The subsidy provided by the Government of Tamil Nadu, both in absolute terms and as a share of revenue and expenditure on revenue, is on the rise and is expected to grow.
A perusal of the Comptroller and Auditor General of India (CAG) State Finance Report 2023-24 shows that the amount of subsidy has increased from ₹ 20,114 crore during 2019-20 (the year of the COVID-19 pandemic) to ₹ 37,749 crore during 2022. Year-on-year subsidy has increased by about 27%, which was due to the introduction of the Kalaignar Magalir Urimai scheme Thogai (KMUT). The report, which was tabled on the floor of the House on Friday, looked at the state’s finances for five years from 2019-20 to 2023-24.
In relation to income (RR) and income (RE), subsidies increased from 11.54% to 14.27% for RR and 9.57% to 12.19% for RE over the five years under review. For unaccepted expenses, which are part of RE and do not include items such as wages, pensions and interest payments, the share of subsidies increased from 35.12% to 38.91%.
The report divides subsidies into two broad categories – explicit and implicit. In the first case, everything that is accounted for under the heading “subsidy” is considered. Items of “explicit subsidies” include KMUT, Public Distribution System (PDS), subsidized domestic category power supply, free bus travel for women and student fare concessions.
Implicit subsidies arise when the government provides social and economic goods/services at a price lower than its costs. According to CAG, it can be direct, in kind or as a concession. Free supply of bicycles and production and distribution of quality seeds are some examples of ‘implicit subsidies’ worth ₹801.77 crore in 2023-24. The CAG advised the state government to “initiate measures to achieve adequate return on its investment and return on its cost of borrowed funds rather than carrying the same on its budget in the form of implicit subsidies”.
Published – 18 October 2025 20:30 IST
