Fiscal consolidation and growth trend of developmental expenditure of Tamil Nadu

Abstract

State government expenditure is an important instrument for the protection and promotion of socio-economic welfare of the citizen. The chronic nature of India’s fiscal crisis, reduction in Central resource flows to the states in the name of reforms and the states’ difficulties in raising revenue have an adverse impact on state governments’ expenditure. Within the total expenditure, the compression fell on developmental expenditure. In this context, an attempt has been made to address the following questions: i) Are there any changes in the composition of revenue expenditure of Tamil Nadu after reforms? ii) What is the impact of economic reforms on developmental expenditure of Tamil Nadu? iii) How far developmental expenditure is responsive to the growth of the economy during the post reform period?