1) Within revenue expenditures, the expenditures on health and
education are of critical importance. Table 3.5 shows that the share of revenue
expenditure on education in 2009-10 BE is lower than what it was in 2001-02. The share
of health expenditure has increased by a small margin but it has not reached one percent
till 2009-10 BE.
Table 3.5: Expenditure on Health and Education in Tamil Nadu
(Rs. crore)
Sector 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 RE2009-10 BE
Education 4058.74 3970.17 4402.55 4597.28 4915.51 5967.91 6732.08 9166.81 10472.56
Health 858.63 865.04 944.28 1304.16 1392.87 1551.97 1737.06 2474.27 2995.50
(% to GSDP)
Education 2.83 2.56 2.61 2.43 2.32 2.56 2.23 2.63 2.65
Health 0.6 0.56 0.56 0.69 0.66 0.67 0.58 0.71 0.76
Source (Basic Data): State Budget Documents and Budget speech 2009-10.
Note: Education includes general and technical education Health includes medical and public health and family
welfare.
A major contribution of state finances to the state economy comes in the form of
capital expenditure, particularly if it is devoted to building infrastructure (Chart 3.5). In
Tamil Nadu it has been rather low in the nineties remaining less than one percent of
GSDP. However, since 2003-04, it has been rising and it is now close to the benchmark of
3 percent suggested by the Twelfth Finance Commission. These have been increasing
over time in per capita terms (see Appendix Table 3.2 for per capita poverty reducing
expenditures in recent years). This trend has to be strengthened further.
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